Sons of Thunder, Inc. v. Borden, Inc.

Decision Date01 November 1995
Parties, 29 UCC Rep.Serv.2d 33 SONS OF THUNDER, INC., Plaintiff-Respondent, v. BORDEN, INC., Defendant-Appellant.
CourtNew Jersey Superior Court — Appellate Division
Peter J. Pizzi, Roseland, for appellant (Connell, Foley & Geiser, attorneys; Mr. Pizzi and Jeffrey Steinberg, of counsel and on the brief)

Richard L. Bazelon, Vorhees, for respondent (Bazelon & Less, attorneys; Mr. Bazelon, Helen Heifets and Jerrilyn G. Marston, of counsel and on the brief).

Before Judges MICHELS, KEEFE and HUMPHREYS.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Defendant Borden, Inc. (Borden) appeals from a portion of a judgment of the Law Division entered on a jury verdict that awarded plaintiff Sons of Thunder, Inc., damages in the amount of $412,000 based on a breach of an implied covenant of good faith and fair dealing in terminating its contract with plaintiff and from a denial of its motion for a judgment notwithstanding the verdict. At issue, is whether an implied covenant of good faith and fair dealing under the facts of this case overrides a contractual right to terminate the subject contract without cause. We hold that it does not and, therefore, reverse the judgment entered in favor of plaintiff.

This appeal involves Borden's Snow Products Division in Cape May, New Jersey. Borden processes quahog clams for resale at its Cape May plant. Quahogs are found in the seabed twenty to forty miles offshore from Cape May in one-hundred to two-hundred feet of water. The quahog is a thick-shelled clam, which is almost impossible to open by hand. Therefore, a steam process is required to "shuck" the clams, that is, to open the shells to remove the meat. Once the meat is removed and processed, it is In the early to mid-1980's, all of those products were manufactured at Borden's plant in Pine Point, Maine. However, the clams utilized in that manufacture were shucked, processed, chilled down, and transported to the Maine plant from Borden's processing plant in Cape May. Before that processing could occur, the clams first had to be harvested and brought to Cape May.

used to make such products as clam chowder, chopped clams, clam juice, and various sauces.

To harvest the clams, Borden maintained a fleet of four boats in Cape May. Additionally, Borden purchased clams from independently owned and operated boats. One of the boats owned by Borden was the Arlene Snow, which was captained by Donald R. DeMusz (DeMusz). In the early 1980's, DeMusz pressed Borden to allow him to take over the management of Borden's fleet of four boats, promising an annual savings to Borden compared to the fees charged by Eric Kirkenberg, who was then managing Borden's fleet. Finally, in May 1983, Borden entered into a charter agreement with DeMusz's corporation, Sea Labor, Inc., to manage and operate Borden's fleet.

Around this time, Borden began to move forward on a long-considered project to shuck clams at sea immediately after harvest. The advantage of shucking clams at sea was that a bigger haul of clam meat could be obtained per boat trip because the weighty and voluminous shells were discarded at sea. A boat, therefore, could stay out at sea longer, collect more clam meat than non-shuck-at-sea boats, and have that clam meat chilled and ready for transport to the Maine plant almost immediately upon docking in Cape May.

By late 1983, Borden had developed equipment to process the clam meat at sea, and was prepared to install the equipment on a boat for testing. At first, Borden attempted to install the equipment on the Arlene Snow. However, the equipment required far more room than was available on the ninety-foot-long Arlene Snow, and Borden began its search for a larger boat. Charles Wayne Booker (Booker), who was Borden's Group Operations Borden eventually agreed to go ahead with DeMusz's proposal for the shuck-at-sea project. In January 1984, DeMusz and two partners formed Sea Work, Corp. (Sea Work). Sea Work purchased a large boat, the Baroid Bullet, which it renamed the Jessica Lori. After acquiring the Jessica Lori, Sea Work engaged a Texas shipyard to rig the boat for clamming. Borden required that the Jessica Lori be "rigged as a double rig" with two clam dredges, one of which was to be operated from the starboard side and the other from the port side of the boat. Although DeMusz objected to this double-rig arrangement because it occupied too much deck space and required additional crew members, which would increase maintenance costs, Sea Work went ahead with the project and double rigged the Jessica Lori. The total cost of purchasing and rigging the Jessica Lori was $750,000, which Sea Work financed through a bank loan.

