MANHATTAN (CN) - The Second Circuit on Wednesday ruled that a pair of insurance companies are not obligated to defend a Texas ghost gun dealer who has been sued separately by New York state and the cities of Buffalo and Rochester over increased public safety costs from gun violence via the untraceable firearms.
The appeals panel explained that because the underlying suits over the intentional marketing of gun components do not involve an "accident," as required to trigger coverage under the policies, the insurers have no duty to defend or indemnify Houston-based gun seller Primary Arms in those cases.
"Because Primary Arms 'committed ... intentional acts that resulted in injuries that ordinarily follow from or could be reasonably anticipated from the intentional acts,' the asserted injuries do not arise from an 'accident,'" U.S. Circuit Judge Denny Chin wrote in the panel's opinion. "Accordingly, we hold that the underlying suits do not allege an occurrence as defined by the policies."
Chin, a Barack Obama appointee, previously signaled at oral arguments that the appeals court was unlikely to overturn a lower court's judgment in favor of the gun seller's insurers.
"The products are intentionally shipped into New York. They're intentionally designed, so they do not fit the definition of a firearm. The intent is to avoid the gun requirements, background check, serialization," he commented during oral arguments in September. "How is that accidental conduct?"
The insurers, Granite State Insurance Company and National Union Fire Insurance Company of Pittsburgh - two subsidiaries of the American International Group global insurance corporation - sued Primary Arms in Manhattan federal court in August 2023, seeking a declaration that the insurers are not obligated under respective policies to defend or indemnify Primary Arms against public nuisance lawsuits that directly linked ghost gun parts sold online to a surge of gun violence in New York.
The Second Circuit panel concluded the lower court properly determined the insurers' duty to defend.
"The district court concluded that the underlying suits indeed alleged that Primary Arms engaged in deliberate actions to 'flout gun control laws and regulations that have been repeatedly demonstrated to lower gun violence,' and to 'enable the anonymous acquisition of uncontrolled firearms with the predictable outcome of increasing gun violence,'" Chin wrote.
Chin was joined on the panel by U.S. Circuit Judge Maria Arajo Kahn, a Joe Biden appointee, and U.S. Circuit Judge William Nardini, a Donald Trump appointee.
Primary Arms argued it paid high premiums to the insurers for "products-completed operations coverage" for the exact purpose of protecting itself from lawsuits claiming that these firearm products caused bodily injury or property damage.
U.S. District Judge Lorna Schofield had granted summary judgment to the insurers in 2024, concluding that Primary Arms "took deliberate action to enable the anonymous acquisition of uncontrolled firearms with the predictable outcome of increasing gun violence."
"The allegations in the underlying suits ... make clear that the failure to perform any checks regarding defendant's customers was not a mistake, but rather a deliberate part of defendant's business and marketing model in order to maximize sales," Schofield, a Barack Obama appointee wrote in her 2024 opinion.
Source: Courthouse News Service
