Michael E. Davin (Davin) was injured playing basketball with T. Sean Lance (Lance) at the Athletic Club of Overland Park on January 14, 1999. Lance claimed Davin grabbed him by the arms and held him with both hands. In response, Lance picked Davin up between the legs, lifted him about five feet above the ground, turned him and dropped him headfirst on the floor. Davin landed on his right shoulder and head. He was knocked unconscious, taken to the hospital and diagnosed with a separated shoulder. He had one unsuccessful surgery and then another operation six months later. Davin's occupation was in investments and insurance and he claimed loss of significant business opportunities because of his injuries. He still had problems with his shoulder after months of physical therapy and sued Lance for battery and negligence. He also sought compensation for his medical expenses and lost wages.

Lance was insured by State Farm Fire and Casualty Company (State Farm) under a homeowner's insurance policy at the time of Davin's injuries. The policy provided indemnity for Lance's liability for bodily injury or property damage caused by an occurrence. State Farm hired an attorney to represent Lance under a reservation of rights. Lance also hired his own personal attorney. Against the advice of the State Farm attorney, Lance entered into an agreement with Davin where Lance would waive a jury trial and consent to Davin taking a judgment against him in the amount of $300,000. The agreement stated that the parties were desirous of entering into an agreement, so that the assets of Sean Lance would be protected from judgment. In exchange, Lance agreed to a consent judgment that he would not move to set aside the judgment, appeal the judgment or take any action to avoid the judgment. Pursuant to the stipulated judgment, the trial court entered judgment against Lance for $300,000, plus court costs. Davin brought a garnishment action against State Farm for the $300,000 policy liability limit. Davin and State Farm filed cross-motions for summary judgment on the issue of policy coverage. The trial court denied Davin's motion and granted State Farm's, finding that a trial was necessary to determine if State Farm had a duty to indemnify Lance. On September 3, 2002, the trial court heard evidence and ruled that Davin's claim was excluded under the State Farm policy and granted State Farm's motion for judgment as a matter of law. Davin appealed.

The Court of Appeals outlined the standard of review on an appeal from a judgment as a matter of law. When ruling on a motion for a directed verdict, the trial court is required to resolve all facts and inferences reasonably to be drawn from the evidence in favor of the party against whom the ruling is sought. Where reasonable minds could reach different conclusions based on the evidence, the motion must be denied. Davin contended that two issues prevented State Farm from relitigating the issue of whether Lance was negligent. One was the law of case doctrine. This is a discretionary policy that allows the court to reopen a matter already decided, without limiting its power to do so. It is applied to avoid the relitigation of an issue, to obtain consistent results in the same litigation and to afford a single opportunity for argument and decision of the issue. The other issue was the doctrine of collateral estoppel. This holds that once a court has decided on an issue of fact or law, that decision may preclude litigation of the issue in a suit on a different cause of action involving a party to the first case.

The appellate court held that, since State Farm represented Lance under a reservation of rights, the trial court correctly allowed State Farm to relitigate the facts of Davin's case to determine whether coverage existed under its policy. The trial court determined that Lance's negligence caused Davin's injuries but that State Farm was not a party to that action. The issue of State Farm's coverage was not before the trial court until the garnishment action was filed. Because of that fact, the laws of case doctrine and collateral estoppel did not apply. The appellate court held that the parties to an event involving litigation cannot concoct a scheme agreeing to a declaration of negligence and a $300,000 judgment and then expect the insurance company to be bound by that agreement without being able to defend itself against the liability.

As a result, it was not an error for the trial court to consider the issue of liability in the subsequent garnishment action. The State Farm policy excluded coverage for the act in question. The action was not an occurrence or accident but was excluded as a bodily injury action either expected or intended by the insured or that resulted from willful and malicious acts of the insured. The insured intent to injure was inferred when the resulting injury was a natural and probable consequence of the act. The stated intent of the insured had to be ignored and the focus had to be on the physical injury being the natural and probable consequence of the act. It was, and the intent to injure was inferred. The evidence presented to the trial court was sufficiently competent to support the trial court's conclusion that Lance's actions were excluded from coverage under the State Farm Policy.

[1045] Michael E. Davin, Appellant, v. Athletic Club of Overland Park and T. Sean Lance, Defendants, and State Farm Fire and Casualty Company, Appellee. Kansas Court of Appeals. No. 90,332. September 3, 2004. Appeal from the Johnson District Court. Affirmed. 2004 CCH Personal and Commercial Liability Cases. 1045.