Certain Underwriters v. TNA NA Manufacturing

64 March 7, 2024 No. 4

IN THE SUPREME COURT OF THE

STATE OF OREGON

CERTAIN UNDERWRITERS AT LLOYD’S

LONDON REPRESENTED BY XL CATLIN

SYNDICATES 2003 AND 1209,

Liberty Syndicate 4472, and

Novae Syndicate 2007,

Petitioners on Review,

v.

TNA NA MANUFACTURING, INC.,

dba FOODesign Machinery & Systems, and

Food Design, Inc., an Oregon corporation,

Respondents on Review.

(CC 18CV15868) (CA A175864) (SC S070083)

En Banc

On review from the Court of Appeals.*

Argued and submitted November 9, 2023.

Sara Kobak, Schwabe, Williamson & Wyatt, P.C.,

Portland, argued the cause and filed the briefs for petition-

ers on review. Also on the briefs were William J. Ohle, and

Aukjen T. Ingraham.

Dayna J. Christian, Immix Law Group PC, Portland, filed

the brief for respondent on review TNA NA Manufacturing,

Inc. Also on the briefs was Nicole McMillan.

Ashley L. Vulin, Davis Wright Tremaine LLP, Portland,

argued the case and filed the brief for respondent on review

Food Design, Inc. Also on the brief was P. Andrew McStay,

Jr., and Meagan A. Himes.

JAMES, J.

______________

* Appeal from Clackamas County Circuit Court, Henry Breithaupt, Judge.

323 Or App 447, 523 P3d 690 ( 2022).

Cite as 372 Or 64 (2024) 65

The decision of the Court of Appeals is affirmed in part

and reversed in part. The judgment of the circuit court is

reversed, and the case is remanded to the circuit court for

further proceedings.

66 Certain Underwriters v. TNA NA Manufacturing

JAMES, J.

The issue in this case is the specificity of contract

language required to disclaim tort liability under Oregon

law. SunOpta, Inc. (SunOpta), purchased food process-

ing equipment from Food Design, Inc. (FDI), for use in its

sunflower seed production.1 Following a listeria outbreak

that resulted in a recall costing SunOpta’s insurer, Lloyd’s

London (Lloyd’s), nearly 20 million dollars, Lloyd’s brought

claims for negligence and product liability against FDI and

TNA NA Manufacturing, Inc. (TNA), FDI’s successor in

interest. On summary judgment, the trial court held that

SunOpta had waived any action in tort through its purchase

contract with FDI, and specifically looked to four provisions

of that contract—sections 5, 7, 11, and 12—reasoning that,

when read together, those provisions reflected a waiver of

tort liability. The Court of Appeals affirmed the trial court,

on narrower grounds, concluding that one provision, section

11, when viewed in the context of the contract as a whole,

constituted a waiver of tort liability because the provision,

“implicates liability beyond that arising under the contract.”

Certain Underwriters v. TNA NA Manufacturing, 323 Or App

447, 454, 523 P3d 690 (2022). Lloyd’s petitioned for review,

which we allowed.

We conclude that both the trial court and the Court

of Appeals erred. Oregon law establishes that “a presump-

tion will be indulged against an intention to contract for

immunity from the consequence of one’s own negligence.”

Waterway Terminals v. P.S. Lord, 242 Or 1, 19, 406 P2d 556

(1965). In considering whether that presumption has been

overcome, “a contract will not be construed to provide immu-

nity from the consequences of a party’s own negligence unless

that intention is clearly and unequivocally expressed.” Estey

v. MacKenzie Engineering Inc., 324 Or 372, 376, 927 P2d 86

(1996) (quoting Transamerica Ins. Co. v. U.S. Nat’l Bank,

276 Or 945, 951, 558 P2d 328 (1976)). As we will explain,

to waive tort liability, contract language must be clear and

explicit; waiver will not simply be deduced from inference or

implication. The text of the contract must show, clearly and

1

Throughout this opinion, we refer to the parties by name and use the term

“defendants” to refer collectively to FDI and TNA.

Cite as 372 Or 64 (2024) 67

unambiguously, that the parties intended to disclaim actions

outside of contract, i.e., actions in tort. Generic text that

purports to waive all liability, or any loss, will typically be

insufficiently specific to overcome the presumption against

the waiver of tort liability. Accordingly, the decision of the

Court of Appeals is affirmed in part and reversed in part.

