Phoenix Light SF Limited v. The Bank of New York Mellon Corporation
- Valerie Caproni
- 1:14-cv-10104
- U.S. District Court · Southern District of New York
- 5
In Phoenix Light v. Bank of New York Mellon, Judge Caproni granted reconsideration and excluded a damages calculation that double-counted settlement payments.
The plaintiffs’ damages evidence was affected because the court excluded Joseph Mason’s calculation to the extent it failed to remove settlement payments from the hypothetical scenario. The Bank of New York Mellon obtained reconsideration and was permitted to address whether the report could be amended.
What happened
Phoenix Light SF Limited and other plaintiffs sued The Bank of New York Mellon, and the bank asked Judge Valerie Caproni to reconsider part of an earlier ruling about whether expert Joseph Mason’s damages calculation could be used. The dispute concerned how Mason’s model treated payments from the 2011 Countrywide Settlement.
The bank argued that Mason’s model counted the settlement payments both in the real-world scenario and in the hypothetical scenario where loans were repurchased. The plaintiffs did not dispute that description, but argued that including the payments in the real-world scenario reduced their losses. The court concluded that the model also had to remove those payments from the hypothetical scenario; otherwise, it assumed the trusts would receive both repurchase proceeds and settlement payments.
Judge Valerie Caproni granted the bank’s motion for reconsideration. The court excluded Mason’s damages calculation to the extent it did not remove settlement payments from the hypothetical scenario and ordered the parties to submit letter briefs on whether Mason could amend his report.
The detailed version
- Phoenix Light SF Limited v. The Bank of New York Mellon Corporation · No. 1:14-cv-10104
- Valerie Caproni
- May 28, 2020
Background
The Bank of New York Mellon, as trustee, moved for reconsideration of one part of the court’s March 20, 2020 order on the bank’s omnibus motion to exclude expert testimony under the rules governing expert evidence. The earlier order had held that Joseph Mason’s damages calculation was admissible. The bank argued that the court had misunderstood how Mason’s model accounted for the 2011 Countrywide Settlement.
A motion for reconsideration asks the court to revisit an earlier ruling based on an intervening change in controlling law, new evidence, or a clear error or manifest injustice. The court emphasized that this relief is subject to a strict standard.
The Parties’ Positions and the Court’s Analysis
The court’s earlier understanding was that Mason’s model calculated damages by subtracting the settlement proceeds actually received from the losses the plaintiffs allegedly would have avoided if the loans had been repurchased. The bank asserted that Mason’s model instead included the settlement payment in both the actual experience and the hypothetical “but-for” experience. Under the bank’s description, the settlement payment canceled out of the calculation, leaving damages equal to the repurchase proceeds without accounting for the settlement payment.
The parties’ briefing contained little supporting record evidence beyond a deposition answer from Mason. The plaintiffs did not dispute the bank’s description of the model. They argued only that including settlement payments in the actual experience reduced the losses calculated by the model. The court rejected that explanation as incomplete. It held that Mason had to include the settlement payments in the actual experience and omit them from the hypothetical experience. Otherwise, the model assumed that the trusts would receive both repurchase proceeds and a settlement based on failures to repurchase.
The court stated that the reliability of Mason’s model generally was not at issue. Instead, one assumption produced an unreasonable result. The court also left undisturbed its prior holding that Mason could simulate repurchase proceeds for loans in the trusts whether or not those trusts participated in the Countrywide Settlement. The court noted that rebuttal expert Faten Sabry appeared to have made the necessary adjustment by removing settlement-payment allocations from the hypothetical experience.
Ruling
Judge Valerie Caproni granted the Bank of New York Mellon’s motion for reconsideration. The court excluded Mason’s damages calculation insofar as it had not removed settlement payments from the hypothetical experience. The court ordered the parties to submit letter briefs addressing whether Mason should be allowed to amend his report to present a damages opinion calculated as repurchase proceeds minus the settlement payment. The plaintiffs’ letter brief was due June 8, 2020; the defendant’s response was due June 18, 2020; and the plaintiffs could file a reply of no more than two pages by June 22, 2020.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.