Date: 03-08-2017

Case Style: Neal Kaste v. Land O'Lakes Purina Feed, LLC

Case Number: A156764

Judge: Lagesen

Court: Oregon Court of Appeals on appeal from the Circuit Court, Tallamook County

Plaintiff's Attorney: Brian R. Talcott

Defendant's Attorney: Brad S. Daniels

Description: Plaintiffs Neal and Nancy Kaste operate a dairy
farm in Tillamook County, and contracted with defendant,
Land O’Lakes Purina Feed LLC, to provide them with feed
for their dairy cows. That feed sickened a number of plaintiffs’
cows and killed others, causing plaintiffs to incur veterinary
expenses to care for the cows as well as other losses.
Plaintiffs sued defendant, alleging two contract claims and
two tort claims: breach of contract; breach of warranty; negligence;
and strict products liability. A jury found for plaintiffs
on all claims, awarding them $89,197.73 on the contract
and warranty claims, and $750,000 on the tort claims.
Because the complaint alleged total damages in the amount
of $750,000, the trial court entered a general judgment for a
total of $750,000, allocating $89,197.73 to the contract and
warranty claims, and $660,802.27 to the tort claims.1 The
court subsequently entered a supplemental judgment awarding
plaintiffs their attorney fees. On appeal from those judgments,
defendant contends that the trial court erred in four
respects: (1) by permitting plaintiffs’ contract and warranty
claims to go to the jury because, in defendant’s view, plaintiffs
did not adequately plead or prove recoverable contract
damages; (2) by concluding that the parties’ contract did
not, as a matter of law, bar plaintiffs from recovering damages
on their tort claims or limit the amount that they could
recover on those claims; (3) by not requiring plaintiffs to
elect between recovering on their tort claims or their contract
claims; and (4) by granting plaintiffs leave to amend
their complaint to assert entitlement to attorney fees. For
the reasons that follow, we conclude that the trial court did
not err in the manners claimed and, accordingly, affirm the
judgments of the trial court.
I. FACTUAL AND PROCEDURAL
BACKGROUND
Plaintiffs are dairy farmers in Tillamook County.
They entered into a one-year sales contract with defendant
1 ORCP 67 C provides, in relevant part: “A judgment for relief * * * exceeding
the amount prayed for in the pleadings may not be rendered unless reasonable
notice and opportunity to be heard are given to any party against whom judgment
is to be entered.”
236 Kaste v. Land O’Lakes Purina Feed, LLC
for the purchase of feed for their dairy cows. Defendant prepared
the written contract and Neal Kaste signed it. Under
the terms of the agreement, defendant agreed to deliver
monthly shipments of feed meeting certain specifications.
Pertinent to the central issues on appeal, the contract also
discussed warranties and limitations on defendant’s liability,
providing:
“EXCLUSIONS OF WARRANTIES: LAND O’LAKES
WARRANTS THAT THE PRODUCTS SOLD HEREUNDER
MEET THE DESCRIPTION AS SET FORTH
ON THE FRONT OF THIS CONTRACT. THERE ARE
NO OTHER WARRANTIES, EXPRESS, IMPLIES [sic],
STATUTORY, OR ARISING FROM COURSE OF DEALING
OR USAGE OF THE TRADE, OF QUALITY, FITNESS
FOR PURPOSE, CAPACITY, DESCRIPTION OR
OTHERWISE OF THE PRODUCTS SOLD HEEUNDER
[sic]. SELLER [sic] WAIVES ALL CLAIMS FOR BREACH
OF WARRANTY OR FOR FAILURE OF THE PRODUCTS
SOLD HEREUNDER UNLESS MADE IN WRITING
AND DELIVERED TO LAND O’LAKES WITHIN
10 DAYS AFTER RECEIPT OF THE PRODUCT. LAND
O’LAKES SHALL IN NO EVENT BE LIABLE TO
BUYER FOR CONSEQUENTIAL DAMAGES; AND
LAND O’LAKES LIABILITY FOR DAMAGES SHALL
IN NO EVENT EXCEED THE PURCHASE PRICE OF
THE PARTICULAR SHIPMENT WITH RESPECT TO
WHICH A CLAIM IS MADE.”
(Underscoring and capitalization in original.)
