Opinion ID: 1970127
Heading Depth: 1
Heading Rank: 3

Heading: Sons of Thunder, Inc.

Text: In August 1984, Booker and DeMusz began negotiations about DeMusz purchasing a second boat that would provide clams to Borden. If the Shuck-at-Sea project was successful, Borden would want a second vessel shucking at sea. Moreover, a second large boat would give Borden the advantage of receiving clam meat in bad weather because small boats generally cannot go out to sea in bad weather. Finally, Borden wanted to ensure that it received a certain amount of clams if the National Fisheries Advisory Council implemented annual limits on the amount of clams a boat could harvest. Booker, on behalf of Borden, and DeMusz entered into an oral agreement, which gave DeMusz a long-term supply contract for the second boat. Borden's accounting manager helped DeMusz calculate how many bushels would have to be sold and how much revenue would have to be generated to support DeMusz's financing of the second boat. Booker, with Southwell's knowledge, wrote DeMusz a letter of intent to help DeMusz obtain financing. DeMusz drafted a one-page contract by himself and sent it to Booker, who approved it with one minor change. According to Booker, the contract memorialized his oral agreement with DeMusz. DeMusz, along with Bill Gifford and Bob Dempsey, formed Sons of Thunder, Inc. to buy the second boat. Dempsey was the manager of Borden's Cape May Plant and was responsible for buying quahogs for Borden. Dempsey failed to disclose his interest in Sons of Thunder on his annual statements affirming that he had no undisclosed interest in any of Borden's suppliers. Despite his conflict of interest, Dempsey did not appear to favor Sons of Thunder, and the trial court instructed the jury not to consider his undisclosed conflict of interest as part of Borden's defense or as to the issue of fraud. On January 15, 1985, Booker signed the contract with DeMusz, Southwell approved it, and Borden's legal department initialed it. That contract is the focus of this appeal. The contract was to begin when the boat was ready to operate. The one-page contract provided: IT IS understood and Agreed to by the parties hereto that Snow Food Products shall purchase shell stock from Sons of Thunder Corp. for a period of one (1) year at the market rate that is standardized throughout the industry. The term of this contract shall be for a period of one (1) year, after which this contract shall automatically be renewed for a period up to five years. Either party may cancel this contract by giving prior notice of said cancellation in writing Ninety (90) days prior to the effective cancellation date. Sons of Thunder Corp. will offer for sale all shell stock that is landed to Snow Food Products with Snow Food Products having first right of refusal, but it is agreed upon that Snow Food Products will purchase at least 240 cages of ocean quahogs per week or 7,680 bushels of ocean quahogs, with the exception of annual plant shutdown and unforeseen plant shutdowns. In March 1985, Sons of Thunder bought a boat, which it named Sons of Thunder. The cost to rig and purchase the boat was $588,420.26. Sons of Thunder sought financing from First Jersey National Bank, but was unable to obtain a loan until Booker intervened in the negotiations. Booker told the representative of the bank that DeMusz had a solid relationship with Borden and that although the contract could be terminated within one year, Borden expected the contract to run for five years. Moreover, Booker explained to the representative that the five-year term of the contract would be sufficient to pay back the loan. Ultimately, DeMusz obtained a $515,000 loan, which he, Gifford, Dempsey, and their spouses personally guaranteed. DeMusz used a personal note to cover the remaining balance. The boat was not ready to fish until February 1986. After some preliminary testing, the Sons of Thunder started to operate and to fulfill its contract with Borden. For most weeks, the records show that Borden did not buy the minimum amount specified in the contract.