The judgment of the circuit court is reversed, and the case is

remanded to the circuit court for further proceedings.2

THE CONTRACT PROVISIONS

Before reciting the underlying facts, for ease of ref-

erence, we set forth the pertinent provisions of the contract

between FDI (the seller) and SunOpta (the purchaser) on

which the parties and the lower courts relied.

Section 5, entitled “WARRANTIES,” states:

“Seller’s warranties are limited as follows:

“There are no warranties which extend beyond the descrip-

tion on the face hereof.

“Seller warrants to the original Customer that the equip-

ment is free from manufacturing defects. Seller agrees to

repair or replace, F.O.B. any part of standard commercial

manufactured items which are, within the warranty period

of the manufacturer’s item in question, found defective or

otherwise unsatisfactory owing to faulty material or work-

manship. The warranty shall not apply to any product which

has been damaged by improper usage, accident, neglect,

alteration or abuse. The liability of the manufacturer is

limited solely to replacing the defective product. In no event

shall the manufacturer be liable for special or consequen-

tial damages to any Purchaser, user or other person.”

Section 7, entitled “MATERIALS AND

WORKMANSHIP,” provides, in relevant part:

“Purchaser agrees to defend and indemnify Seller against

any loss, cost, damage or expense (including reasonable

attorney’s fees) resulting from any claims by Purchasers

or by third parties (including Purchaser’s employees) of

2

At the Court of Appeals, plaintiffs raised an additional assignment of error,

arguing that the trial court abused its discretion when it ordered plaintiffs to pay

FDI attorney fees as a discovery sanction under ORCP 46 A(4). Certain Underwriters,

323 Or App at 449. The Court of Appeals affirmed the attorney fee award, id. at 457,

and plaintiffs do not challenge that part of the decision before this court.

68 Certain Underwriters v. TNA NA Manufacturing

damage to property or injury to persons resulting from

faulty installation or negligent operation of the equipment.”

Section 11, entitled “DISCLAIMERS,” states:

“There are no warranties, express or implied, including the

warranty of merchantability and the warranty of fitness

for a particular purpose extending beyond those set forth

in [s]ection 5. Seller’s liability shall be limited to the repair

or replacement of any defective equipment and the parties

agree that this shall be Purchaser’s sole and exclusive rem-

edy. Seller shall not be liable, in any event, for loss of prof-

its, incidental or consequential damages or failure of the

equipment to comply with any federal, state or local laws.

Seller shall under no circumstances be liable for the cost of

labor, raw materials used or lost in testing or experimen-

tal or production operations of any equipment sold, whether

such testing, production or experimentation is done under

the supervision of a representative of the Seller or of any

employee or other representative of the Purchaser.”

Section 12, entitled “DEFAULT, DAMAGES, AND

REMEDIES,” provides, in relevant part:

“In the event of default by either party, all rights and reme-

dies shall be governed by the law of the State of Oregon and

venue for any litigation shall be laid in the Circuit Court of

Oregon for the County of Clackamas.

“Seller shall further not be liable for any consequential

damages.”

BACKGROUND

Because the trial court granted defendants’ motion

for summary judgment, we recount the facts in the light

most favorable to Lloyd’s, the nonmoving party. ORCP 47 C.

SunOpta is a plant-based food company that expe-

rienced $20 million in damages after it issued a voluntary

product recall in 2016 due to the discovery of the bacterium

Listeria monocytogenes (listeria) in its processed sunflower

seeds. The recalled sunflower seeds had been processed

using equipment that SunOpta had purchased from FDI

in 2012. Following the recall, Lloyd’s paid SunOpta the

insurance policy limit of $20 million to cover the company’s

Cite as 372 Or 64 (2024) 69

property losses, and SunOpta subrogated its claims related

to FDI’s potential tort liability to Lloyd’s.