At some point after beginning the dairy cows on
defendant’s feed, plaintiffs noticed problems within their
herd. Some cows died, and many other cows suffered from a
variety of health problems that interfered with their ability
to produce milk. As a result, plaintiffs incurred expenses
to care for their ailing cows, as well as losses to their business.
Plaintiffs determined that defendant’s feed was causing
their cows’ health problems and filed this civil action
seeking $750,000 in damages against defendant, alleging
claims for breach of contract, breach of express and implied
warranties, negligence, and strict products liability.
At trial, plaintiffs’ theory was that harmful levels of
proteins, phosphorous, and copper in the delivered feed had
Cite as 284 Or App 233 (2017) 237
caused harm to their herd. They sought to recover a range of
damages incurred as a result of the harm to their herd. They
also sought to recover the difference in value between the
feed that defendant had provided them and feed that would
have complied with the parties’ contractual standards.
At the close of plaintiffs’ case, defendant moved for a
directed verdict. Defendant’s primary argument in support
of that motion was that the contractual provision regarding
warranties and damages limitations precluded plaintiffs
from recovering any damages resulting from their cows’ consumption
of the feed, regardless of whether plaintiffs sought
those damages in contract or in tort. Defendant asserted
that the limitation on recovery of consequential damages
precluded plaintiffs from obtaining any relief on their tort
claims because, in defendant’s view, all tort damages sought
by plaintiffs qualified as “consequential damages” under the
contract. As to the contract claims, defendant also argued
that plaintiffs had failed to present any evidence of damages
apart from consequential damages. Therefore, defendant
argued, it was entitled to a directed verdict on all of plaintiffs’
claims. Alternatively, defendant contended that the contractual
provision limited the total damages that plaintiffs
could recover on both the tort claims and the contract claims.
The trial court denied the motion for a directed
verdict. It concluded that the provision limiting damages
was ambiguous as to whether it applied to plaintiffs’ tort
claims and, for that reason, did not operate as a matter of
law to bar or limit plaintiffs’ recovery on those claims. The
court agreed with defendant that the contractual limitation
on damages barred plaintiffs from recovering more than
the purchase price of the feed on their contract claims. The
court also agreed that the provision barred plaintiffs from
recovering consequential damages on their contract claims,
but denied defendant’s motion for a directed verdict on the
contract claims because it determined that plaintiffs had
presented evidence that would permit a jury to find that
plaintiffs incurred damages other than consequential damages
as a result of defendant’s breach of contract.
The jury found for plaintiffs on all four claims. It
awarded them $89,197.73 for breach of contract and breach
238 Kaste v. Land O’Lakes Purina Feed, LLC
of warranty, and $750,000 for negligence and strict products
liability. The court noted that plaintiffs sought $750,000 in
the complaint and capped the total recovery at that amount.
The court then allocated that award between the two
claims, reducing the recovery under the tort theories by the
$89,197.73 awarded by the jury on the contract claims, and
entering a general judgment for $750,000. In doing so, the
court rejected defendant’s contention that plaintiffs were
required to elect between recovering on their tort claims
and recovering on the contract claims.
The court then entertained plaintiffs’ petition for
attorney fees and entered a supplemental judgment awarding
plaintiffs $762,283.41 in attorney fees. Although plaintiffs
initially did not plead an entitlement to attorney fees in
the complaint, during trial the court granted plaintiffs leave
to amend the complaint to assert a right to recover attorney
fees.
Defendant appeals. As noted, defendant contends
that the trial court erred in the following four respects:
(1) by denying its motion for a directed verdict on plaintiffs’
contract and warranty claims; (2) by concluding that
the parties’ contract did not, as a matter of law, bar plaintiffs
from recovering damages on their tort claims or limit
the amount that they could recover on those claims, and in
denying defendant’s motion for a directed verdict as to the
tort claims based on that conclusion; (3) by granting plaintiffs
leave to amend their complaint to assert entitlement
to attorney fees; and (4) by not requiring plaintiffs to elect
between recovering on their tort claims or their contract
claims.
