Opinion ID: 1111013
Heading Depth: 1
Heading Rank: 3

Heading: Replacement of the Primary Residence

Text: Rick Tompkins estimated that it would cost $164,441 to build a home having the same square footage and number of rooms as the Polk residence. However, Tompkins never viewed the Polk home before making this estimate. Instead, he relied on information provided to him over the telephone by a DOTD representative. DOTD argues strenuously that it was not required to furnish the Polks with the money to build a replica of their existing home, but merely a comparable home of the same size and number of rooms, constructed of quality materials and in compliance with applicable building and safety codes. Accordingly, DOTD argues that it properly relied on the Tompkins estimate in determining that plaintiff did not qualify for replacement housing benefits. We agree that a comparable replacement dwelling need not be a replica of the acquired dwelling. Replacement housing benefits should simply be sufficient to allow a displaced person to acquire a new residence which is as similar as reasonably possible to the former dwelling. However, the Tompkins bid can hardly be considered an adequate gauge of the cost of building a home comparable to the Polks' residence. The bid was made wholly without reference to the nature of the Polk home, the materials used therein, the shape of the home, etc. While DOTD had no obligation to provide an estimate on building an identical residence, something more than a blind estimate made on generalized information was required in order to determine the cost of building a truly comparable home. Thus, the Tompkins estimate did not provide a reasonable basis for the agency's decision to deny replacement housing benefits. On the other hand, the estimate provided by Girlinghouse did provide a reasonable basis on which DOTD could calculate the cost of building a comparable residence. This estimate was made based upon Girlinghouse's personal examination of the house, and assumed that the replacement house would have the same shape, number of rooms and square footage. Girlinghouse also made his calculations based on the assumption that most (though not all) of the types of materials used in constructing the acquired residence would be used for the new residence. The Girlinghouse estimate that it would cost $202,711 to build a comparable residence was properly relied on by DOTD in calculating replacement housing costs. That being the case, it was unreasonable for DOTD to make no award for replacement housing benefits on the main residence. Girlinghouse's estimate for building a comparable home (excluding the additional improvements), $202,711, exceeded the purchase price which DOTD paid for the home (excluding improvements), $185,767, by $16,944. Apparently, DOTD did not award $16,944 in replacement housing benefits based on the Girlinghouse bid because it chose to discount Girlinghouse's $202,711 replacement cost figure to take into account depreciation of the value of the main residence. Girlinghouse testified that after taking into account depreciation, the main residence was worth $163,875. DOTD relied on that figure (as well as on the Mansour/Tompkins estimate) in support of its determination that replacement of the main residence would not cost more than the $185,767 acquisition price which it paid for the home. It was, however, unreasonable for DOTD to base its determination of replacement housing benefits on a cost estimate that was discounted for depreciation. The relevant inquiry for the purpose of calculating replacement housing benefits was the amount that the Polks actually would have to expend for the purpose of obtaining a comparable home. Obviously a comparable home would be built with new materials, and a replacement cost estimate discounted for depreciation would not reflect the actual cost of building a new home. While it was reasonable for DOTD to rely on Girlinghouse's replacement cost estimate of $202,711, it was unreasonable for DOTD to discount that estimate for depreciation and to rely on the discounted figure as a basis for denying replacement housing costs. Accordingly, DOTD should have awarded the Polks replacement housing benefits on the main residence in the amount of $16,944, the difference between the replacement cost estimate provided by Girlinghouse ($202,711) and the purchase price paid for the main residence ($185,767). It is true that Donald Mansour, plaintiff's expert at trial, provided a much higher estimate for replacement of the main residence, $302,270.86. The differences between the Girlinghouse and Mansour bids appear to be in part because of Mansour's higher estimates for profit and overhead, and in part because of the fact that Mansour's estimate included some materials of higher quality than Girlinghouse's. For the most part, however, there were no significant differences between what the two bids promised to do, as both were for the building of a home that was substantially similar to the main residence. Therefore, it was not unreasonable for DOTD to calculate replacement costs based on the lower bid submitted by Girlinghouse. Because it was not unreasonable, arbitrary or capricious for DOTD to rely on the Girlinghouse estimate, the trial court erred by relying on the higher Mansour estimate as a basis for calculating the cost of replacing the main residence. The court of appeal affirmed the trial court's reliance on the Mansour bid on the rationale that the trial judge should be given great discretion in assessing expert testimony, and his decision to rely on the testimony of one expert over another should not be reversed absent manifest error. That standard of review, however, does not apply here, in a case involving review of a discretionary decision by a state agency. The trial court's inquiry should have been whether it was reasonable for DOTD to rely on the Tomkins and Girlinghouse bids. We have determined that it was unreasonable for DOTD to rely on the Tomkins bid, as that bid did not provide an estimate for the replacement cost of a truly comparable home. However, it was reasonable for DOTD to rely on the Girlinghouse bid, which, though lower than the estimate provided by Mansour at trial, did provide an adequate estimate for the cost of building a truly comparable home.