Lloyd’s then sued defendants, FDI and its succes-

sor in interest, TNA, alleging tort claims for negligence and

strict products liability under ORS 30.920. Lloyd’s alleged

that “the food contamination was caused by unreasonably

dangerous design and manufacturing defects in FDI’s cool-

ing conveyor system that wrongly impeded access to fully

inspect and sanitize all areas of the equipment.” Lloyd’s also

alleged that the equipment had serious design and manu-

facturing flaws that improperly allowed water intrusion into

hidden parts of the equipment that dangerously concealed

product buildup and other conditions promoting the growth

of listeria.

Defendants moved for summary judgment, argu-

ing that the purchase contract for the cooling equipment

barred Lloyd’s tort action. That contract, a five-page doc-

ument containing FDI’s standard terms and conditions,

had been included as part of FDI’s sales proposal for the

custom cooling conveyor system.3 SunOpta executed that

proposal without objecting to FDI’s terms and conditions,

and FDI then manufactured and delivered the equipment

to SunOpta for approximately $32,000. Defendants argued

that four provisions of that purchase contract—sections 5, 7,

11, and 12—reflected an “unmistakable mutual agreement

for SunOpta, as an equipment buyer, to exculpate FDI from

any tort liability for damages caused by FDI’s own negli-

gence or product defects.”4 In response, Lloyd’s argued that

those provisions of the sales contract did not satisfy the

requirement that provisions limiting tort liability must be

“clear and unequivocal.”

The trial court granted summary judgment in favor

of defendants. Relying on American Wholesale Products v.

3

There was no evidence offered at summary judgment that FDI engaged in

any kind of explanation or discussion with SunOpta about any of FDI’s standard

terms and conditions. There was also no evidence that FDI ever offered any kind

of price concession, or otherwise bargained with SunOpta for a release of tort

liability as a condition for the sale of FDI’s food-processing equipment.

4

Initially FDI did not claim that its standard terms and conditions included

a waiver of tort liability. Rather, FDI asserted that the contractual terms at issue

were intended to “disclaim[ ], in whole or in part, warranties” in the equipment.

70 Certain Underwriters v. TNA NA Manufacturing

Allstate Ins. Co., 288 Or App 418, 406 P3d 163 (2017), the

trial court read the relevant contract provisions together to

“determine whether the liability allocation in the contract,

including liability for defendants’ own negligence or tort

exposure, [was] clear and unequivocal.” After noting that

none of the provisions contradicted each other, the trial

court stated that “nothing in the documents suggests that

defendants’ liability extends beyond repair or replacement.”

The court found that, “most importantly, no language in the

agreement suggests that defendants have any responsibil-

ity for damage to person or property—that is[,] tort[-]type

damages.” The trial court then entered a general judgment,

dismissing Lloyd’s claims with prejudice.

Lloyd’s appealed, and the Court of Appeals affirmed,

although on different grounds than the trial court. The

Court of Appeals “disagree[d] with the trial court’s rea-

soning suggesting that sections 5, 7, and 12 shielded FDI

from tort liability, because they all could be plausibly read

as limitations to contract damages.” Certain Underwriters,

323 Or App at 455. On the other hand, the Court of Appeals

concluded that section 11 “[could not] be read in a way that

restricts it to damages related to contract liability” and

therefore “agree[d] with the trial court’s ultimate conclusion

that the text of the sales contract unambiguously limited

FDI’s tort liability.” Id.

The court invoked Estey for the proposition that “[a]

limitation of liability clause need not use the word ‘negli-

gence’ in order to be effective against a negligence claim.” Id.

at 450 (quoting Estey, 324 Or at 378). Although the Court of

Appeals disagreed with the trial court that sections 5, 7, and

12 immunized defendants from tort liability, it affirmed the

trial court’s grant of summary judgment on the grounds that

section 11 of the sales contract “unambiguously disclaimed

any liability in tort when viewed in the context of the con-

tract as a whole.” Id. at 453. The court stated that section 11,

“[b]y disclaiming liability of the seller ‘in any event,’ in a sec-

tion separate from the one titled ‘[WARRANTIES]’ and with

broad language as to the types of damages disclaimed, * * *

the contract unambiguously expressed the parties’ intent to

immunize FDI from tort liability.” Id.

Cite as 372 Or 64 (2024) 71

The Court of Appeals based that decision on one

of its own cases where it had held that “[a] contract that

contains a broad reference to ‘any liability’ suggests that

the parties intended for the provision to limit ‘any liability’

regardless of whether that liability arose in tort or contract.”

