Church Mutual renewed an insurance policy issued to Chabad of New Mexico on June 2, 2022, which covered certain real property owned by Chabad in Rio Rancho, New Mexico.
On December 28, 2022, there was an act of arson committed on a building covered by the Policy. On March 5, 2023, there was a second act of arson committed on the same building. Chabad submitted claims under the Policy to Church Mutual for both fires.
Church Mutual investigated the claims under a reservation of rights, and stated that “while the building was not actively being used, there remained sufficient contents in the structure for the Insured to continue their normal operations.”
On January 29, 2024, Church Mutual instituted this diversity action, seeking a declaratory judgment that it owes no duty to cover Chabad’s claims because the property was “vacant” for more than sixty consecutive days before the acts of arson, and therefore no coverage is owed pursuant to the Policy’s “Vacancy” loss condition.
Chabad sought to introduce expert testimony “regarding insurance industry standards, customs and practices and about how Church Mutual Insurance Company deviated from those standards in its handling of the property damage claims.”
In this regard, Chabad has hired Stuart Setcavage who purports to be “an expert in the field of insurance industry claim handling, policy interpretation and coverage analysis.” Church Mutual filed a motion to exclude Setcavage’s testimony.
Insurance Expert Witness
Stuart S. Setcavage has considerable experience in the handling and management of third-party, contractual and extracontractual lawsuits. He has learned industry claim handling standards based on personal learning, training, research, and industry experience for over three decades. His adjuster’s licenses in Texas, Florida, and West Virginia enjoy reciprocal agreements with most every state that requires licensing.
He is a past president of the Pennsylvania Defense Institute and also served as chairman of its Coverage and Claims Practices committee. Throughout his career he has attended professional seminars and continuing legal education seminars related to insurance industry claims practices and procedure, auto law, policy, and coverage bad faith. He has given many presentations to both claims and law groups on insurance and claims-related topics, and served as faculty for the Pennsylvania Association for Justice, the Pennsylvania Bar Institute, the West Virginia Association for Justice, the Florida Justice Association, and the Kentucky Justice Association.
Discussion by the Court
a) Qualification
Church Mutual initially argued that Setcavage is unqualified to offer expert opinions in this case because he lacks sufficient knowledge of property insurance policy language and property insurance adjusting to offer reliable opinions regarding the subject property.
Church Mutual noted that Setcavage’s background is primarily in handling and supervising automobile insurance claims and most of the cases for which he has provided expert testimony involved automobile insurance claims.
But Church Mutual did not articulate any difference between industry standards applying to claims handling under automobile insurance policies and property insurance policies that would render Setcavage’s knowledge, experience, education, and training as to the former irrelevant to the latter.
As a result, the Court found that Setcavage is qualified by knowledge, skill, experience, training, and/or education to render an opinion on insurance practices and standards and whether Church Mutual deviated from those standards in its handling of Chabad’s claims and in renewing Chabad’s Policy in 2022 with the “Vacancy” loss provision.
b) Usurping the role of the Court
Church Mutual next argued that Setcavage’s interpretation of the Policy’s terms are legal conclusions that usurp the role of the Court. The Court agreed with Church Mutual that the interpretation and construction of an insurance policy is a question of law for the Court.
The motion did not specify which of Setcavage’s opinions Church Mutual believes are legal conclusions. However, it appeared to object to Setcavage’s opinion that the plain language of the Policy’s “Vacancy” provision applies, rather than Church Mutual’s position that “vacancy” means “unused.”
c) Reliability
Church Mutual next argued that Setcavage’s opinion is unreliable because “no discernible methodology exists to guide Setcavage’s interpretation of the Policy.”
The Court first found that Church Mutual’s argument is largely moot because it takes issue primarily with Setcavage’s interpretation of the Policy’s “Vacancy” loss condition, and the Court has already interpreted that provision and found that it does not preclude coverage. Thus, Setcavage’s interpretation of the Policy’s “Vacancy” loss condition will be relevant only to whether Church Mutual’s interpretation of the Policy’s “Vacancy” loss condition was frivolous, unfounded, or otherwise violative of the duty of good faith and fair dealing.
He further stated that “claim professionals are trained to know that the plain meaning of an insurance policy will prevail unless its terms somehow violate public policy” and that “Church Mutual is attempting to redefine ‘vacancy’ to include factors not set forth in the policy it had underwritten and sold to this policyholder.”
As to valuation, Setcavage stated that “claims professionals are trained to know that the plain meaning of an insurance policy will prevail unless its terms somehow violate public policy. Like ignoring policy definitions relative to coverage, calculating the loss differently than what the policy promises to pay violates industry standards.”
It is unclear what more of an explanation Church Mutual believes is necessary in this context.
d) Assist the jury
Finally, Church Mutual argued that Setcavage’s testimony will not assist the jury because there is nothing about Church Mutual’s claim handling procedures or the principles of bad faith that would require any real expert opinion.
Here, Setcavage has offered opinions that may assist the jury in deciding whether Church Mutual has engaged in bad faith insurance conduct. For example, he opines that Church Mutual’s handling of Chabad’s claims was “unfair” and “falls well below industry standards.” He further stated that “the purported investigation in this matter was woefully inadequate as is evidenced by the claim notes. In fact, the claim handling or investigation is indicia of a pre-determination to deny payment for these claims.”
These opinions (and others) may assist the jury in determining whether Church Mutual engaged in bad faith insurance conduct under New Mexico law.
Held
The Court denied Church Mutual Insurance Company’s motion to exclude the testimony of Stuart S. Setcavage
Key Takeaway
District courts evaluating the reliability of non-scientific expert testimony do not have to focus on whether the expert employed an objective standard or methodology and can instead focus on the reliability of the expert’s personal knowledge or experience.
Setcavage’s personal knowledge and experience permits him to offer an expert opinion regarding insurance industry standards, customs and practices and about how Church Mutual deviated from those standards in its handling of Chabad’s claims.
Case Details:
| Case Caption: | Church Mutual Insurance Company, S.I. V. Chabad Of New Mexico |
| Docket Number: | 1:24cv90 |
| Court Name: | United States District Court, New Mexico |
| Order Date: | February 10, 2026 |
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