Montana Federal Court Holds Definition of 'Building' Does Not Extend to Mountain Tunnel


U.S. District Court for the District of Montana

In Mont. Rail Link, Inc. v. Travelers Indem. Co., 2011 U.S. Dist. LEXIS 12811 (D. Mont. Feb. 9, 2011), the U.S. District Court of Montana held that the plain meaning of “building” did not extend to a tunnel running through a mountain, and thus a collapsed tunnel did not constitute “physical damage to property” as that phrase was defined in a first-party property policy.

In the spring of 2009, Montana Rail Link began a project to widen the Mullan Tunnel, through which trains travel on the Northwest Pacific Railroad line as they cross the Continental Divide. In July 2009, decomposed granite collapsed a section of the tunnel and buried the track. The collapse completely closed the tunnel and blocked rail traffic for 25 days.

Montana Rail submitted a first-party property claim to its insurer, Travelers Indemnity. Travelers argued that the damage resulting from the collapse was not “physical damage to property” as defined by the policy. The policy defined “physical damage to property” as “direct and accidental loss of or damage to rolling stock and their contents, mechanical construction equipment or motive power equipment, railroad tracks, roadbeds, catenaries, signals, bridges or buildings.”

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