Id. at 453-54 (quoting Kaste v. Land O’Lakes Purina Feed,

LLC, 284 Or App 233, 246, 392 P3d 805, rev den, 361 Or 671

(2017)). The court concluded that “[s]ection 11’s statement

that FDI ‘shall not be liable, in any event’ is substantially

similar to a disclaimer of any liability.” Id. at 454. The court

further noted that the fact that the terms at issue were not

included in the “WARRANTIES” provision but instead in

the “DISCLAIMERS” provision indicated an intention for

those disclaimers to apply beyond contract liability. Id.

Finally, the Court of Appeals agreed with the trial court

that the “disclaimer of any liability related to a violation

of law necessarily implicates claims for negligence per se,

which is a concept in tort.” Id.

After concluding that the contract clearly and

unambiguously immunized defendants from tort liability,

the Court of Appeals proceeded to assess “the possibility of

a harsh or inequitable result that would fall on one party if

the other party was immunized from the consequences of

its own negligence.” Id. at 455 (quoting American Wholesale

Products, 288 Or App at 423). The court concluded that

“[t]he language of the contract indicates that the parties

expected that issues involving the use of FDI’s equipment

would be remedied by either repairing or replacing the

equipment. Nothing in the nature of the parties’ relation-

ship or bargaining power suggests that the parties reason-

ably held different expectations and, thus, it would not be

harsh or inequitable to limit FDI’s liability.”

Id. at 456.

Lloyd’s petitioned for review, which we allowed.

ANALYSIS

Oregon law recognizes a “policy favoring the free-

dom to contract as one pleases * * * unless there is some

contravening policy which outweighs it.” Irish & Swartz

Stores v. First Nat’l Bk., 220 Or 362, 378, 349 P2d 814

72 Certain Underwriters v. TNA NA Manufacturing

(1960). Accordingly, absent a public policy impediment,5 so

long as the parties have “expressed their intent with rea-

sonable clarity, contractual immunity from a party’s own

negligence” can be “a matter for negotiation.” Commerce &

Industry Ins. v. Orth, 254 Or 226, 232, 458 P2d 926 (1969).

However, because “public policy favors the deter-

rence of negligent conduct,” Bagley v. Mt. Bachelor, Inc., 356

Or 543, 572, 340 P3d 27 (2014), the allocation of liability in

tort is one area where public policy may outweigh the gen-

eral freedom to contract. In light of the strong public interest

in promoting the exercise of reasonable care, it has been the

established rule in Oregon for over sixty years that “a pre-

sumption will be indulged against an intention to contract

for immunity from the consequence of one’s own negligence

and that a contract will not be given that meaning unless so

expressed in unequivocal language.” Waterway Terminals,

242 Or at 19 (citing So. Pac. Co. v. Morrison-Knudsen Co.,

216 Or 398, 410, 338 P2d 665 (1959); Glens Falls Indem. Co.

v. Reimers, 176 Or 47, 53, 155 P2d 923 (1945); Southern Pac.

Co. v. Layman, 173 Or 275, 280, 145 P2d 295 (1944); and U.

S. Fid. & Guar. Co. v. Thomlinson Co., 172 Or 307, 324-25,

141 P2d 817 (1943)) (emphasis added).

In determining when a contract will overcome the

presumption against the waiver of tort liability, exculpatory

contracts are strictly construed to ensure that the releas-

ing party did, in fact, knowingly bargain for the release of

tort liability. Commerce & Industry Ins., 254 Or at 231. “A

contract will not be construed to provide immunity from

consequences of a party’s own negligence unless that inten-

tion is clearly and unequivocally expressed[.]” Estey, 324

Or at 376 (internal quotation marks and additional brack-

ets omitted); see also Restatement (Third) of Torts: Products

Liability § 2 comment d (1997) (“Courts normally construe

exculpatory contracts strictly, finding that the plaintiff has

5

For example, this court has held that “a clause in a contract for insurance

purporting to indemnify the insured for damages recovered against him as a

consequence of his intentional conduct in inflicting injury upon another is unen-

forceable by the insured on the ground that to permit recovery would be against

public policy.” Isenhart v. General Casualty Co., 233 Or 49, 53, 377 P2d 26 (1962).

