AIG unit need not defend retailer selling parts for ghost guns

An American International Group Inc. unit is not obligated to defend an Auburn, Washington-based firearms retailer against three “ghost gun” lawsuits, a federal judge in New York ruled Thursday.

U.S. District Judge Margaret M. Garnett of the Southern District of New York said in Granite State Insurance Co. v Rainier Arms LLC that the lawsuits brought by the New York Attorney General’s Office and the cities of Buffalo and Rochester, New York, over sales of the frames and components of handguns, rifles and shotguns without serial numbers do not involve a covered occurrence or accident.

The lawsuits, filed in 2022, allege that Rainier violated New York business laws and committed a public nuisance because the products make guns harder to trace when involved in a crime and help individuals evade laws and regulations on sales of firearms.

New York-based Granite issued commercial general liability policies to Rainier in effect from October 2008 until October 2022 and denied coverage for the lawsuits in August 2023.

Granite sued Rainier, seeking a court order saying it was not obligated to defend the lawsuits or indemnify the company, and the retailer filed counterclaims for breach of contract and bad faith.

Granite filed a motion for partial summary judgment on its defense obligations in February 2024.

Representatives for the parties did not respond to requests for comment.