Granite State Insurance Company v. KM Tactical, LLC
1:23-cv-07769
S.D.N.Y.May 27, 2025Background
- Granite State Insurance Company (Granite State) filed suit in the Southern District of New York seeking a declaration that it is not obligated to defend or indemnify KM Tactical, LLC (KM Tactical) in lawsuits brought in New York concerning the sale of parts allegedly used to assemble "ghost guns."
- Berkshire Hathaway Specialty Insurance Company (BHSI) issued a similar policy to KM Tactical for a subsequent policy period and denied coverage for the same underlying lawsuits. KM Tactical then sued BHSI (and later Granite State) in the Western District of Missouri.
- The Missouri action was stayed in favor of the earlier-filed New York action under the first-filed rule, and KM Tactical's motion to transfer the New York case to Missouri was denied.
- BHSI sought to intervene in the New York case under Rule 24(b), seeking resolution of its own coverage obligations to KM Tactical within the same action, citing judicial efficiency and avoidance of inconsistent rulings.
- KM Tactical opposed BHSI's intervention, arguing BHSI lacked a sufficient interest in the existing New York case and that intervention would prejudice KM Tactical by depriving it of its preferred Missouri forum.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of BHSI’s motion | Early stage; no prejudice to parties | Delay after knowing interest | Timely: Early case stage, no prejudice, no discovery |
| Common question of law/fact | Coverage disputes virtually identical | No dispute | Requirement satisfied (identical claims & policy language) |
| Sufficient interest and impairment | Interest in outcome and risk of impairment | No direct interest, not binding | Interest sufficient under flexible Rule 24(b) standard |
| Prejudice/delay to existing parties | Judicial economy, avoids duplication | Intervention deprives choice of forum | No undue prejudice; efficiency and justice favored |
Key Cases Cited
- "R" Best Produce, Inc. v. Shulman-Rabin Mktg. Corp., 467 F.3d 238 (2d Cir. 2006) (Sets four-factor standard for intervention as of right)
- In re Holocaust Victim Assets Litig., 225 F.3d 191 (2d Cir. 2000) (Intervention timeliness analysis and Rule 24(b) standards)
- Wash. Elec. Co-op., Inc. v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92 (2d Cir. 1990) (Purpose of intervention is to prevent multiple, duplicative lawsuits)
- H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 797 F.2d 85 (2d Cir. 1986) (Discretion of courts in permissive intervention)