As another example, ORS 30.140 voids, on public policy grounds, any provision in

a construction agreement for indemnification against liability for personal-injury

or property damage due to the indemnitee’s sole negligence.

Cite as 372 Or 64 (2024) 73

assumed a risk only if the terms of the agreement are clear

and unequivocal.”).

In considering whether a contract “clearly and

unequivocally” waives tort liability, Oregon courts “consider

both the language of the contract and the possibility of a

harsh or inequitable result that would fall on [the releas-

ing] party by immunizing the other party from the con-

sequences of [their] own negligence.” Estey, 342 Or at 376.

The “heavy burden” to satisfy the “clear and unequivocal”

standard means that the exculpatory contract must “put[ ] it

beyond doubt,” and the contract must make it crystal clear

that the releasing party has absolved the other party from

the consequences of the party’s own negligence and prod-

uct defects. Layman, 173 Or at 281 (citation and quotation

marks omitted).

With those principles in mind, we turn to the con-

tract at issue here. We readily conclude that sections 5, 7,

and 12 fail to effect a waiver of tort liability.

We agree with the Court of Appeals that, with

respect to section 5, “warranties” are “typically a contract

concept.” Certain Underwriters, 323 Or App at 451. The types

of damages limited under section 5—special or consequen-

tial damages—are ordinarily types of damages under the

Uniform Commercial Code (UCC), and they are naturally

associated with contract disputes, not tort claims. See ORS

72.7150(2) (defining “consequential damages” as damages

“resulting from the seller’s breach”); Parker v. Harris Pine

Mills, Inc., 206 Or 187, 208, 291 P2d 709 (1955) (explaining

that “ ‘special damages’ [are] those naturally but not nec-

essarily resulting from the breach” of a contract (emphasis

omitted)).

Defendants argue that, “[e]ven if the limitation of

liability in [s]ection 5 relates only to breaches of warranty

* * *, [that provision] uses * * * language showing the intent

to limit liability even for harm to third parties.” Even if that

language shows an intent to limit liability for harm to third

parties, that does not compel the conclusion that the par-

ties were intending to cover third-party tort liability. Third-

party liability can arise under contract as well. Sisters of

74 Certain Underwriters v. TNA NA Manufacturing

St. Joseph v. Russell, 318 Or 370, 374, 867 P2d 1377 (1994)

(recognizing third party liability under contract; explain-

ing that, “[a]s a general proposition, a third party’s right

to enforce a contractual promise in its favor depends on the

intention of the parties to the contract”).

For much the same reason, section 12 is insufficient

to limit FDI’s tort liability. Section 12—which covers default

and limitations on liability for consequential damages—

addresses contract requirements and remedies. Nothing in

the text of section 12 reflects the clear and unambiguous

language required to disclaim tort liability.

Nor does section 7 immunize FDI from all tort lia-

bility. That provision indemnifies FDI from some tort liabil-

ity, but critically, only some. By its terms, section 7 shifted

tort liability to SunOpta only for tort claims “resulting from

faulty installation or negligent operation of the equipment.”

A reader could reasonably infer that only the referenced sub-

set of tort claims is being addressed by that provision, and

that, by negative implication, the contract does not waive

other liability in tort.

We turn now to section 11, which formed the basis

for the Court of Appeals’ holding that tort liability had been

contractually disclaimed in this case. For convenience, we

set out the terms of section 11 again:

“DISCLAIMERS:

“There are no warranties, express or implied, including the

warranty of merchantability and the warranty of fitness

for a particular purpose extending beyond those set forth

in [s]ection 5. Seller’s liability shall be limited to the repair

or replacement of any defective equipment and the parties

agree that this shall be Purchaser’s sole and exclusive rem-

edy. Seller shall not be liable, in any event, for loss of prof-

its, incidental or consequential damages or failure of the

equipment to comply with any federal, state or local laws.

Seller shall under no circumstances be liable for the cost of

labor, raw materials used or lost in testing or experimen-

tal or production operations of any equipment sold, whether

such testing, production or experimentation is done under

the supervision of a representative of the Seller or of any

employee or other representative of the Purchaser.”

