On Tuesday, Judge Carter granted summary judgment to defendants Granite State Insurance Company and Berkshire Hathaway Specialty Insurance Company against plaintiff KM Tactical, LLC in an insurance coverage suit. KM Tactical had sued defendants for coverage or indemnification against government lawsuits alleging that KM Tactical marketed and sold unfinished firearm frames and receivers used to assemble untraceable “ghost guns.” In these lawsuits, the State alleged that KM Tactical failed to impose controls on these sales and promoted its products in a way designed to attract customers seeking to evade firearms laws. KM Tactical allegedly knew, intended, or was willfully blind to the likelihood that the components would be converted into functioning unserialized guns. KM Tactical’s insurers, Granite State and BHSI, denied coverage.
The Court held that the insurers had no duty to defend or indemnify KM Tactical. Under the policy, the trigger for coverage was an “occurrence,” which was defined as an “accident.” Some, but not all, intentional acts qualify as accidents. The “determinative inquiry” is whether the act resulted in damage that was “expected or foreseeable” to a reasonably prudent person. Here, the Court explained that KM Tactical’s marketing and sales caused foreseeable harm:
The intentional acts by the firearms retailers spawned an influx of ghost guns into New York … that increased the number of firearms likely to be used in the commission of a crime, (ii) diminished or unwound the effect of on-point legal protections, including those relating to intimate partner violence, (iii) increased the number of murders and suicides, and (iv) created a new primary and secondary market for illicit guns in New York.” These consequences could have been reasonably anticipated given the allegation that KMT “sold unfinished frames or receivers into New York State knowing, intention, or being willfully blind to the fact that these products would be converted into working, unserialized firearms, while marketing their products as a way around serialization requirements, and portraying serialization as optional, unnecessary, or undesirable.” Thus, the ensuing financial burden on New York State was an expected and foreseeable result of KMT’s marketing and sales strategy.
Judge Carter thus found that no “accident” was alleged to fall within “an occurrence as defined by the Policy.”