PSE&G building in Newark, NJ/Photo by Carmen Natale

In a yearslong dispute between a PSE&G subsidiary and its steel supplier, a New Jersey appeals court on Monday, reinstating the action, said a trial judge erred in blocking an executive's testimony and requiring an expert report.

The three-judge Appellate Division panel, in a published decision, ordered a new trial for the plaintiff, Midland City, Alabama-based E&H Steel Corp., which filed the lawsuit against Newark-based PSEG Fossil LLC, a subsidiary of PSEG Power LLC.

Appellate Division Judge Heidi Currier, writing for the panel, said a Hudson County judge erred by extensively blocking the testimony of E&H's vice president, a licensed engineer, as he tried to explain how the company was financially harmed by PSEG Fossil. Judges Carmen Alvarez and William Nugent joined in the ruling.

“Here, the trial court misconstrued the nature of the [company official's] testimony and misapplied the pertinent rules of evidence,” Currier said. “The resulting determination to exclude the testimony was an abuse of discretion.”

The dispute between E&H and PSEG goes back more than seven years.

PSEG Fossil, after a competitive bidding process, hired E&H to fabricate steel for a power generating facility PSEG Fossil was going to build in Jersey City, according to the ruling.

At some point after the contract was awarded, Currier said, PSEG Fossil changed the specifications of the project, submitting dozens of new drawings and plans, which E&H said would require the use of additional steel and increase workers' hours.

E&H then issued a change order. PSEG Fossil, Currier said, approved spending more for additional steel and other equipment, but refused to pay for additional time or labor.

E&H filed a complaint against PSEG Fossil in 2011.

After the trial denied a series of motions filed by PSEG Fossil to dismiss the lawsuit on summary judgement, a bench trial was scheduled. The trial judge was not identified by the Appellate Division.

E&H planned on relying heavily on the testimony of its vice president, Scott Quattlebaum, who had been with E&H since 1987, to make its case, according to the decision.

The judge allowed Quattlebaum to describe the change order requests, but barred him from discussing his beliefs and the reasons behind those change orders, the court said.

Because Quattlebaum was barred from offering his opinions about the reasons behind the change orders, the judge also ruled that E&H's financial expert, Ray Vinson, would not be allowed to testify about the financial impact the change orders had on the company.

The judge dismissed E&H's lawsuit, and entered judgment in favor of PSEG Fossil on its counterclaim, which alleged breach of contract and sought nearly $2.9 million in damages.

E&H appealed, and the Appellate Division reversed.

While saying that trial judges are normally offered deference in their evidence rulings, “no deference is required when the trial court fails to properly analyze the admissibility of the proffered evidence,” Currier said.

“Contrary to the trial court's interpretation of the expert opinion rule, New Jersey law does not mandate that lay testimony, and even lay opinion testimony, based on scientific, technical, or other specialized testimony, automatically triggers the need for compliance with the rules for admissibility of expert testimony,” Currier said.

PSEG Fossil's lawyer, Lawrence Lustberg of Gibbons in Newark, declined to comment.

E&H's lawyer, David Mockbee of Mockbee Hall & Drake in Jackson, Mississippi, didn't return a call seeking comment.

PSEG Fossil issued a statement through a spokesman, Michael Jennings.

“We are reviewing the decision and evaluating our options going forward,” Jennings said.