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I'd look to the brake hoses for a failure, then the caliper. If the hoses ARE original, certainly, replace them with new hoses. If you do replace the calipers, replace them as a pair.
If you have spare calipers, there are kits for a rebuild. It's a grungy job but very doable. There are FedEx delivery sources for purchasing rebuilt calipers, too. Hirsch Industries (Arizona) comes to mind - they have a website with contact info. Rotors can be had from IPD and, I think, RPR. Hoses from RPR, too. Pads and such can be had anywhere.
$500 seems high to me. For the same money you might have rebuilt calipers, new rotors, new hoses and new pads... and a system flush... if you were willing, and had the time, to do the work yourself. It's not difficult.
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