II. ANALYSIS
A. Directed Verdict Issues
We start with defendant’s contentions that it was
entitled to directed verdicts on all of plaintiffs’ claims. We
review a trial court’s denial of a directed verdict motion by
viewing the evidence in the light most favorable to the nonmoving
party and determining whether the moving party
was entitled to judgment as a matter of law. Mauri v. Smith,
324 Or 476, 479, 929 P2d 307, cert den, 519 US 813 (1996);
Cite as 284 Or App 233 (2017) 239
Najjar v. Safeway, Inc., 203 Or App 486, 489-90, 125 P3d
807 (2005).
1. Directed verdict on contract claims
Defendant’s contention that it was entitled to a
directed verdict on plaintiffs’ contract claims—that is, the
breach of contract claim and the breach of warranty claim—
is predicated on the provision in the parties’ contract stating
that “LAND O’LAKES SHALL IN NO EVENT BE
LIABLE TO BUYER FOR CONSEQUENTIAL DAMAGES.”
(Capitalization in original.) Defendant argues that the only
damages alleged in the complaint were consequential damages
and that, at trial, plaintiffs put on evidence only of consequential
damages and not of direct damages. Defendant
further argues that, for either or both of these reasons, the
trial court should have directed a verdict in its favor on
plaintiffs’ contract claims.
Both arguments fail. Defendant’s arguments about
the sufficiency of the pleadings did not provide grounds for
entry of a directed verdict. As plaintiffs point out,
“[t]he rule in Oregon is that when objection to the legal
sufficiency of a pleading is first made at trial, where the
defect in the pleading, even though material, consists of
an omission to state a necessary fact and it appears that
the necessary fact could have been added by amendment,
the entire record will be examined. The determination of
the sufficiency of the pleading is then made by looking at
the sufficiency of the evidence to establish the claim rather
than the sufficiency of the pleading.”
Davis v. Tyee Industries, Inc., 295 Or 467, 483, 668 P2d 1186
(1983). Here, even if we assume without deciding that plaintiffs
insufficiently alleged that they had suffered damages
from defendant’s breach of contract apart from consequential
damages, that is a defect that they could have cured
by amendment. See ORCP 23 B (allowing parties to amend
pleadings to conform to the evidence introduced at trial
when amendment is not prejudicial to the objecting party).
Accordingly, we examine the entire record to determine
whether the evidence plaintiffs presented was sufficient to
establish those damages.
240 Kaste v. Land O’Lakes Purina Feed, LLC
That leads us to defendant’s argument that the evidence
was not sufficient to permit the jury to find that plaintiffs
had suffered any damages from defendant’s breach
apart from consequential damages. Our review of the record
persuades us otherwise. Plaintiffs presented evidence that
they paid the bills for the feed that they were promised, but
received inferior feed that was toxic to their cows. From that
evidence, the jury permissibly could find that plaintiffs had
been damaged in an amount equal to the purchase price of
the feed: Plaintiffs paid for feed with a value of the contract
price, but received feed with no value, given its toxicity. As
a result, the trial court did not err by denying defendant’s
motion for a directed verdict on the contract claims.2
2. Directed verdict on tort claims
Defendant also contends that it was entitled to
a directed verdict on its tort claims. As with the contract
claims, defendant’s argument hinges on the provision in the
parties’ contract discussing warranties and limitations on
damages. In particular, defendant’s argument turns primarily
on the last sentence of that provision:
“LAND O’LAKES SHALL IN NO EVENT BE LIABLE
TO BUYER FOR CONSEQUENTIAL DAMAGES; AND
LAND O’LAKES LIABILITY FOR DAMAGES SHALL IN
NO EVENT EXCEED THE PURCHASE PRICE OF THE
PARTICULAR SHIPMENT WITH RESPECT TO WHICH
A CLAIM IS MADE.”
(Capitalization in original.)
2 Defendant also argues that the trial court erred by denying its motion for
a directed verdict because it is legal error for a court to enter a judgment awarding
damages that were not pleaded. In so arguing, defendant relies on Rieman
v. Swope, 190 Or App 516, 79 P3d 399 (2003), and Northwest Marketing Corp. v.
