- 9 -
There is an obvious conflict between the use of $4.25
million as a replacement cost by Mr. Ferguson and Mr. Geiger’s
estimate of replacement cost. However, Mr. Ferguson testified at
trial he was not made aware of Mr. Geiger’s estimate when he
prepared his original report. There is an additional problem
with the $4.25 million figure. It was based on a letter from
Perry Oceanographic Foundation, a firm related to Perry, to Mr.
Ferguson dated December 7, 1994. Perry’s estimate was for an
ABS-certified vessel, which JUL was not. Mr. Geiger had worked
for Perry and was familiar with JUL’s original construction. He
knew JUL was not ABS certified, and his estimate of $1.97 million
is more accurate than the $4.25 million figure.
Respondent’s valuation expert, Mr. Geary, also determined
replacement cost and depreciated that cost to arrive at a value
for JUL. His replacement cost estimate was $1.1 million, which
he reduced by 27 percent for inflation and further reduced for
depreciation to arrive at a value of $464,102. He also used an
alternative method based upon JUL’s estimated value in 1977 and
recommended a value of $367,758.
While expert opinions may assist in evaluating a claim, we
are not bound by those opinions and may reach a decision based on
2(...continued)
admitted at trial. Petitioners are in error. The report was
stipulated as part of a joint exhibit (Ex. 3J), the 1994 income
tax return, and ironically was admitted at petitioners’ urging
over respondent’s objections.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011