Cite as 372 Or 64 (2024) 75

The Court of Appeals did not identify any specific

language of tort disclaimer in section 11 but reasoned that

the inclusion of the wording “ ‘’in any event,’ in a section sep-

arate from the one titled ‘[WARRANTIES]’ and with broad

language as to the types of damages disclaimed” was suf-

ficient. Certain Underwriters, 323 Or App at 453. In short,

the Court of Appeals found the intent to waive tort liabil-

ity through inference or implication, and through the use of

broad language. We disagree with both of those approaches.

First, and most critically, nothing in section 11

plainly, directly, and unequivocally speaks to liability out-

side of that arising under contract. The words “in any event”

do not clearly waive tort liability because the types of dam-

ages that are “disclaimed” in any event—loss of profits, inci-

dental or consequential damages, or failure of the equipment

to comply with federal, state, or local laws—can reasonably

be understood to refer to damages other than those arising

from the seller’s own negligence. Because there is no clear,

unequivocal waiver of that liability, any waiver can only be

found by inference from the broad words used in section 11.

The problem with finding a waiver of tort liability

by inference is that, at least in this case, there is not a single

permissible inference. Section 11 could reasonably be read

as a disclaimer of implied warranties other than section

5’s express warranty. Much like section 5’s remedy limita-

tions for any breach of the express warranty, section 11 pre-

scribes the exclusive remedy of repair or replacement of the

equipment, and then it follows with an alternative remedy

limitation in the event that the exclusive remedy does not

apply—that is, it sets out the alternative remedy limitation

providing that FDI is not liable “in any event” for “loss of

profits, incidental or consequential damages or failure of the

equipment to comply with any federal, state or local laws.”

Additionally, it is not the case that the only per-

missible inference to be drawn from the location of the dis-

claimer, in a provision separate from one under the heading

“WARRANTIES,” is that the parties intended to disclaim

tort liability. The requirements of the UCC provide a rea-

son for commercial contracts for the sale of goods to have

separate headings in contracts for warranties and warranty

76 Certain Underwriters v. TNA NA Manufacturing

disclaimers. The UCC requires that disclaimers of implied

warranties of merchantability or fitness be “conspicuous.” See

ORS 72.3160 (“to exclude or modify the implied warranty of

merchantability” or “implied warranty of fitness,” exclusion

must be “conspicuous”). Under the UCC, a “printed head-

ing in capitals” is conspicuous, ORS 71.2010(10), and Oregon

courts have previously held that warranty disclaimers are

not sufficiently conspicuous if placed under a heading titled

“warranty.” See Seibel v. Layne & Bowler, Inc., 56 Or App

387, 391, 641 P2d 668 (1981) (declining to give effect to war-

ranty disclaimers because “[o]nly the paragraph headings,

e.g., ‘WARRANTY,’ stand out, but such a heading suggests

the making of warranties, not their exclusion”).

Nor does the reference to “federal, state or local laws”

require the inference that the parties intended to waive tort

liability. Commercial contracts—especially in highly reg-

ulated industries such as food processing—often impose

requirements for parties to comply with governing laws and

regulatory standards, and compliance with such standards

may be part of the basis of an implied warranty of fitness

for a specific purpose. See, e.g., Millenkamp v. Davisco Foods

Int’l, Inc., 562 F3d 971, 977 (9th Cir 2009) (analyzing how

compliance with government regulations can be relevant to

claims asserting breach of an implied warranty of fitness for

a particular purpose); Durrett v. Baxter Chrysler-Plymouth,

Inc., 198 Neb 392, 395-96, 253 NW2d 37, 39 (1977) (explain-

ing how compliance with government standards and reg-

ulations can be used to defend in cases involving implied

or express warranties); Clausing v. DeHart, 83 Wash 2d 70,

73-75, 515 P2d 982, 984-85 (1973) (assessing a breach of

warranty claim where a contract for the sale of securities

in a nursing home warranted that sellers’ operations were

“maintained in accordance with all applicable government

rules”). Contract damages—including consequential dam-

ages from regulatory penalties, manufacturing shutdowns,

or other “down time” when equipment is out of service—also

may result from failures to fulfill a contractual duty to com-

ply with governing laws. See, e.g., NextSun Energy Littleton,

LLC v. Acadia Ins. Co., 494 F Supp 3d 1, 4 (2020) (uphold-

ing breach-of-contract claim to recover lost income during

mandatory shutdown of operations from governmental

Cite as 372 Or 64 (2024) 77

red-tag orders requiring the testing, inspection, and repair

of equipment).

