Gunmaker Targeted By Kansas City Lawsuit Files For Bankruptcy | KCUR

Gunmaker Targeted By Kansas City Lawsuit Files For Bankruptcy

Feb 12, 2020

Jimenez Arms, the Nevada-based gun manufacturer that Kansas City sued last month, has filed for Chapter 7 bankruptcy in Nevada.

The company’s bankruptcy petition listed assets of less than $50,000. That, coupled with more than $1,000,000 in outstanding liabilities, may make it difficult for Kansas City,  should it prevail in its lawsuit, to recover compensation from the company.

The city sued Jimenez Arms in January, alleging the gun manufacturer was involved in a conspiracy to traffic handguns in Kansas City. The lawsuit argues Jimenez Arms created a “public nuisance” that caused the city and its residents “harm and substantial costs.”

Speaking last month at a news conference to announce the lawsuit, Kansas City Mayor Quinton Lucas said the case represented the first municipal lawsuit filed against a gun manufacturer in more than a decade. Nonetheless, he said the city’s argument stood on “very strong legal footing.”

The lawsuit joins — and shares many allegations with — an existing wrongful death lawsuit filed by the family of Alvino “Dwight” Crawford, who was killed in 2016 by a bullet from a Jimenez handgun allegedly trafficked as part of a conspiracy.

Last week, a Jackson County judge rejected dual motions by Jimenez to dismiss the Crawfords’ suit. 

Everytown Law, a branch of the gun control advocacy group Everytown for Gun Safety, assisted with both lawsuits against Jimenez.

"Kansas City families can rest a little easier knowing that a company responsible for facilitating years of illegal trafficking of guns is no longer operating," said Alla Lefkowitz, a lawyer for the organization. "When firearm companies repeatedly ignore the law and facilitate gun trafficking they bring these sort of consequences on themselves."

Jimenez Arms owes more than $1.3 million to the federal government in the form of payroll and excise taxes, according to its Chapter 7 petition. The bulk of that — $900,000 — consists of unpaid excise taxes on the manufacture of firearms. The U.S. Treasury Department currently taxes pistols and revolvers at 10% of their sales price.

Also listed in the bankruptcy petition is a $625,000 debt for a “lawsuit settlement.” That appears to pertain to a 2016 lawsuit filed by the family of a Nevada woman who was killed in 2014 when a Jimenez handgun she had dropped fired and struck her in the face. An attorney who represented the family did not immediately respond to a message seeking comment.

Jimenez Arms is also facing eviction from a property that has five years remaining on its lease. The petition does not make clear whether that refers to the company’s manufacturing facility. The company did not immediately respond to a request for comment.

Municipalities rarely sue the gun industry thanks in large part to a 2005 federal law called the Protection of Lawful Commerce in Arms Act (PLCAA). 

The law passed with bipartisan support in response to a series of lawsuits filed in the 1980s and 1990s. Some of the lawsuits argued that makers of small, cheap handguns sometimes called “Saturday Night Specials” should be held liable because simply manufacturing the gun constitutes an abnormally dangerous activity. Other suits claimed negligent marketing or public nuisance.

The lawsuits were rarely successful, but proved costly to gun manufacturers and drove some out of business.

Jimenez Arms was created out of the ashes of Bryco Arms, which was itself found liable in a civil lawsuit alleging a flawed gun design.

In 2017, Jimenez manufactured more than 26,000 handguns, according to a 2019 report from the National Shooting Sports Foundation, a firearms industry trade group. While that total was dwarfed by larger manufacturers such as Smith & Wesson Corp., which produced more than 1.2 million handguns that year, Jimenez ranked 20th out of 104 manufacturers listed in the report.

Chris Haxel is a reporter for KCUR 89.3. Email him at chaxel@kcur.org, and follow him on Twitter @ChrisHaxel.