Court Opinion

ID: 9948650
Source: CourtListenerOpinion
Date Created: 2024-03-07 17:13:01.529678+00
Date Added: 2024-06-11T14:25:43.234637
License: Public Domain

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.