Estey v. MacKenzie Engineering Inc.

902 P.2d 1220, 137 Or. App. 1, 27 U.C.C. Rep. Serv. 2d (West) 1281, 1995 Ore. App. LEXIS 1375
CourtCourt of Appeals of Oregon
DecidedSeptember 27, 1995
Docket9212-08572; CA A82218
StatusPublished
Cited by3 cases

This text of 902 P.2d 1220 (Estey v. MacKenzie Engineering Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estey v. MacKenzie Engineering Inc., 902 P.2d 1220, 137 Or. App. 1, 27 U.C.C. Rep. Serv. 2d (West) 1281, 1995 Ore. App. LEXIS 1375 (Or. Ct. App. 1995).

Opinion

*3 RICHARDSON, C. J.

Plaintiff brought an action against defendants MacKenzie Engineering, Inc. (MEI) and Leonard Krombein, an employee of MEI, alleging negligence, negligent misrepresentation and breach of contract. The trial court granted defendants’ motion for summary judgment based on a limitation of liability clause in the parties’ contract for professional services. We affirm.

Plaintiff contracted with MEI for a “limited visual review” of a house that he intended to purchase. The contract consisted of one page that set out the estimated contract sum of $200 and the scope of work to be completed. It also contained a clause that provided:

“The liability of MEI and the liability of its employees are limited to the Contract Sum.”

The agreement was signed by plaintiff. Pursuant to the contract, Krombein conducted a limited visual review of the house and provided plaintiff with a two-page written report.

Plaintiff subsequently purchased the house. Six weeks later, plaintiff discovered that a broken water pipe had been leaking beneath the house prior to the date of Krombein’s inspection. He also noticed that the floors in the house “slanted in an easterly direction.” Plaintiff hired another engineering firm to inspect the house and has since spent a substantial amount of money repairing and stabilizing it. Plaintiff sought damages of $340,000 in his complaint.

Defendants moved for summary judgment, asserting the limitation of liability clause contained in the contract as an affirmative defense. Plaintiff moved for partial summary judgment on the ground that the limitation of liability clause was not enforceable. The trial court granted defendants’ summary judgment motion, concluding that the contract limited defendants’ liability for negligence, negligent misrepresentation and breach of contract. The parties stipulated that, “if enforceable, the limitation of liability clause constitutes a complete bar to plaintiffs claims for damages.” On appeal, plaintiff assigns error to the trial court’s ruling and asserts that the clause limiting defendants’ liability for negligence is unenforceable.

*4 Agreements to limit the extent of a party’s liability for tortious conduct are described as not favored by the courts, but neither are they automatically void. K-Lines v. Roberts Motor Co., 273 Or 242, 248, 541 P2d 1378 (1975). We have said that

“[a]n agreement limiting liability is governed by principles of contract law and will be enforced in the absence of some consideration of public policy derived from the nature of the subject of the agreement or a determination that the contract was adhesionary.”

Mann v. Wetter, 100 Or App 184, 187, 785 P2d 1064, rev den 309 Or 645 (1990). Plaintiff makes a number of arguments in support of his assertion that the clause is unenforceable. First, he argues that the clause was not negotiated by the parties nor brought to his attention. 1 Defendants argue that even if the clause was not negotiated or discussed by the parties, it was conspicuous.

In K-Lines, the Supreme Court said that limitation clauses are enforceable, even in the absence of explicit evidence of “haggling” or negotiation, provided that the limitation is part of the parties’ bargain in fact. 273 Or at 253. In Anderson v. Ashland Rental, Inc., 122 Or App 508, 510, 858 P2d 470 (1993), we held that a clause in a contract can limit tort liability if it was either “bargained for, brought to a party’s attention or conspicuous.” See also Atlas Mutual Ins. v. Moore Dry Kiln, 38 Or App 111, 114, 589 P2d 1134 (1979). In this case, both parties agree that they never specifically bargained for or discussed the clause. Consequently, whether it was part of the parties’ bargain in fact depends on whether it is conspicuous. In determining whether a clause is conspicuous, we have turned to the Uniform Commercial Code (UCC) for guidance, even in cases not governed by the UCC. Anderson, 122 Or App at 510, 513. The UCC states:

‘ ‘A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it.” ORS 71.2010(10).

*5 Whether a clause is conspicuous is a question of law for the court. ORS 71.2010(10); Anderson, 122 Or App at 510.

In this case the contract consists of four paragraphs, six sentences, that covers only three-quarters of an 8-1/2 by 11-inch page. The limitation of liability clause is the third paragraph and consists of one sentence. All of the type in the contract is the same, and each paragraph is separated by a blank line. Although the limitation of liability clause is not in bold type or capitalized, it is not hidden in the middle of a lengthy written agreement, nor is the print difficult to read or understand. See, e.g., Anderson, 122 Or App at 510-11 (contract was “typographical nightmare,” which used a “hodgepodge of print sizes,” bolding, colors and capitalization); Seibel v. Layne & Bowler, Inc., 56 Or App 387, 641 P2d 668, rev den 293 Or 190 (1982) (print used in contract generally difficult to read, used type smaller and more closely spaced than that used for footnotes in court’s permanent reports). The clause is located squarely in the middle of a one-page contract. As the trial court stated:

“The contract is extremely simple containing four short paragraphs. A reader would have to make a real effort for the limited liability clause to escape his or her attention.”

We conclude that a reasonable person would have noticed the limitation clause. The provision is conspicuous and a part of the parties’ agreement.

We turn next to plaintiff’s argument that limitation of liability clauses are strictly construed and do not operate to limit liability for negligence unless they include an express provision to that effect. He relies on Transamerica Ins. Co. v. U.S. Nat’l Bank, 276 Or 945, 951, 558 P2d 328 (1976), in which the Supreme Court said that “a contract will not be construed to provide immunity from the consequences of a party’s own negligence unless that intention is clearly and unequivocally expressed.” However, a provision need not specifically discuss negligence to limit liability for negligence. In Atlas Mutual Ins., we interpreted the language “nor will we be liable for * * * damages of any kind sustained by you from any cause” to manifest the intent that defendant be free from liability for negligence. 38 Or App at 115 (emphasis supplied). In this case, defendants used the language “[t]he liability of MEI and the liability of its employees are limited to *6 the Contract Sum.” It is clear that defendants’ intent was to limit the extent of their liability to the contract amount.

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902 P.2d 1220, 137 Or. App. 1, 27 U.C.C. Rep. Serv. 2d (West) 1281, 1995 Ore. App. LEXIS 1375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estey-v-mackenzie-engineering-inc-orctapp-1995.