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
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 &
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
API'scounsel 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.
SeeSt. Paul Fire and Marine Ins. Co. v. A.P.I.
Inc., 738 N.W.2d 401 (Minn. Court of Appeals 2007).
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