Fore-Ward Investments, 173 Or App 508, 22 P3d 1230 (2001). Those cases, however,
address the question of when it is erroneous for a trial court to enter judgment
on an award of damages for an unpleaded theory, and do not suggest that a
pleading deficiency supplies a basis for a directed verdict. In any event, the rule
discussed in those cases does not necessarily apply where the opposing party is
not surprised or prejudiced by the pleading deficiency. Schroeder v. Schaefer, 258
Or 444, 464, 483 P2d 818 (1971). Here, defendant does not contend that it was
surprised by the fact that plaintiffs sought contract damages other than consequential
damages, and the record reflects that defendant was able to respond
directly to plaintiffs’ claim for such damages, addressing it in closing argument.
As a result, the cases that defendant cites do not suggest that the trial court
erred by denying defendant’s motion for a directed verdict on the contract claims.
Cite as 284 Or App 233 (2017) 241
Defendant contends that that provision unambiguously
bars plaintiffs’ recovery on their tort claims because
plaintiffs’ tort damages constitute “consequential damages”
under the contract. Alternatively, defendant contends that
even if the limitation on consequential damages does not
apply to plaintiffs’ tort claims, the latter part of the sentence
unambiguously limits plaintiffs’ total recovery on all claims
to the purchase price of the feed.
The problem for defendant, as the trial court recognized,
is that when that sentence is viewed in the context of
the contractual provision in which it is located, it is ambiguous
as to whether it applies to the parties’ tort claims.
Because the provision is ambiguous as to whether it applies
to plaintiffs’ tort claims, the trial court properly concluded
that the provision did not bar or limit plaintiffs’ recovery on
their tort claims and correctly denied defendant’s motion for
a directed verdict.3
The provision at issue, as a whole, states:
“EXCLUSIONS OF WARRANTIES: LAND O’LAKES
WARRANTS THAT THE PRODUCTS SOLD HEREUNDER
MEET THE DESCRIPTION AS SET FORTH
ON THE FRONT OF THIS CONTRACT. THERE ARE
NO OTHER WARRANTIES, EXPRESS, IMPLIES [sic],
STATUTORY, OR ARISING FROM COURSE OF
3 The parties appear to dispute whether the ambiguity renders the provision
unenforceable as a matter of law. Pointing to Estey v. MacKenzie Engineering
Inc., 324 Or 372, 927 P2d 86 (1996), plaintiffs argue that, to apply to their tort
claims, any limitation on liability must be clear and unequivocal and, absent
the requisite clarity, cannot apply to their claims at all. Defendants argue that
Estey’s rule requiring a limitation of tort liability to be clear and unequivocal
does not apply to commercial contracts. We need not resolve the issue. Even if the
rule in Estey does not apply, the parties’ contract is ambiguous, and that ambiguity
would preclude defendant from obtaining a directed verdict. The best case
scenario for defendant would be that the question about the provision’s meaning
would go to the jury if Estey’s rule does not apply. Yogman v. Parrott, 325 Or 358,
363-64, 937 P2d 1019 (1997). Alternatively, in the absence of extrinsic evidence
addressing the parties’ intentions—and the record suggests that this may be a
case in which no such evidence exists—we would construe the provision against
defendant, the drafter of the contract. Berry v. Lucas, 210 Or App 334, 339, 150
P3d 424 (2006) (“[I]t is a basic tenet of contract law that ambiguous language in
a contract is construed against the drafter of the contract.”); see also Estey, 324
Or at 376 (construing ambiguous contract clause purporting to limit negligence
liability against drafter). One way or another, the ambiguity as to whether the
contract provision applies to plaintiffs’ tort claims means that defendant was not
entitled to the directed verdict that it sought.
242 Kaste v. Land O’Lakes Purina Feed, LLC
DEALING OR USAGE OF THE TRADE, OF QUALITY,
FITNESS FOR PURPOSE, CAPACITY, DESCRIPTION
OR OTHERWISE OF THE PRODUCTS SOLD
HEEUNDER [sic]. SELLER [sic] WAIVES ALL CLAIMS
FOR BREACH OF WARRANTY OR FOR FAILURE OF
THE PRODUCTS SOLD HEREUNDER UNLESS MADE
IN WRITING AND DELIVERED TO LAND O’LAKES
WITHIN 10 DAYS AFTER RECEIPT OF THE PRODUCT.
