Opinion ID: 1970127
Heading Depth: 1
Heading Rank: 6

Heading: Termination Letters

Text: During the spring of 1987, Borden discovered that an accounting error of $500,000 had been made in calculating the Shuck-at-Sea project, and that the project would not be profitable. Two internal memos, dated April 2, 1987, and April 24, 1987, recommended that the Shuck-at-Sea project be abandoned. On May 8, 1987, Borden sent both Sea Work and Sons of Thunder letters, notifying them that it was terminating the contracts. Both letters seemed to comport with the time limitations of the two contracts (sixty and ninety days respectively). Culver testified that Borden ended the contracts because DeMusz's credibility had been tainted by the Dempsey incident. However, Sea Labor, with DeMusz at the helm, remained as the manager of Borden's fleet into 1988. DeMusz testified that Gallant said that Borden was terminating the contract with Sons of Thunder because of a corporate decision. Within ten days of the letters, Borden removed the cages from the Sons of Thunder. Within weeks, the boat was no longer sent out to harvest clams. After the contracts were terminated, no markets existed for the boats. Then, Gallant told DeMusz that Borden would continue to buy shell stock from the Jessica Lori if DeMusz was the only owner of the boat. In June 1987, DeMusz became the sole owner of the Jessica Lori and Gifford and Dempsey became joint owners of the Sons of Thunder. Gallant told DeMusz that he would have to sign a promissory note covering the advance if he wanted to continue fishing the Jessica Lori. On July 28, 1987, DeMusz signed a promissory note making Sea Labor, Sea Work, and himself personally liable for the balance of the $125,000 advance, which at that point was $96,277.75. That note also carried an interest rate six points over the prime rate. DeMusz testified that [he] was forced into paying something [he] didn't owe to continue working to survive. Gallant told Nicholson to give the Jessica Lori priority over other independent boats. However, Nicholson did not follow that instruction until DeMusz paid him kickbacks (fifteen cents per bushel). Borden fired Nicholson in September 1987 for accepting kickbacks. Eventually, DeMusz sold the Jessica Lori because of financial difficulties, and the buyer took over the note. DeMusz lost both his homes and was left financially devastated. Gifford and Dempsey moved the Sons of Thunder to Virginia to try to find a new market. They bought more boats before splitting their business in 1988. Gifford has been successful in the clam business, but he ultimately sold the Sons of Thunder because no market existed for such a large clamming vessel. He received $900,000, which enabled him to break even.