In Terfehr v. Buffalo-Red River Watershed District, the Minnesota Court of Appeals continues to narrowly tailor official discretionary immunity and refuses to expand this exception for regular contractors working with public entities.

Public entities are entitled to immunity through either statutory immunity or common law immunity. For statutory immunity, the challenged act must be discretionary in nature. Minn. Stat. § 466.03, subd. 6 provides that municipalities shall be immune from liability for "[a]ny claim based upon the performance or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused." Unlike operational-level activities (those performed in the ordinary day-to-day operation of government), planning decisions "involve questions of public policy and are protected as discretionary decisions," as the Minnesota Supreme Court explained in Steinke v. City of Andover. Public policy considerations include "social, political, or economic considerations," but do not include "merely professional or scientific judgment." In Fisher v County of Rock, that connection existed because the decision not to install guardrails reflected both engineering considerations and a county policy balancing safety and economic burdens. In Terfehr, by contrast, the public entity failed to connect the project's implementation, including the alleged tree removal, to any specific planning decision that required a balancing of policy objectives.

In Kariniemi v. City of Rockford, the Minnesota Supreme Court held that an engineering firm's close relationship with the city and the "functions it performed" for the city made the firm "operate as an extension of the city government rather than as an independent contractor," because those functions were essential to the proper functioning of the municipal government and, as such, it was entitled to common-law official immunity as if it were a public official. 

In Terfehr, however, the Minnesota Court of Appeals held that the contractor did not establish a similar "special relationship" for purposes of official immunity. The contractor built the project based on plans developed by the public entity and the engineering firm, and it played no role in planning or designing the project's specifications. It also conceded in its briefing that much of the planning had been completed before it bid on the project, reinforcing that it was implementing decisions made by others rather than exercising protected governmental discretion.

The court went on to distinguish that the contractor's conduct (the alleged tree removal) was a ministerial duty not entitled to immunity, more so resembling the demolition case of Williamson v. Cain, where the Minnesota Supreme Court held that: "Their job was simple and definite—to remove a house. While they undoubtedly had to make certain decisions in doing that job, the nature, quality, and complexity of their decision-making process does not entitle them to immunity from suit." That reasoning applied here because the contractor's work likewise consisted of executing fixed tasks predetermined by the public entity, rather than making the kind of policy-driven decisions immunity is meant to protect.