Wade Clark Mulcahy LLP

In Granite State Ins. Co. v. Primary Arms LLC, insurance company plaintiffs Granite State Insurance Company ("GSIC") and National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union") sought a declaratory judgment that they did not owe a duty to defend or indemnify their insured, Texas-based firearms dealer Primary Arms LLC ("Primary"), in three underlying lawsuits filed in New York. These lawsuits were brought against Primary under the insuring agreements in their commercial general liability policies. Granite State Ins. Co. v. Primary Arms LLC, No. 23 CIV. 7651 (LGS), 2024 WL 4008167, at *1 (S.D.N.Y. Aug. 30, 2024).

In the underlying lawsuits, plaintiffs allege that Primary sold and shipped unfinished firearm parts that evaded gun control laws and regulations, and that its sales contributed to an increase in gun violence. The untraceable firearms made from these parts are referred to as “ghost guns.”

Applying Texas law, the court found that the underlying lawsuits contained allegations that Primary “took deliberate action to enable the anonymous acquisition of uncontrolled firearms with the predictable outcome of increasing gun violence.” Therefore, Primary’s actions did not constitute an “accident” or “occurrence” triggering coverage under the GSIC and National Union policies. The court noted, “The claim is not that [Primary] forgot to run a background check on certain customers or misplaced its paperwork; rather, the allegations are that [Primary] made a deliberate choice not to implement internal controls.”

Accordingly, the court granted the insurance companies' motions for summary judgment, finding that neither owed a duty to defend Primary in the lawsuits involving injuries due to Primary’s allegedly intentional conduct.