Court Opinion

ID: 9609922
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:33:26.483525+00
Date Added: 2024-06-11T18:02:53.963304
License: Public Domain

DEITS, C. J.,
dissenting.
The majority concludes that a private contractor’s agreement to hold harmless and indemnify the state agency with which he contracted is contrary to the indemnity provisions of the Oregon Tort Claims Act (OTCA) and offends public policy to such a degree that the court may invalidate or refuse to enforce the agreement. I do not agree with that conclusion, and I therefore dissent.
There is no difference between the majority’s and my understanding of what the relevant principles of law are. My disagreement is with the way that the majority applies those principles here. The majority correctly notes that, as a rule, “a person may waive by agreement the benefit of a statutory provision” unless, inter alia, the waiver “would violate public policy expressed” in the statute. 152 Or App at 197, quoting Turney v. J.H. Tillman Co., 112 Or 122, 132, 228 P 933 (1924). Further, as the majority also acknowledges, a court may not invalidate or refuse to enforce contractual provisions on public policy grounds unless the policy in question rises to the level that the Supreme Court has described as “over-powering.” Eldridge et al v. Johnston, 195 Or 379, 405, 245 P2d 239 (1952).
The majority offers three examples of the exceptional circumstances in which the Supreme Court or this court has invoked the public policy rationale as a basis for concluding that agreements that waive or affect entitlement to statutory rights or benefits are unenforceable: School Dist. No. 1 v. Teachers’ Retirement Fund, 163 Or 103, 95 P2d 720 (1939) (disability benefits); Young v. Mobil Oil Corp., 85 Or *204App 64, 735 P2d 654 (1987) (exclusive liability provisions of the Workers’ Compensation Law); and McKinney v. Employment Division, 21 Or App 730, 537 P2d 126 (1975) (unemployment benefits and the statutory bases for denying them). The majority also cites McKinney for the overriding proposition that, “[w]here legislation is intended to secure general objectives of public policy as well as to protect the interests of individuals, it may not be circumvented by private agreement.” Id. at 737.
The message that emerges from the foregoing principles and authorities is that the invocation of “public policy” as a rationale for judicial nullification of consensual agreements is an exercise in which the courts should rarely indulge. That general proposition applies with particular force when the source of the public policy is statutory. The legislature itself may, and in many instances does, specify which policies that it has promulgated or codified are of a magnitude that they cannot be modified contractually or foregone. See, e.g., ORS 657.855 (providing that “[n]o agreement by an individual to waive the individual’s rights under [the unemployment compensation statutes] is valid”). See also Sun Veneer v. Employment Div., 105 Or App 198, 205, 804 P2d 1174 (1991). This is not to say that the courts are foreclosed categorically from invalidating or denying enforcement to contractual provisions on the ground that they offend public policies that are statutory in origin. In my view, however, the courts should be even more reluctant to employ the public policy rationale in that connection than in others, because the legislative branch is the author of the policy and has the capacity to specify what means it regards as necessary for the policy’s implementation.
At the expense of being repetitive, the courts should recognize and have recognized that, beyond those general limits, there are certain additional restraints upon their authority to implement statutory policy by nonenforcement of contracts when, as here, the statute is one that confers a right or a benefit upon a particular category of persons. The general rule, as reflected in Turney, is that the party is free to waive the benefit that the legislature has given.1 The *205instances where the courts may properly depart from that rule, when the legislature itself has expressed no intention to do so, are reflected in McKinney. The statutory policy must be of such a nature that significant interests of the public, as well as those of the individuals who are directly benefitted, are implicated.
However, as the cases that both the majority and I find apposite presuppose, most statutorily created or statutorily recognized individual rights and benefits are not of a kind that are impervious to individual waiver or appropriate subjects for judicial prevention of an individual’s agreement to waive them. The line between those statutory benefits that may be waived and those that may not is not precise. It is clear, however, that the invalidation of a contract on the ground that it contravenes a statutory policy is an extraordinary judicial act and that many more contracts and statutes fall on one side of the line than the other.