LAND O’LAKES SHALL IN NO EVENT BE LIABLE
TO BUYER FOR CONSEQUENTIAL DAMAGES; AND
LAND O’LAKES LIABILITY FOR DAMAGES SHALL IN
NO EVENT EXCEED THE PURCHASE PRICE OF THE
PARTICULAR SHIPMENT WITH RESPECT TO WHICH
A CLAIM IS MADE.”
(Underscoring and capitalization in original.)
The first indication that the paragraph might apply
to contract claims, and might not apply to tort claims, comes
in its heading and first two sentences. Those provisions focus
on warranties—a contract concept—and emphasize that
defendant’s sole warranty regarding the feed is that it will
meet the standards described on the front of the contract.
That suggests that the provision as a whole was intended to
address warranties and contractual standards, along with
the remedies for breaches of those standards.
The second indication comes in the third sentence of
the paragraph:
“SELLER [sic] WAIVES ALL CLAIMS FOR BREACH
OF WARRANTY OR FOR FAILURE OF THE PRODUCTS
SOLD HEREUNDER UNLESS MADE IN WRITING
AND DELIVERED TO LAND O’LAKES WITHIN 10
DAYS AFTER RECEIPT OF THE PRODUCT.”
(Capitalization in orginal.) Although the nonsensical reference
to “seller” waiving claims for breach of warranty or failure
of products muddies the waters as to how probative the
sentence is regarding the parties’ intentions, the reference
to a claim for “breach of warranty” plainly refers to contract
claims, suggesting again that the focus of the provision is
on contract claims. The reference to claims “for failure of
products sold hereunder” is ambiguous. It could be read to
refer to claims asserting that the product sold under the
contract failed to meet contractual standards, or could be
Cite as 284 Or App 233 (2017) 243
read more broadly to refer to claims based on any type of
defect in the product, including tort claims. Regardless, the
sentence plausibly can be read to refer to contract claims
only, undercutting defendant’s argument that the provision
unambiguously encompasses tort claims.
Next, the final sentence of the provision is itself
ambiguous as to whether it applies to tort claims in addition
to contract claims:
“LAND O’LAKES SHALL IN NO EVENT BE LIABLE
TO BUYER FOR CONSEQUENTIAL DAMAGES; AND
LAND O’LAKES LIABILITY FOR DAMAGES SHALL IN
NO EVENT EXCEED THE PURCHASE PRICE OF THE
PARTICULAR SHIPMENT WITH RESPECT TO WHICH
A CLAIM IS MADE.”
(Capitalization in original.) The reference to consequential
damages in the first part of the sentence is itself an indication
that the provision applies only to contract claims. As
other courts have recognized, the phrase “consequential
damages” ordinarily refers to contract damages, not tort
damages. Berwind Corp. v. Litton Industries, Inc., 532 F2d
1, 7 (7th Cir 1976) (“[T]he use of the words ‘consequential
damages’ refers to contract rather than tort damages.”);
Starr v. Dow Agrosciences LLC, 339 F Supp 2d 1097, 1101
(D Or 2004) (concluding that contractual limitations on
recovery of consequential damages did not bar recovery
on negligence claims). In fact, Oregon’s enactment of the
Uniform Commercial Code defines “consequential damages”
in terms of damages “resulting from the seller’s breach.”
ORS 72.7150(2) (emphasis added).4 And although the final
part of the sentence refers generally to “damages,” not just
to “consequential damages,” in view of the preceding indications
that the provision was intended to address contract
claims rather than tort claims, we are unable to conclude
that the provision unambiguously applies to tort claims as
well as contract claims. Simply put, the provision reasonably
can be read to apply solely to contract claims and, as a
4 The parties’ contract calls for application of Washington law, but the parties
have litigated this case under Oregon law. For that reason, we too rely on
Oregon law. In any event, the parties have not pointed to any Washington law
that would suggest a different result.
244 Kaste v. Land O’Lakes Purina Feed, LLC
result, is ambiguous as to whether the parties intended for
tort claims to fall within its scope.
In arguing for a different result, defendant relies
heavily on the Supreme Court’s decision in K-Lines v.
