A recent ruling by a federal judge in New York has determined that a unit of American International Group Inc. is not required to defend an Auburn, Washington-based firearms retailer, Rainier Arms LLC, against three lawsuits concerning ‘ghost guns.’ These lawsuits allege that the retailer was involved in the sale of firearm components without serial numbers, making them difficult to trace.
In Granite State Insurance Co. v Rainier Arms LLC, U.S. District Judge Margaret M. Garnett, of the Southern District of New York, concluded that the lawsuits, initiated by the New York Attorney General’s Office and the cities of Buffalo and Rochester, do not pertain to a covered occurrence or accident under the commercial general liability policies provided by New York-based Granite State Insurance Co.
The legal actions, filed in 2022, assert that Rainier Arms breached New York business regulations and contributed to public nuisance. This is due to claims that the products sold by Rainier enable circumvention of firearm tracing and regulatory adherence. Granite State Insurance Co., which had issued policies to Rainier from October 2008 to October 2022, denied coverage for these lawsuits in August 2023.
In response to the lawsuits, Granite State Insurance Co. sought a declaratory judgment to affirm it has no duty to defend or indemnify Rainier Arms. The retailer counteracted by filing claims of breach of contract and bad faith against the insurer. Subsequently, Granite requested partial summary judgment on its defense obligations as of February 2024.
As of now, representatives for both parties have not provided comments on the ruling.
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