On August 18, 2015, Judge Denise Cote of the federal district court for the Southern District of New York addressed the appropriate measure of potential damages in an action by Bank of New York Mellon (BoNY), as RMBS trustee, against WMC Mortgage, LLC and GE Mortgage Holding, L.L.C. In that action, BoNY seeks repurchase of a number of allegedly defective loans as trustee for the GE-WMC Mortgage Securities Trust 2006-1.  Judge Cote previously held that where repurchase is unavailable, the trustee may be entitled to damages.  On defendants’ motion to exclude the testimony of the trustee’s damages expert, the court held that the trustee’s potential damages are limited to the repurchase price for liquidated loans, as defined in the relevant agreements.  One component of that measure is the stated principal balance of the loan; the agreements define the stated principal balance of liquidated loans as “zero.”  The trustee’s damages expert had not used this measure.  As a result, Judge Cote struck the report of the trustee’s damages expert.  The decision reduces potential damages on liquidated loans from $379 million (as calculated by the trustee’s expert) to $13.3 million (the maximum calculated by the defense expert).  Order.