Roberts Motor Co., 273 Or 242, 541 P2d 1378 (1975), and
our decisions in Atlas Mutual Ins. v. Moore Dry Kiln, 38 Or
App 111, 589 P2d 1134 (1979) and Northwest Pine Products
v. Cummins Northwest, Inc., 126 Or App 219, 868 P2d 21
(1994). In each of those cases, the court concluded that the
contractual provisions unambiguously limited damages that
were recoverable on tort claims. However, the provisions at
issue in those cases were written differently from the one
at issue in this case, in ways that more clearly signaled the
parties’ intentions to restrict tort recovery.
Starting with K-Lines: The provision at issue there
provides a model for parties seeking to limit tort remedies.
It specified a contractual remedy and then stated “the foregoing
shall be Buyer’s sole and exclusive remedy whether in
contract, tort or otherwise.” K-Lines, 273 Or at 245-48. By
specifically referring to tort remedies, the provision unambiguously
indicated that the contractual limitations on remedy
applied regardless of what type of claim a buyer might
have.
Turning to Atlas Mutual Ins.: As defendant points
out, in that case we concluded that a provision that did not
refer explicitly to tort remedies nevertheless unambiguously
limited them. But the provision at issue contained a broad
disclaimer of liability for “any loss, injury or damages to person
or property” occasioned by the product sold under the
pertinent contract. It read as follows:
“THERE ARE NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY,
EXCEPT AS SPECIFICALLY SET
FORTH HEREIN. All new material furnished hereunder
is warranted against any defect in materials or workmanship,
providing claim therefor is made in writing within 1
year after installation of such equipment. Our obligation on
any claims is limited to replacement or repair of the defective
part or material, f. o. b. North Portland, Oregon. Except
as above stated, we will not be liable for any loss, injury or
Cite as 284 Or App 233 (2017) 245
damages to persons or property resulting from failure or
defective operation of any material or equipment furnished
hereunder or delay in performance of this agreement, nor
will we be liable for direct, indirect, special or consequential
damages of any kind sustained by you from any cause.
This writing expresses the entire agreement between us
and no other agreement, statement or representation shall
be binding unless reduced to writing, signed by an officer
of this Company and attached hereto.”
Atlas Mutual Ins., 38 Or App at 113 (capitalization in original;
emphasis added). We concluded that the emphasized
wording “unambiguously manifest[ed] defendant’s intent
to be free from all liability arising ‘from any cause.’ ” Id. at
115. Here, however, the provision nowhere states that defendant
is disclaiming liability for “any loss” resulting from the
feed regardless of cause. The provision that we are addressing
in this case lacks the clarity of the broad Atlas Mutual
Ins. provision. As a result, Atlas Mutual Ins. does not assist
defendant.
Finally, Northwest Pine Products: This case presents
the closest call because the contractual provision at
issue in it bears the strongest resemblance to the one at
issue in this case. There, the plaintiff sued for lost profits
incurred when a compressor installed by the defendant in
the plaintiff’s wood chipper exploded. 126 Or App at 221.
Although our opinion does not mention the fact, the plaintiff
asserted both contract and tort claims. We concluded
that the limitation-of-liability provision unambiguously precluded
the plaintiff from recovering lost profits on all claims.
Id. at 223. The provision stated, in relevant part:
“LIMITATIONS OF LIABILITY
“* * * * *
“ANY LIABILITY OF CUMMINS ARISING OUT OF ANY
MATERIAL OR SERVICES PROVIDED HEREUNDER
SHALL NOT EXCEED THE COST OF CORRECTING
OR REPLACING SUCH DEFECTIVE MATERIALS OR
SERVICES IN ACCORDANCE WITH THE AFOREMENTIONED
WARRANTIES. IN NO EVENT SHALL
CUMMINS BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT
246 Kaste v. Land O’Lakes Purina Feed, LLC
LIMITATION, TOWING OR OTHER TRANSPORTATION
CHARGES, LOSS OF REVENUE, OR LOSS OF USE.”
Id. at 221 (capitalization in orginal). We held that the specification
that the defendant would not be liable for “consequential
damages, including” damages for “loss of revenue,”
unambiguously precluded the plaintiff from recovering lost
profits. Defendant contends that, because Northwest Pine
Products involved both tort and contract claims, it supports—
if not compels—the conclusion that the parties’ reference to
consequential damages in this case unambiguously limits
plaintiffs’ recovery on both contract and tort claims.
