In a troubling decision for the firearms industry, on December 10, 2025, the U.S. Court of Appeals for the Second Circuit ruled in Granite State Insurance Co. v. Primary Arms, LLC (No. 24‑2748‑cv) that insurers are not obligated to defend or indemnify a Texas-based firearms retailer accused of contributing to gun violence In Rochester and Buffalo, New York, through the sale of unserialized firearm components—commonly referred to as “ghost-gun” kits.
Applying Texas law on insurance coverage and the “eight‑corners rule,” a unanimous three-judge panel held that the retailer’s alleged intentional marketing and sale of unfinished frames and receivers—which the plaintiffs in the underlying suits against the retailer had alleged were designed to circumvent serialization and background checks—did not qualify as an “occurrence” because it was not an “accident,” based on the definition of “occurrence” in the retailer’s liability policies. This negated coverage for nuisance and deceptive trade practices claims brought by New York State and the cities of Buffalo and Rochester, including any duty to defend the lawsuits.
Judge Chin, writing for the court, emphasized that the underlying lawsuits against the retailer framed its conduct as intentional, with resulting harms constituting the natural and expected consequences of deliberate actions. Texas courts interpret “occurrence” or “accident” narrowly—requiring harm that is fortuitous, unexpected, and unintended. Therefore, claims rooted in intended conduct fall outside the scope of coverage, and policy provisions concerning negligence or completed operations do not create a duty to defend.
As a result, the retailer remains fully responsible for its defense costs in these ongoing cases. Pitting the financial resources of dealers against those of the State of New York and the cities of Buffalo and Rochester, this ruling signals a broader shift in litigation risk for firearms manufacturers and retailers. When plaintiffs frame complaints alleging intentional misconduct, insurers may deny coverage, creating an increased likelihood of self-funded legal defenses. Industry stakeholders should closely review policy language, endorsements, and exclusions when renewing their liability insurance.
ATF eForms System Blackout and NFA Tax Shift
The ATF has announced a scheduled eForms system blackout from December 26, 2025, through January 1, 2026, in preparation for implementing the “One Big Beautiful Bill Act,” which eliminates the $200 federal tax on certain National Firearms Act (NFA) items—specifically suppressors and short-barreled rifles and shotguns, as well as the $5 federal tax on any other weapons effective January 1, 2026. Submissions and certifications will be disabled starting at midnight on December 26. Unsaved draft forms will be permanently deleted, so any pending filings should be submitted before the deadline. Forms fully submitted and certified before the blackout will continue processing. Similarly, delays and backlogs after January 1 are expected due to the anticipated surge in submissions seeking the $0 tax stamp.
Renzulli Law Firm, LLP will continue to monitor new and developing firearm related laws and litigation around the country. If you have any questions concerning firearms-related legislation or regulation, please contact Christopher Renzulli.