We reiterate that, to affect a waiver of liability in

tort, a contract must be clear, explicit, unequivocal, and

place the waiver beyond doubt. Arguments that seek to infer

such an express waiver through inference or implication are

unlikely to succeed. Our decision in Estey, 324 Or at 372,

is illustrative. In that case, the plaintiff brought negligence

and breach-of-contract claims against the defendant engi-

neering firm after it provided a faulty inspection report. The

contract between those parties set out an estimated contract

sum of $200 and provided that “[t]he liability of [defendant]

and the liability of its employees are limited to the Contract

Sum.” Id. at 374. On review, we found that the term lacked

sufficient clarity to absolve the defendant of tort liability

because the “plaintiff reasonably might have interpreted

‘liability’ to refer only to liability arising from breach of

contract” and not to liability for negligence. Id. at 378-79.

Because of the ambiguity in the limitation of liability, we

could not “conclude that the parties ‘clearly and unequiv-

ocally’ intended a broader interpretation that would have

required plaintiff to bear the risk of defendant’s negligence.”

Id. at 379.

In reaching our conclusion in Estey, “we declin[ed]

to hold that the word ‘negligence’ must expressly appear in

order for an exculpatory or limitation of liability clause to be

effective against a negligence claim.” Id. at 378. That state-

ment in Estey should not be read to obscure its core holding:

The text of the contract must clearly and unambiguously

show that the parties intended to disclaim liability outside

of contract. Our decision in K-Lines, Inc. v. Roberts Motor Co.,

273 Or 242, 541 P2d 1378 (1975), illustrates effective contract

language. In that case, the defendant manufacturer sought

to avoid tort liability to a commercial purchaser based on a

term in the sales contract providing that the manufacturer’s

liability was limited to repair or replacement of the prod-

uct as the purchaser’s “sole and exclusive remedy whether

in contract, tort or otherwise, and [the defendant manufac-

turer] shall not be liable for injuries to persons or property.”

Id. at 245. In upholding the enforceability of that explicit

78 Certain Underwriters v. TNA NA Manufacturing

limitation on tort liability, we held that the provision was

“not ambiguous or confusing” as a matter of law. Id. at 254.

We adhere to our statement in Estey that no magic

words are, per se, required. However, to overcome the strong

presumption against waiver of tort liability, the contract

must make explicit that the liability being waived is out-

side of liability arising under contract. Perhaps it is possible

to accomplish that goal without the use of the word “negli-

gence,” or “tort,” and we do not entirely foreclose the possi-

bility that an effective waiver could be constructed without

those terms. But use of the terms negligence or tort may

certainly prove helpful, and prudent and cautious contract

drafters in Oregon might consider their use.

Finally, the Court of Appeals relied on its holding

in Kaste for the proposition that “[a] contract that contains

a broad reference to ‘any liability’ suggests that the parties

intended for the provision to limit ‘any liability’ regardless

of whether that liability arose in tort or contract.” Certain

Underwriters, 323 Or App at 453-54 (quoting Kaste, 284

Or App at 246). We disagree with that proposition. As we said

in Estey, because the issue arose in the context of a contract,

the “plaintiff reasonably might have interpreted ‘liability’ to

refer only to liability from breach of contract” and not to lia-

bility for negligence. 324 Or at 378-79. Broad language may

encompass tort liability in theory, but as a practical matter,

in a contract, where the parties are naturally interpreting

terms in the context of contractual obligations, broad lan-

guage may obscure as much as it clarifies. Accordingly, we

have rejected similar broad language disclaiming “any loss.”

In Layman, we considered a contractual waiver

written in very broad terms:

“The agreement is on a printed form prepared by the rail-

way company. The plaintiff is termed the ‘Licensor’ and the

defendant the ‘Licensee’. The clause thereof which plaintiff

seeks to enforce reads: ‘Licensee shall and hereby expressly

agrees to indemnify and save harmless the Licensor and its

lessor from and against any and all loss, damage, injury,

cost and expense of every kind and nature, from any cause

whatsoever, resulting directly or indirectly from the main-

tenance, presence or use of said crossing.”