Defendant’s argument has some force, given the
similarity between the provision at issue in Northwest Pine
Products and the one at issue here. However, the provisions
are not identical and the differences between them convince
us that our decision in Northwest Pine Products does not dictate
the conclusion that the provision at issue in this case
unambiguously applies to limit recovery on plaintiffs’ tort
claims.
First, the provision at issue in Northwest Pine
Products was not included in a provision focused on contract
warranties but, instead, was located in a separate section
labeled “Limitations of Liability.” Id. at 221. Although parts
of that section addressed application of warranties, the contract
also had a separate section addressing warranties. Id.
The separation of the limitations-of-liability section from
the warranty section suggests that the parties intended for
the limitations to apply to claims beyond warranty claims.
Second, the first sentence of the provision at issue
in Northwest Pine Products refers to a limit on “any liability
* * * arising out of any material or services provided hereunder.”
Id. (Emphasis added; capitalization omitted.) That
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 in contract.
Third, although the reference to “consequential
damages” could have suggested that the parties intended
the limitations to apply only to contract claims, by specifically
defining “consequential damages” in the contract to
Cite as 284 Or App 233 (2017) 247
include “loss of revenue” along with other specific items,
the parties clearly indicated that damages for loss of revenue
would not be recoverable. For all of those reasons, the
Northwest Pine Products provision was unambiguous as to
its application to the plaintiff’s tort claims for lost profits.
Here, by contrast, the provision lacks similar indicia
of the parties’ intent that it would apply to tort claims.
It does not speak to “any” or “all” liability or losses, it does
not supply a specific definition of consequential damages
that suggests that the parties employed that phrase to refer
to tort damages, and it is located in the section of the contract
addressing warranties, rather than in a general section
addressing limitations on liability. Under those circumstances,
Northwest Pine Products does not persuade us that
the parties’ contract unambiguously limits plaintiffs’ ability
to recover tort damages.
In the end, we think that the provision in the parties’
contract most nearly resembles one which the Supreme
Court concluded was ambiguous in Estey v. MacKenzie
Engineering Inc., 324 Or 372, 378, 927 P2d 86 (1996). That
provision stated, “The liability of [the defendant] and the
liability of its employees are limited to the Contract Sum.”
Id. at 374. The court reasoned that the provision was susceptible
to multiple reasonable interpretations, including
the interpretation that the provision applied only to liability
arising from a breach-of-contract claim. Id. at 378-79. As a
result, the court was unable to conclude that the provision
applied unambiguously to the plaintiff’s tort claims.
The same is true here. As explained, the provision
in the parties’ contract reasonably can be interpreted
to apply only to plaintiffs’ contract claims. It therefore is
ambiguous as to whether it applies to plaintiffs’ tort claims.
For that reason, defendant was not entitled to a directed
verdict on the ground that the provision precluded plaintiffs
from recovering on their tort claims or limited their recovery
on those claims.
B. Election of Remedies
The next question is whether, under the doctrine of
election of remedies, plaintiffs were required to elect between
248 Kaste v. Land O’Lakes Purina Feed, LLC
recovering on their contract claims or recovering on their
tort claims. Specifically, defendant contends that plaintiffs
were required to elect between recovering on their contract
claims (which would afford them a lower amount of damages
but allow them to recover attorney fees), or recovering on
their tort claims (which would allow them to recover a larger
amount of damages but no attorney fees). The trial court
concluded that plaintiffs were not required to elect between
contract and tort remedies. On review for legal error, we
agree with that conclusion. See, e.g., Godat v. Waldrop, 78
Or App 374, 379-80, 717 P2d 180, rev den, 302 Or 86 (1986)
(reviewing trial court’s application of election-of-remedies
doctrine for legal error).
That doctrine of election of remedies requires a
plaintiff to elect between two remedies where they either are
inconsistent with each other, contradictory, or would result
in double recovery. McAllister v. Charter First Mortgage,
Inc., 279 Or 279, 286-87, 567 P2d 539 (1977) (explaining that
election is required when remedies sought are inconsistent);
Colonial Leasing Co. v. Tracy, 276 Or 1193, 1196-97, 557 P2d
639 (1976) (“The doctrine of election of remedies is designed
to prevent double recovery for a single wrong.”); State ex rel
Washington Co. v. Betschart, 72 Or App 692, 700-01, 697 P2d
206 (1985) (same). Ordinarily, an election, if required, need
not be made “until a judicial proceeding has gone to judgment
on the merits.” Colonial Leasing Co., 276 Or at 1197.
