March 15, 2024
Oregon’s Supreme Court has reversed lower court rulings that concluded a $32,000 equipment purchase contract contained a tort liability waiver that invalidated a $20 million subrogation claim. In Certain Underwriters v. TNA NA Manufacturing , Lloyd’s insured purchased food processing equipment that was later involved in a recall that cost Lloyd’s the $20 million policy limit. Lloyd’s subrogated against the manufacturer, but the manufacturer won summary judgment because the $32,000 purchase agreement contained a waiver of all tort liability.
Oregon’s Supreme Court reversed. The court explained it has long enforced a strong presumption against contractual waiver of tort liability. Such waivers can be created and enforced if clear and unequivocal language is used, but meeting that burden is intentionally difficult. Applied here, the Supreme Court noted the district court and Court of Appeals had concluded a waiver existed “through inference or implication, and through the use of broad language. We disagree with both of those approaches.”
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The Supreme Court then reviewed the contract and found no clear and unequivocal language existed that released the manufacturer from all liability. “We reiterate that, to effect 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.” “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” language sufficient to overcome the strong presumption against the waiver of tort liability.”
This ruling is a win for Lloyd’s but highlights the potential risk that can arise in certain claims relying on form contacts that contain broad “any and all” language.