In this case, the majority traces its conclusion that public policy precludes the enforcement of Welker’s contractual waiver of his OTCA indemnity rights to two Supreme Court cases that speak generally about the purpose of those provisions as they relate to public employees and one case of ours that uses the term “public policy” in the course of holding that citizen volunteers can be “agents” within the meaning of the provisions. Stevenson v. State of Oregon, 290 Or 3, 619 P2d 247 (1980); Gill v. SAIF, 314 Or 719, 842 P2d 402 (1992); Samuel v. Frohnmayer, 82 Or App 375, 728 P2d 97, mod 84 Or App 80 (1986), rev den 303 Or 261 (1987). None of those cases was concerned directly with any question about a waiver of statutory benefits or with any questions about contractual enforceability and public policy. Assuming solely for argument’s sake that the rationale reflected by the language *206in those opinions on which the majority relies might nevertheless support the conclusion that a waiver of indemnity rights by public employees, or even by some agents,2 might be unenforceable under a judicially declared public policy, that rationale cannot extend as far as the majority would stretch it, and it does not extend to the circumstances of this case.
The court said in Gill:
“The legislature enacted [the OTCA indemnity provisions] to eliminate the concern of public employees that they could be held personally liable for a failure to use reasonable care in performing their jobs and thereby to encourage able persons to accept responsible employment in the public sector.” 314 Or at 724-25.
The court made the same points at greater length in Stevenson, where it also summarized the purposes of the indemnity provisions as being to lessen the possibility that fears of “personal liability might dampen the ardor of public employe[e]s in the performance of their duties or discourage able persons from accepting responsible [public] employment.” 290 Or at 13.
The relevant language in Stevenson and Gill relates to the procurement and retention of an able and responsible corps of public servants. Welker is not a public servant. He is an independent contractor, and one whose services are by no means uniquely governmental in character. He is simply a private individual who plies a trade and, on different occasions, might sell his services to a public body as readily as to a private one. There is no functional difference for purposes of the issue in this case between him and a private contractor whom the government hires to pave a courthouse parking lot and whose previous or next job was or will be to perform the same service for a department store.
The majority does not distinguish between public employees and agents of governmental bodies for purposes of its holding that a waiver of OTCA indemnity rights is contrary to public policy. Indeed, the majority makes no distinctions at all. Under its reasoning, no agent of a public body *207may contractually waive the statutory benefit; the majority implicitly but clearly reaches that conclusion as to all public employees and agents and, according to its analysis, there is no difference for purposes of the issue it treats as decisive between a full-time police officer, a citizen volunteer of the kind involved in Samuel, and a foreign corporation that the governmental body hires on a one-time basis to provide a particular service that the corporation simultaneously or sequentially provides to numerous public and private entities throughout the country.
The majority attempts to bridge the gap between public employees and independent contractors of the kind in question through a two-stage construct. First, the majority hammers home the truism that agents of a governmental body, like its regular employees, are performing governmental or public functions while they are engaged as contractors for the public body. Second, the majority continues:
“In that respect, an employee and a non-employee ‘agent’ are identical.
“Because of that identity of function, the second public policy underlying the OTCA’s indemnity provisions applies equally to employees and to nonemployee ‘agents.’ Because both are performing public functions, it is equally imperative that both be encouraged and protected in the zealous performance of their duties — that is, that their ‘ardor’ not be ‘dampened’ by the prospect of personal liability.” 152 Or App at 200-01.
The problem with the majority’s analysis is that its bridge crosses only half the gap. Stevenson and Gill speak in terms about only regular and ongoing public employees, and they repeatedly describe the salutary purpose that they identify in the OTCA indemnity provisions as being directed toward the alleviation of the liability concerns that might prevent able persons from becoming or ably serving as public employees.
It is obviously desirable for independent contractors who provide episodic services for the government to perform those services — as well as those that they perform for anyone else — conscientiously and “zealously.” It is equally apparent that the legislature has seen fit to cover agents, as well as *208regular public employees, with the indemnity protections of the OTCA. In those and possibly other respects, employees and independent contractors who qualify as governmental “agents” are similar. In other respects that I have touched on above, they are different, and the public interest is qualitatively different in the employment and “zealous” performance of regular public servants, on the one hand, and intermittent or one-time hired contractors, on the other.3