As tried and submitted to the jury, plaintiffs’ contract
remedies were not inconsistent with plaintiffs’ tort
remedies. The gravamen of plaintiffs’ contract claims was
that the feed provided by defendant did not meet with contractual
standards; the gravamen of plaintiffs’ tort claims
was that defendant breached applicable standards of care in
producing that feed, and that the feed produced was defective
and unreasonably dangerous for its intended purpose.
In other words, plaintiffs’ theory was that defendant sold
them feed that did not comply with the parties’ contract,
causing plaintiffs contract damages, and that that feed then
damaged plaintiffs’ herd of dairy cows, causing plaintiffs
to suffer a range of reasonably foreseeable economic losses.
Those theories are neither inconsistent nor contradictory.
Cite as 284 Or App 233 (2017) 249
Moreover, there is no likelihood that the jury’s
award of damages on the contract claims duplicated its
award of damages on the tort claims. The jury instructions
on contract damages told the jury that it could “award
money damages for the difference in value between the cow
feed as provided by Land O’Lakes and the value the cow
feed would have had” if it had met contractual standards.
The jury instructions on tort damages told the jury that a
different measure of damages—one that did not take into
account the value of the feed—applied to the negligence and
strict liability claims:
“With respect to [plaintiffs’] negligence and products
liability claims, economic damages are the objectively verifiable
monetary losses that a party has incurred or will
probably incur. In determining the amount of economic
damages, if any, consider:
“(1) Lost profits since the date of injury/damage;
“(2) Decreased value of affected cows;
“(3) Milk production lost since the date of injury/
damage;
“(4) The value of any cows lost, including the mature
cows, calves, and those cows that would have been born to
cows lost;
“(5) Veterinary expenses;
“(6) Testing and inspection expenses;
“(7) Future similar losses.”
Thus, the jury was instructed that nonoverlapping measures
of damages applied with respect to the contract claims and
the tort claims, and the jury is presumed to have followed
those instructions. Rowlett v. Fagan, 358 Or 639, 669-70,
369 P3d 1132 (2016). Under those circumstances, the trial
court did not err when it did not require plaintiffs to make
an election of remedies.
C. Attorney Fees
Defendant’s remaining argument is that the trial
court erred when it permitted plaintiffs to amend their complaint
during trial to assert an entitlement to attorney fees
250 Kaste v. Land O’Lakes Purina Feed, LLC
under the parties’ contract. We review the trial court’s decision
to grant leave to amend for abuse of discretion. Benj.
Franklin Fed. Savings and Loan v. Phillips, 88 Or App 354,
355, 745 P2d 437 (1987).
Here, we are persuaded that the trial court did
not abuse its discretion. The complaint alleged contractual
claims from the onset of the litigation. Defendant itself
drafted the contract that gave rise to plaintiffs’ claimed
entitlement to fees on the contract claims and, for that reason,
could not have been unfairly surprised by the fact that
plaintiffs ultimately invoked that provision in connection
with their contract claims. See Hall v. Fox, 106 Or App 377,
380, 808 P2d 99 (1991) (noting that the defendant was aware
of the contractual fee provision in concluding that the defendant
was not prejudiced by late amendment to complaint to
assert entitlement to fees); see also Htaike v. Sein, 269 Or
App 284, 298-301, 344 P3d 527, rev den, 357 Or 595 (2015).
Beyond that, on this record, defendant’s arguments that
plaintiffs’ delay in asserting their fee entitlement interfered
with its ability to resolve fee issues before trial by settlement
or otherwise do not persuade us that it was an abuse of discretion
for the trial court to allow leave to amend. Htaike,
269 Or App at 299-301 (rejecting argument that allowing
post-trial amendment of pleading to assert claim for attorney
fees represented an abuse of discretion where opposing
party might have pursued settlement if amendment had
been made earlier); Hall, 106 Or App at 379-80 (rejecting
similar argument). We therefore reject defendant’s claim
that the trial court erred by allowing leave to amend.

Outcome: Affirmed.

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