Between the Lines

Court Shoots Down Coverage for Public Nuisance Claims Against Ghost Gun Manufacturers

Parens patriae suits by government entities for “public harm” present a host of coverage issues under general liability insurance policies.  Who, if anyone, has suffered bodily injury or property damage?  Is anyone seeking damages because of such injury, as the policy requires?  Do they seek damages at all, where the government alleges only increased costs of providing services?  To that list one must also add whether the suit alleges an “occurrence.”  In Granite State Insurance Co. v. Rainier Arms LLC, 773 F. Supp. 3d 24 (S.D.N.Y. 2025), the court said “no.”

Granite State brought suit against gun manufacturer Rainier Arms, seeking a declaration that it had no duty to defend or indemnify Rainier Arms against suits filed by the New York attorney general, the City of Buffalo, and the City of Rochester, each generally alleging the same thing: “that the Ghost Gun Defendants, including Rainier, marketed and sold ‘unfinished’ and un-serialized frames and receivers that constitute the core part of a handgun, rifle, or shotgun, but that are missing a few drill holes and contain a small amount of extra plastic, such that they are ‘easily convertible into the finished product, a deadly weapon, sometime called a privately made firearm or a ghost gun.’”  Id. at 30.

Because these products fell outside federal gun law definitions (or so Rainier Arms claimed), they could be sold without background checks and be purchased by persons otherwise not eligible to buy a firearm legally.  As a consequence, “New York has faced a public health and safety crisis caused by gun violence and gun crime, due in significant part to the influx of untraceable ghost guns. . ..  Plaintiffs allege that the abatement of the health and safety crisis has required and will require extensive additional resources for which the Ghost Gun Defendants should be held responsible, such as costs to locate and recover unfinished frames and receivers or the ghost guns made from those products, trace un-serialized firearms used in the commission of crimes, and support communities that have been harmed by gun violence and crime.”  Id. at 31.

Applying Washington law (where Rainier Arms is located), the court held that the complaints did not allege an “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” and therefore there was no coverage.  To determine whether an “accident” occurred, “Washington courts look to whether (1) a deliberate act was performed; and, if so, (2) whether some additional unexpected, independent, and unforeseen happening occurred that produced the injury.  The term ‘accident’ is not subjective in nature; the perspective of the insured is not relevant to this inquiry.  Washington courts have routinely denied coverage for intentional acts as a matter of law, even when the harm is unintended.”  Id. at 36 (emphases in original, internal quotations omitted).

The court took little time to determine that the lawsuits allege intentional acts.  “Specifically, they allege that Rainier deliberately sold and shipped unfinished frames and receivers that were easily convertible into finished frames and receivers, marketed the products as easily convertible in order to attract customers (including customers who may not otherwise be eligible to purchase firearms through lawful channels); misled customers into believing that the unfinished frames and receivers were legal workarounds to applicable laws; and sold and shipped unfinished receivers and frames without observing applicable state and federal laws and regulations intended to protect the public health and safety, such as requiring background checks, serial numbers, and the logging of sales.”  Id. at 37.

Rainier Arms offered two rejoinders, both of which the court rejected.  First, it argued that any injuries were unintended.  The court held that this was irrelevant: “case law makes clear that the relevant inquiry as to whether an ‘accident’ occurred is whether the conduct was deliberate, not whether the injuries that resulted were intended.”  Id. at 39.  Rainier Arms’ second objection was that the complaints allege negligence and negligent entrustment, which could be proven without any evidence of intentional or deliberate conduct. The court rejected that assertion because “just because the complaints include claims of negligence or other claims that do not require a finding of ‘intent’ as an element does not mean that the complaints allege non-deliberate conduct.”  The relevant question is whether the acts alleged were intentional, not the legal labels affixed to the causes of action.  “[T]he conduct alleged under each claim of negligence specifically underlines that Rainier engaged in intentional, deliberate conduct.”  Id. at 40-41.

The court then turned to the second part of the test: whether the deliberate conduct resulted in “an additional unexpected, independent, or unforeseen happening.”  The court held that it did not.  “[N]o reasonably prudent person could find that the harms alleged were unforeseeable—certainly not to an experienced firearms retailer like Rainier—and nothing in the record suggests that any additional unexpected, independent, and unforeseen happening occurred which caused the particular harms alleged in the Ghost Gun Lawsuits. . ..  [I]t is simply not credible that—when consumers bought unfinished receivers and frames and converted them into functioning firearms (as sold and shipped by Rainier and in accordance with Rainier’s marketing), when the resulting firearms were untraceable ghost guns that did not contain serial numbers and were not logged in appropriate databases (as deliberately facilitated by Rainier), and when Rainier conducted no background checks in contravention of laws designed to mitigate risks from firearms and failed to observe other legally required gun control measures—the government would not foreseeably need to expend additional resources on mitigating the resulting harms.”  Id. at 43-45.

Thus, “the harms alleged in the Ghost Gun Lawsuits were not ‘caused by an occurrence’ within the meaning of the policies or Washington law,” and Rainier Arms was not entitled to a defense from its insurer.  Id. at 45.

Because the court resolved the case on the grounds that the complaints did not allege an “occurrence,” it did not reach Granite States’s second argument—that the complaints did not seek damages “because of” bodily injury or property damage and instead alleged only economic harm to the governmental entities.

The rule applied by the court here could have implications for other parens patriae suits, which are often based on “intentional” business practices.  Indeed, there is already coverage litigation concerning the social media addiction MDL, which raises similar issues about coverage for claims arising from intentional business conduct allegedly resulting in “foreseeable” harm.

Click the link to read the entire decision: Granite State Insurance Company v Rainier Arms LLC