Some policyholders cite the Minnesota trial court decision in St. Paul Fire and Marine vs. A.P.I. Inc. (Minn. Dist. Court, Ramsey County, No. C9-02-8084, J. Finley Order dated May 13, 2004) as rejecting the Fourth Circuit’s holding in In re Wallace & Gale Co., 385 F.3d 820 (4th Cir. 2004). The argument is incorrect for several reasons.

First, Judge Finley’s May 2004 decision in API did not even address the core holding in Wallace & Gale but rather simply ruled on the burden of proof issue, concluding that it was insurers’ burden to prove that the claims fell within the completed operations hazard. (5/13/04 API Order at 16-17.) Because the completed operations definition is part of the policy limits and not an exclusion, this conclusion is very questionable. See, e.g., Boedigheimer v. Taylor, 178 N.W.2d 610, 614 (Minn. 1970) [“the burden of proof rests upon the party claiming coverage under an insurance policy”]; Fibreboard Corp. v. Hartford, 16 Cal.App.4th 492, 503 (1993) [Products Hazard is not an exclusion but part of the coverage conditions of the policy].

Second, Judge Finley subsequently clarified his May 2004 decision in a September 2005 order denying API’s summary judgment motion which sought a ruling that all the claims fell outside the completed operations aggregate. Instead, the Court found it could not “determine that the particular claimant’s bodily injury does not come within the limiting products-completed or operations-completed hazard.” (9/26/05 API Order at 15.) In other words, Judge Finley reaffirmed his earlier burden of proof ruling. But the Court did not stop there. It also went on to discuss a series of hypotheticals, many of which are directly at odds with policyholder positions on operations coverage, including the following which is entirely consistent with the Wallace & Gale holding:

Another example would be if the claimant is a carpenter working for XYZ Corporation working alongside the employees of API who have installed the insulation as part of the operations of API. That claimant would never have participated in API’s operations and therefore may not fall under the unlimited operations clause of the policies. Here, the completed product is the insulation and the occurrence is the bodily injury. The injury was caused by the installation of the insulation in which the employee of XYZ was not a participant. (9/26/05 API Order at 15.)

API’s counsel was so unhappy with the September 2005 decision they sought reconsideration through a motion to clarify, which was denied. (See 10/12/05 API Letter Order.) In short, Judge Finley’s API ruling is not the wholesale rejection of Wallace & Gale that policyholders attempt to portray.

Finally, whatever its holding, Judge Finley’s ruling remains simply an interlocutory trial court ruling. The API case continued on, many parties settled, and when the matter finally reached the Minnesota Court of Appeals, the Wallace & Gale completed operations issue had been left behind and was never addressed by the appellate court. See St. Paul Fire and Marine Ins. Co. v. A.P.I. Inc., 738 N.W.2d 401 (Minn. Court of Appeals 2007).