If the question here involved the interpretation or application of the indemnity statutes, the similarities between employees and agents that the majority describes would be dispositive. The indemnity provisions of the OTCA expressly confer their benefit on agents of all kinds as much as they do on full-time regular governmental employees. However, that is not the issue. Rather, the question is whether, in the absence of any such indication in the statutes themselves, a court may say that a public policy inheres in the indemnity statutes that is of such an “overpowering” kind that no independent contractor’s agreement to waive the statutory benefit can be given effect. I do not agree with the majority’s answer.
It is at least noteworthy that the legislature has expressly declared that at least one type of waiver provision in contracts between private parties and governmental bodies is unenforceable on public policy grounds. Under ORS 279.063, a contractual provision that “purports to waive, release or extinguish the rights of a contractor” to remedies for unreasonable delay in performance resulting from acts or omissions of the public body “is against public policy and is void and unenforceable.” The existence of that nonwaiver *209provision illustrates that the legislature knew how to say it when it meant it and did not say it in connection with waivers of the statutory right in question here.
However, I do not wish to place great emphasis on that point, because it is not my view that the legislature must have manifested its intent not to abrogate particular contracts on public policy grounds in order for it to be generally inappropriate for the courts to take it upon themselves to do the opposite. The courts are not in the business of making statutory policy. Yet that is exactly what a court does any time that it holds that, for reasons of public policy, a statute should be given a particular effect that the court cannot affirmatively say that the legislature intended.
It is nevertheless clear that the Oregon cases hold that, on occasion, the courts may do that. It is equally clear, under the cases, that the occasions on which the courts may do so are rare and are subject to definable standards. Under those standards, this is not a complicated case. The legislature has given private contractors, to the extent they are agents of public bodies under the OTCA, a right to indemnity for certain work-related torts. The contractual provision at issue requires Welker to give essentially what the statute entitles him to receive and constitutes a waiver of the contractual right. The threshold question in determining whether the courts may refuse to give effect to the provision is whether there is a cognizable public interest, over and above the individual benefit that the statute confers, in an independent contractor’s ability to obtain indemnity from the government for liability that the contractor incurs as a result of his performance of a single limited and isolated service that he has contracted to perform for the government. I would conclude that, at least generally and under the circumstances of this case, the answer is no.
Therefore, I respectfully dissent.

 Also worthy of note is the court’s observation in Turney:
*205“By reason of the fact that the habits, opinions, and wants of the people vary with the times so public policy may change with them. So because these habits, opinions and wants are different in different places, what may be against public policy in one state or country may not be so in another[.]” 112 Or at 132.
That is another reason why the definition and implementation of public policy are matters better left to legislatures than courts.

 I also assume, again only for purposes of discussion, that Welker is or might be an “agent” within the meaning of the OTCA provisions.

 At 152 Or App 201-02, the majority provides a description of the public significance that it perceives in the particular service that Welker was hired to perform. That description does not alter the fact that, under the principal aspects of the majority’s reasoning, a waiver of the statutory benefit by any independent contractor who is an agent for purposes of the statute would violate public policy. Moreover, it would seem to be a given from the standpoint of the courts that a public contract, at least if it is not specifically challenged as lacking one, is for a service or purpose that the responsible governmental authorities deem to be important enough to the public to warrant the hiring of the contractor. The majority’s intrusion into the legislature’s policymaking role is in no way attenuated by the fact that it also designates itself a quality control board for the executive department’s contracts.