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A federal judge in New York has delivered a major blow to a Missouri firearms retailer facing allegations that its sale of so-called ghost gun kits contributed to gun violence, ruling that two insurers have no obligation to defend or indemnify the company.

In a decision issued Tuesday, U.S. District Judge Andrew L. Carter Jr. determined that units of AIG and Berkshire Hathaway were not required to provide coverage to KM Tactical LLC because the underlying lawsuits did not claim injuries resulting from an accident.

The ruling centers on whether the alleged conduct qualifies as an “accident” under Missouri law or an “occurrence” under the insurers' commercial general liability policies. Judge Carter concluded that it did not.

The decision adds another layer to the legal battle over ghost guns, turning an already contentious dispute into a fight over where insurance protection ends and intentional conduct begins.

Lawsuits Accuse Retailer of Fueling Gun Violence

The underlying litigation began in June 2022, when the state of New York sued KM Tactical and other firearms retailers. The cities of Buffalo and Rochester filed a separate lawsuit against retailers in December 2022. KM Tactical was subsequently dismissed from the cities' litigation.

New York's lawsuit accused KM Tactical of deliberately marketing and selling unfinished firearm receivers and frames that could be assembled into untraceable ghost guns.

According to the state's allegations, the retailer targeted New Yorkers seeking ways to circumvent gun-control restrictions. The state argued that those sales contributed to rising gun violence and crime.

The allegations placed KM Tactical at the center of a broader legal fight over privately assembled firearms and the responsibilities of companies selling components that can be turned into untraceable weapons.

Insurers Take Dispute to Federal Court

Granite State Insurance Co., an AIG unit, launched the insurance coverage lawsuit in August 2023.

The insurer sought a declaration that it had no obligation to defend or indemnify KM Tactical under a series of commercial general liability policies covering the period from September 2018 through September 2022.

Berkshire Hathaway Specialty Insurance Co., which provided KM Tactical with CGL coverage from September 2022 through September 2023, later joined the federal case as an intervenor in January 2025.

KM Tactical responded with counterclaims, arguing that the insurers had violated their agreements by refusing to acknowledge a duty to defend the retailer.

Judge Relies on Earlier Second Circuit Decision

Judge Carter's decision leaned heavily on a similar case involving Granite State and Texas firearms retailer Primary Arms LLC.

In December 2025, the Second Circuit affirmed a ruling that Granite State and another AIG insurance unit did not have to defend or indemnify Primary Arms in connection with the same underlying lawsuits.

That appellate case focused on Texas law, with the court concluding that the underlying claims failed to allege harm resulting from an accident.

The Second Circuit further determined that under Texas law, conduct is not considered an accident when it is intentional and produces injuries that could reasonably have been expected.

Missouri and Texas Laws Found Substantially Similar

Although the earlier Primary Arms litigation applied Texas law, while KM Tactical's dispute is governed by Missouri law, Carter found the distinction insufficient to change the outcome.

The judge determined that Missouri's definition of an accident is substantially similar to the Texas standard examined by the Second Circuit.

As a result, Carter applied the appellate court's reasoning to KM Tactical's case.

The judge said differences between the two retailers did not alter the analysis. Many allegations in New York's complaint applied broadly to the defendants, while the allegations specifically involving KM Tactical closely resembled those made against Primary Arms.

Court Says Alleged Conduct Was Intentional

At the heart of the ruling was the nature of KM Tactical's alleged conduct.

The court said both retailers were accused of intentionally selling ghost gun components without meaningful controls over who could purchase them. According to the ruling, the resulting harm alleged by New York was a foreseeable consequence of those actions rather than an unexpected accident.

KM Tactical argued that its conduct should instead be viewed as negligent.

Judge Carter rejected that position, pointing to allegations that the retailer engaged in intentional acts and made misrepresentations to customers in an effort to reach consumers who could not legally purchase firearms.

That distinction proved critical: If the alleged harm was the predictable result of intentional conduct, the insurance policies' coverage for accidental occurrences did not apply.

Judge Declines to Resolve Bodily Injury Question

The insurers also argued that the underlying lawsuits did not seek damages because of bodily injury in the manner required by their policies.

Carter declined to decide that question.

The reason was straightforward: The policies provide coverage for bodily injury or property damage caused by an occurrence, and the judge had already determined that there was no qualifying occurrence in this case.

With that finding, the additional dispute over bodily injury did not need to be resolved.

Counterclaim Remains Pending

The ruling does not completely close the federal case.

The parties must submit a joint status report by Sept. 22 addressing the next steps for KM Tactical's remaining counterclaim, which alleges breach of contract by the insurers.

A Berkshire Hathaway representative declined to comment.

Representatives for Granite State and KM Tactical did not immediately respond to requests for comment Wednesday.

Attorneys Representing the Parties

Granite State is represented by Christopher J. St. Jeanos, James Fitzmaurice and Stephanie L. Miner of Willkie Farr & Gallagher LLP.

Berkshire Hathaway is represented by Andrew L. Margulis and Jung H. Park of Ropers Majeski PC.

KM Tactical is represented by Alexander T. Brown, Alana M. McMullin and Caitlin M. Albaugh of Lathrop GPM LLP.

The decision leaves the retailer facing its underlying legal battles without the insurance defense it sought, while the broader debate over ghost guns continues to collide with questions about corporate responsibility, intentional conduct and the boundaries of insurance protection.