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E&H Steel Corp. v. Pseg Fossil, LLC

Superior Court of New Jersey, Appellate Division

May 21, 2018

E&H STEEL CORPORATION, Plaintiff-Appellant/ Cross-Respondent,
v.
PSEG FOSSIL, LLC a/k/a PSEG POWER, LLC, Defendant-Respondent/ Cross-Appellant.

          Argued April 11, 2018

         On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-0516-11.

          David W. Mockbee (Mockbee Hall & Drake, PA) of the Mississippi bar, admitted pro hac vice, and Sandhya M. Feltes, argued the cause for appellant/cross-respondent (Kaplin Stewart Meloff Reiter & Stein, PC and David W. Mockbee, attorneys; Sandhya M. Feltes and David W. Mockbee, of counsel and on the briefs; Mary Elizabeth Hall (Mockbee Hall & Drake, PA) of the Mississippi bar, admitted pro hac vice, on the briefs).

          Lawrence S. Lustberg argued the cause for respondent/cross-appellant (Gibbons, PC, attorneys; Keith R. Hemming, Charles T. Kane and Daniel A. Dorfman, on the briefs).

          Before Judges Alvarez, Nugent, and Currier.

          OPINION

          CURRIER, J.A.D.

         In this breach of contract action arising out of a purchase agreement between the parties, the trial judge found, after a Rule 104 hearing, that the testimony of plaintiff's principal witness was insufficient to sustain its claim and plaintiff required an expert to establish its proofs. As a result, the judge dismissed plaintiff's complaint and, after a bench trial, entered judgment for defendant on its counterclaim. Because we conclude that the trial judge erroneously precluded plaintiff's witness from presenting proofs of its claims and required it to produce an expert, we reverse and remand for a new trial.

         I.

         Plaintiff E&H Steel Corporation was the successful bidder for a proposal to fabricate sixteen types of structural steel items to be used for equipment in a power station owned and operated by defendant PSEG Fossil.[1] Plaintiff based its unit prices on documents and specifications submitted with the bid package. Following the award of the bid, the parties met to execute the contract. After the execution of the agreement, defendant's representatives placed a CD in the contract binder containing the drawings for the required steel components.

         Plaintiff alleged that the CD contained forty-seven new drawings not previously provided to the company that differed significantly from the drawings supplied in the bid package, upon which the contract price was based. There were also numerous revisions to the drawings previously priced. Defendant denied plaintiff's requests for a revision and re-pricing of the units, and a conformity of the contract to the new drawings.

         Nevertheless, plaintiff fabricated the steel according to the new drawings and submitted change orders for its increased time and labor needed to construct the steel in conformity with the drawings. Defendant contended that the contract only permitted change orders for increased tonnage, and not for expenses of more time and labor. Accordingly, it issued a change order increasing the tonnage amount of the contract but refused additional change order requests.

         Plaintiff filed a construction lien and a complaint alleging that defendant breached the contract when it presented new drawings which required additional time and labor than that previously provided for in the bid drawings and purchase agreement, and failed to approve change order requests necessitated by the additional drawings. Defendant's counterclaim also alleged breach of contract, asserting that the contract only permitted change orders for increased tonnage, not additional time and labor. The counterclaim also sought the discharge of the construction lien.

         A.

         Defendant moved for summary judgment, arguing that the complaint was filed after the expiration of the one-year statute of limitations period specified under the contract and requesting the discharge of the construction lien. The motion was denied on November 18, 2011.[2] A second motion to discharge the construction lien was denied in a September 4, 2013 written order.

         Summary judgment was again sought by defendant on several grounds, including the statute of limitations, and was denied on May 15, 2015. Defendant moved for reconsideration of the denial of its summary judgment motion and requested a Rule 104 hearing for a determination as to whether expert testimony was required for plaintiff to establish its claims. Although plaintiff's principal witness, Scott Quattlebaum, had answered extensive interrogatories and been deposed, he had not been designated as an expert.

         Defendant's motion for reconsideration was denied on June 15, 2015. However, the court agreed to conduct a Rule 104 hearing to determine whether plaintiff required an expert to establish a prima facie case.

         B.

         At the Rule 104 hearing, Quattlebaum, a vice-president of the company and a licensed professional engineer, testified that he had worked for the company since 1987 in numerous roles including as a general laborer, fabrication employee, and shop employee, "doing the fabrication processes starting from the very beginning . . . all the way through the completed project." He worked in the engineering and detailing department for several years drafting fabrication or "shop" and erection drawings from engineering or construction drawings.

         Quattlebaum continued to work for plaintiff as assistant engineering manager[3] and, later, engineering manager. In that role, he was in charge of the engineering and detailing departments. He had offices in two different states, overseeing thirty-five people who detailed or created shop and erection drawings, compared the shop and erection drawings for revisions, and compared the contract drawings to determine change order requests.

         Defendant put out a bid inquiry for a Selective Catalytic Reduction Unit - a component of emission control equipment - to be installed at its power plant. Quattlebaum explained the specifications of the proposal, the request for pricing of sixteen items including seven categories of structural steel, and the requirements that the bid comply with the included CD of drawings. He also detailed for the court what certain terms meant and their importance. He advised that he reviewed all of the contract drawings and specifications for the project and created a budget of engineering and detailing.

         Referring to the bid documents for the specifications for connections and bolts, Quattlebaum offered an extensive explanation of the different factors that he considered in calculating the bid price for those elements. He noted the importance of determining what code governed the project because the particular code standards had to be taken into account in detailing fabrication and delivery of the steel parts. He also used drawings and photographs to supplement and support his testimony.

         In discussing the events surrounding the signing of the contract, Quattlebaum stated that upon opening the CD provided to his team as they left the signing, he discovered there were forty-seven new drawings not previously provided to his company that differed significantly from the drawings supplied in the bid package, upon which the contract price was based. There were also numerous revisions to the drawings previously priced. He noted particularly the change in connection details. Whereas the original drawings showed connections to be 10% of the overall weight of the unit, the new drawings increased the connections to 34% of the total weight for the same length of beam. He described this as "a dramatic increase in the quantity of connection material, which is the most expensive commodity on this piece." He added that as more connections are added to each foot of steel beam, "the higher the man hour per foot it costs" to produce that beam.

         As compared to the original set of drawings, Quattlebaum stated that the steel members shown in the new drawings were "very large and very heavy, requiring the use of more and larger bolts and cranes to lift the pieces." This required the revision and re-pricing of the units and unit prices in the contract.

         As an example, Quattlebaum showed the court photographs of the connection plate that the bid drawings and specifications required, and the connection plate that plaintiff eventually fabricated and shipped to the site. In the photographs, the templates are placed on either side of a man, demonstrating the significant difference in the size of the two connections. Numerous other photographs and drawings were used to show the difference between the size of pieces specified in the bid and the much larger "as built[, ]" or fabricated pieces constructed pursuant to the additional CD drawings.

         Quattlebaum also explained how the change in drawings affected the fabrication process and pricing scheme. For instance, the original size of the pieces specified in the bid were small enough to fit into plaintiff's automated equipment, but some of the "as built" pieces were too large to do that. They "ha[d] to be hand cut with a torch." In addition, plaintiff's machinery was equipped to punch the seven-eighths inch holes shown on the inquiry specifications, but when the sizing was increased to 72 one-and-a-quarter inch holes on the connections ...


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