Applying Texas law, the Second Circuit affirmed the district court’s judgment that the insurers had no duty to defend or indemnify the manufacturer of ghost guns and gun parts. Granite State Ins. Co. v. Primary Arms, LLC, 2025 U.S. App. LEXIS 32275 (2nd Circ. Dec. 10, 2025).

The insured, Primary Arms, sold and shipped firearms and firearm parts, including unfinished firearm frames and receivers, to locations across the United States. Its marketing promoted its products as a way around background checks and other public safety laws. Primary Arms sold firearm parts without the serialization or background checks required for finished firearms and without ensuring that buyers possessed a firearms license. Buyers could easily convert the unfinished weapons kits into untraceable firearms called “ghost guns.” The evasion of federal and state laws made Primary Arms’ products attractive to persons who would not be able to purchase guns legally.

Primary Arms’ marketing and sales scheme allegedly helped launch a surge of gun violence in New York. In 2022, the State and cities of Buffalo and Rochester sued Primary Arms and other gun companies in the underlying suits for damages. Claims against Primary Arms included violation of state law for repeated and persistent illegal and fraudulent conduct.

Primary Arms tendered to its insurers, including Granite State. The insurers filed suit against Primary Arms seeking a declaratory judgment that the policies did not obligate them to defend or indemnify Primary Arms. The insurers moved for partial summary judgment on their duty to defend and Primary Arms cross-moved.

The district court granted the insurers’ motion and denied Primary Arms’ cross-motion. The court found that the underlying suits did not allege an “accident” as required to trigger the duty to defend. The parties then agreed that the district court’s ruling also disposed of the insurers’ remaining claims on the duty to indemnify. Final judgment was entered and Primary Arms appealed.

The Second Circuit agreed that the policies did not cover the underlying suits because the complaints did not allege an “accident” under Texas law or an “occurrence” under the policies. Based upon the underlying allegations, Primary Arms intended to sell and knowingly sold unfinished frames and/or receivers to individuals who were likely to create an unreasonable risk of harm to others. When Primary Arms advertised its products to buyers as “easily convertible” into finished firearms, it sent its products into New York knowing or being willfully blind to the fact that these products would be converted into working, unserialized firearms. Therefore, Primary Arms committed intentional acts that were not covered.

This created financial burdens on the State and cities that followed from Primary Arms’ intentional acts of marketing and selling ghost gun kits to individuals legally prohibited from owning firearms.

Because Primary Arms committed intentional acts that resulted in injuries that ordinarily followed from or could be reasonably anticipated from the intentional acts, the injuries did not arised from an “accident.” Accordingly, the underlying suits did not allege an occurrence as defined in the policies.

There was also no duty to indemnify. The parties agreed below that the district court’s ruling on the duty to defend was dispositive of the insurers’ duty to indemnify, and Primary Arms did not argue otherwise on appeal.