Gun Retailer Urges Appeals Court to Reverse Coverage Win for AIG

A federal appeals court should reverse a ruling letting an American International Group Inc. unit off the hook for a Texas firearm seller’s defense costs in public nuisance suits over its alleged role in gun violence, the retailer said.

The underlying litigation seeks damages covered by policies issued to Primary Arms LLC by specialized firearm insurers that should have been aware of the legal risk, the gun retailer told the US Court of Appeals for the Second Circuit in a brief filed Wednesday.

“The legal landscape of firearm-related litigation, including public nuisance claims and negligent entrustment, was hardly uncharted territory when these Policies were issued,” the brief said. “A specialized insurer in the firearms sector would have been acutely aware of these potential liabilities.”

The dispute is one of four lawsuits filed by AIG against firearm companies named in the underlying litigation, and among several similar cases across the country focused on whether liability insurance policies afford coverage for gun violence-related public nuisance suits.

In the underlying cases, New York state and several local governments accused Primary Arms and other gun makers and retailers of knowingly marketing unfinished firearm parts, which can be used to create untraceable “ghost guns,” to individuals who would otherwise be prohibited from owning the weapons.

The US District Court for the Southern District of New York ruled for Granite State Insurance Co. in August 2024, holding that Primary Arms’ “uncontrolled sales were not an ‘accident’ because their effect was alleged to be fully intended and expected” and that the carrier had no duty to defend the gun retailer. Primary Arms appealed, and the case is now fully briefed.

Primary Arms also pushed back on a proposed amicus brief filed by an insurance industry group, the Complex Insurance Claims Litigation Association. The brief failed to support AIG’s position on the duty to defend, but it does underscore “the profound implications of this dispute for the insurance industry and Texas policyholders,” Primary Arms said, reiterating its request for the Second Circuit to certify two key issues to Texas’ high court.

Additionally, the gun seller said, the responsibility to gauge and manage risk should lie with insurers, “not through post-hoc judicial lobbying via amicus curiae briefs.”

“The time for the insurance industry to manage risk and clarify policy language is during underwriting, not through attempts to retroactively rewrite contracts in the courtroom,” the brief said.

Willkie Farr & Gallagher LLP represents Granite State. Lathrop GPM represents Primary Arms.

The case is Granite State Ins. Co. v. Primary Arms LLC, 2d Cir., No. 24-2748, reply brief 5/21/25.