B-241771, Jun 5, 1991, 91-1 CPD ***

B-241771: Jun 5, 1991

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PROCUREMENT - Payment/Discharge - Shipment - Carrier liability - Amount determination - GAO review DIGEST: Damages to a mobile home are measured by the difference in market value between what the home would have been worth in its undamaged condition and what it was worth in its damaged condition at the time and place of delivery. Remains habitable and later is sold. An appropriate measure of such damages is the difference between the market value of an undamaged mobile home at the time and place of sale and the sale price. Since the home was no longer mobile. Charter disagrees that the mobile home was structurally damaged. Charter has introduced statements from its transportation manager and the owner of a mobile home repair company that there was no structural damage.

B-241771, Jun 5, 1991, 91-1 CPD ***

PROCUREMENT - Payment/Discharge - Shipment - Carrier liability - Amount determination - GAO review DIGEST: Damages to a mobile home are measured by the difference in market value between what the home would have been worth in its undamaged condition and what it was worth in its damaged condition at the time and place of delivery. Where a mobile home has sustained damage that compromises its future transportability, but remains habitable and later is sold, an appropriate measure of such damages is the difference between the market value of an undamaged mobile home at the time and place of sale and the sale price.

Charter Mobile Homes, Inc.:

Charter Mobile Homes, Inc., requests review of the Coast Guard's settlement and offset from amounts due Charter of $20,751.06, plus interest, penalties and administrative costs, for damage to a member's mobile home sustained during transit from South Carolina to Brooklyn, New York, in May 1988. We reverse the Coast Guard's settlement.

The Coast Guard reports that the mobile home sustained cosmetic damages (about $3,000 to $4,000) and permanent structural damage (bent I-beams) when Charter's driver collided with a pole or tree. Since the home was no longer mobile, the Coast Guard found it unfit for its planned purpose and, therefore, a total loss except for its salvage value.

Because repair costs exceeded replacement costs, the Coast Guard calculated damages by determining the value of a new replacement home at time and place of destination ($31,152.60) /1/, then deducting 15 percent depreciation for 7 months ($4,672.89), delivery charges to Brooklyn ($3,228.65), and salvage value of the current home ($2,500).

Charter disagrees that the mobile home was structurally damaged, contending that the government's experts lack the expertise to properly make such a determination. Charter has introduced statements from its transportation manager and the owner of a mobile home repair company that there was no structural damage. Charter also claims that the Coast Guard erred by not conducting an oral hearing on the issues of structural damage and future transportability in accordance with the Federal Claims collection Standards, particularly 4 C.F.R. Sec. 102.3, which suggests that an oral hearing may be appropriate where matters of veracity or credibility are involved.

Charter contends that calculation of damages should start from, at most, the member's purchase price ($27,000). The firm also objects to the member's retention of title to the mobile home, since Charter was charged with its total loss, and disputes the salvage value of $2,500, since the member in fact used it as a residence parked on government (Navy) property. Charter suggests that even if the home was no longer transportable, it still had a useful life as an ordinary residence since it could be resold on location as a home for military personnel. Finally, Charter states that the limit of its liability should be $15,000, the amount of required insurance at the time of the shipment under the applicable Tender of Service.

Further inquiry by this Office with the Coast Guard reveals that the member lived in the mobile home from mid-1988 until he recently sold it to another member for $18,000, with the structural damage unrepaired. The member claims that he repaired the cosmetic damages from the 1988 accident himself, spending $1,000 for materials and adding about $2,000 of his own labor. He also states that he added about $3,000 to $5,000 of other improvements during his occupation of the home after the accident.

While Charter has offered its own evidence that no structural damage had occurred to the mobile home, the record contains substantial evidence to the contrary. When questions of fact are disputed between an agency and a claimant, our Office generally is compelled to accept the statements of fact furnished by the administrative agency in the absence of a preponderance of evidence to the contrary. IML Freight, Inc., B-193101, Mar. 12, 1979.

Also, the cited regulation does not require an oral hearing in a particular case, so long as issues of veracity and credibility generally are not involved, and the agency has determined that review of the written record ordinarily is an adequate means to correct prior mistakes. C.F.R. Sec. 102.3(c)(2); see Gayla Chappel Reiter, B-219734, Apr. 16, 1986.

In sum, we conclude, based on this record, that the mobile home in fact sustained the noted structural damage.

The general rule for measuring the amount of damages is the difference between the market value of the property in the condition in which it should have arrived at its destination and its market value in the damaged condition in which it did arrive. Chandler Trailer Convoy, Inc., B-193195, May 7, 1979. The carrier and the Coast Guard agree on the cost to repair the cosmetic damages being $3,000. The only remaining factor is the value of the non-cosmetic damages.

Although loss of value for unrepaired damages to the structure normally would be difficult to assess, here a buyer paid $18,000 for the home 3 years after the incident, with whatever structural damage it may have had. The current version of the National Automobile Dealers Association (NADA) Mobile/Manufactured Housing Appraisal Guide (May August 1991) /2/ indicates that this type of home, undamaged, has a market value of $22,888.32 in the New York area. By adjusting that value to reflect the fact that the particular home was assessed at only 95.95 percent of the NADA value in 1988 /3/, the undamaged 1991 value is $21,961.34. believe that the difference ($3,961.34) between the adjusted NADA current New York market value and the sale price ($18,000) probably is an accurate reflection of the non-cosmetic damages that remained from the accident.

The member also claims he made between $3,000 and $5,000 worth of improvements to the home after the accident. The $18,000 purchase price thus presumably reflects improvements for which the member should be compensated. On this record, however, we must leave it to the Coast Guard to establish that improvements in fact were made and their value.

We therefore conclude that Charter is being assessed considerably more than it should be in this case. In our view, the carrier should be held liable for damages to the mobile home in the amount of $3,961.34 (non- cosmetic damages), plus $3,000 (cosmetic damages), plus an amount to be determined that would mitigate the effect of the improvements in the sale price.

As to Charter's objection to the member retaining title to the home, where basic salvage value is fully considered in reducing a carrier's liability for damages, the carrier has no right to possession. See IML Freight, Inc., B-193101, supra.

Finally, since the final calculation of damages clearly will be less than the carrier's Tender of Service insurance requirements, the issue of whether these insurance requirements constitute a limitation of the carrier's liability need not be considered.

The Coast Guard should settle this matter accordingly.

/1/ The damaged home was purchased in South Carolina 7 months before the accident for $27,000.

/2/ This Office has used this Guide in previous decisions involving valuation of mobile homes. See Chandler Trailer Convoy, Inc., B-193195, May 7, 1979.

/3/ The NADA Guide (May-August 1988) indicates that an undamaged mobile home of the type in dispute was valued at $24,492.24 in New York in May 1988. An appraiser hired by the Coast Guard appraised this home at $23,500, or 95.95 percent of the NADA value.