Cite as 372 Or 64 (2024) 79

173 Or at 276-77.

Despite the terms specifying “any and all loss * * *

from any cause whatsoever,” we reasoned that such broad

language was insufficient to meet the “clear and unequiv-

ocal” language requirements for contractual waiver of tort

liability. In so reasoning, we began by noting that “[i]t is a

firmly established rule that contracts of indemnity will not

be construed to cover losses to the indemnitee caused by his

own negligence unless such intention is expressed in clear

and unequivocal terms.” Id. We reiterated the strong policy

rationale behind that strict rule:

“ ‘The liability on such indemnity is so hazardous, and the

character of the indemnity so unusual and extraordinary,

that there can be no presumption that the indemnitor

intended to assume the responsibility unless the contract

puts it beyond doubt by express stipulation. No inference

from words of general import can establish it.’ ”

Id. (quoting Perry v. Payne, 217 Pa 252, 255, 66 A 553, 554

(1907)).

We then considered the specific language of the

indemnity clause at issue, noting that it was “undoubtedly

broad and general enough to include loss caused solely by

the plaintiff’s negligence.” Id. at 281. However, we surveyed

the treatment of similar language by a range of courts and

concluded that such “language has not deterred the courts

from finding that no such meaning was intended by the par-

ties.” Id. (citing Mynard v. Syracuse, B & NYR Co., 71 NY

180, 183 (1877) (“General words from whatever cause arising

may well be satisfied by limiting them to such extraordi-

nary liabilities as carriers are under without fault or negli-

gence on their part. When general words may operate with-

out including the negligence of the carrier or his servants,

it will not be presumed that it was intended to include it.”

(Emphasis in original.)); Manhattan Ry. Co. v. Cornell, 7

NYS 557, 558 (Gen Term 1889), aff’d, 130 NY 637, 29 NE

151 (1891) (“For while the language of this part of the con-

tract is very general, it cannot reasonably be so construed as

to impose upon the contractors the obligation to protect the

plaintiff against the carelessness or negligence of persons in

its own employment.”).

80 Certain Underwriters v. TNA NA Manufacturing

The treatment we observed in our survey of other

jurisdictions in Layman, in 1944, continues to find support

in other jurisdictions today. See, e.g., Wycoff v. Grace Cmty.

Church of Assemblies of God, 251 P3d 1260, 1265 (Colo App

2010) (reviewing appellate case law; holding that “any liabil-

ity” language did not waive personal injury claim as no excul-

patory provisions had previously been upheld in the absence

of “some reference to waiving personal injury claims”); Hyson

v. White Water Mountain Resorts Of Connecticut, Inc., 265

Conn 636, 829 A2d 827 (2003) (concluding that a party can-

not be released from liability for injuries resulting from its

future negligence in the absence of language that expressly

invokes negligence); Wright v. Loon Mountain Recreation

Corp., 140 NH 166, 169, 663 A2d 1340, 1342 (1995) (provid-

ing that the validity of a release turns on whether a rea-

sonable person would have known of an exculpatory provi-

sion and stating that a reasonable person would understand

the provision only if the language “ ‘clearly and specifically

indicates the intent to release the defendant from liability

for personal injury caused by the defendant’s negligence’ ”

(quoting Barnes v. New Hampshire Karting Ass’n, Inc., 128

NH 102, 107, 509 A2d 151, 154 (1986))); Sivaslian v. Rawlins,

88 AD2d 703, 704, 451 NYS2d 307, 309 (1982) (concluding

that provision that covered “any and all manner of actions”

was insufficient to disclaim tort liability).

Accordingly, we continue to adhere to our analysis

in Layman. Disclaimers written in generic broad language,

such as “any liability” or “any loss” may be insufficiently

specific to meet the standard of “clear and unequivocal” lan-

guage sufficient to overcome the strong presumption against

the waiver of tort liability.

The decision of the Court of Appeals is affirmed in

part and reversed in part. The judgment of the circuit court

is reversed, and the case is remanded to the circuit court for

further proceedings.