Manager in Columbus, Ohio, was in charge of the production and operation of Borden's Snow Food Products processing division. He began negotiations with DeMusz who was working closely with Borden on the shuck-at-sea project. DeMusz proposed that he would purchase a larger boat on which Borden could install the shuck-at-sea equipment. In exchange, Borden would purchase the clams harvested and processed by DeMusz at a set price. Booker saw advantages for Borden in DeMusz's proposal. First, because Borden would not have to purchase a larger boat, there would be an immediate and substantial savings in boat-purchase costs. Second, because the clam shells would be discarded at sea, Borden would avoid the environmental costs associated both with the disposal of the clam shells on land and with the related water treatment expenses incurred in the processing of the clams at the Cape May plant. Finally, Borden would also avoid the cost of drilling a new freshwater well at the Cape May plant, which would be necessary if the clams were processed at the plant and not at sea.

On July 11, 1984, Borden and Sea Work entered into an "Equipment Lease" under which Borden agreed to place its Sometime in July or August 1984, DeMusz and Booker began discussions concerning the possibility of DeMusz acquiring a second large boat. Borden wanted a second large boat under contract to assure a reliable supply of clams during bad weather when smaller boats could not venture out to sea. Additionally, if a second large boat were clamming for even a short period of time, that boat would benefit from any allocation system arising out of a then-anticipated change in the federal clam fishery rules, because any allocation of allowable clam harvest to a particular boat would be based on the boat's harvest history. A large all-weather boat would have a greater catch history. As a result, with a second large boat under contract, Borden could be guaranteed a reliable supply of raw clams even if a federal allocation system were implemented in the future.

shucking equipment on the Jessica Lori in exchange for Sea Work's agreement to sell to Borden the clam meat that was to be harvested and processed at sea over a period of three years at a set price. At the time that the Equipment Lease was executed, both Borden and Sea Work anticipated that Borden's shuck-at-sea processing equipment would be installed on the Jessica Lori, and would be tested and operational by the end of 1984. Unfortunately, Borden's processing equipment did not function properly and required extensive redesign before the equipment could be finally installed. This work was not accomplished until the spring of 1985. In the meantime, Sea Work's Jessica Lori engaged in harvesting quahog clams as an independent supplier, selling them to Borden at the Cape May plant.

Negotiations between DeMusz and Booker extended over the latter half of 1984. Booker reviewed the project with Herbert Southwell, Vice President and Manager of Borden's Grocery Products Division, and arranged for David Rau, Borden's Snow Products Division Accounting Manager, to work with DeMusz to calculate "how many bushels of quahogs a week Mr. DeMusz or his company would need to be able to sell to support the investment in this project." Eventually, Booker and DeMusz arrived at On December 20, 1984, Booker sent DeMusz a letter, stating that Borden intended to enter into a quahog supply contract with him to support the purchase of a second large boat. Booker had previously reviewed this letter with Southwell and sent a copy to Borden's legal department. Moreover, Booker was aware that DeMusz would present the letter to a bank in an effort to obtain financing for the purchase and renovation of the second boat. Upon receipt of Borden's letter, DeMusz directed his attorney to form plaintiff corporation.

an understanding that DeMusz would purchase a second large boat and that Borden would enter into a contract to purchase a set amount of clams harvested weekly by that boat at a set price. In that manner, Borden would be assured of a dependable supply of clams, and DeMusz would be guaranteed both a purchaser for the clams and a reliable income stream to finance the boat.

In late December 1984, DeMusz drafted a one-page contract and sent it to Booker for signature. Booker reviewed the contract with Southwell and received Southwell's permission to sign it. Shortly thereafter, Booker apparently telephoned DeMusz and informed him that the contract was acceptable. On December 26, 1984, DeMusz filed plaintiff's certificate of incorporation with the New Jersey Secretary of State. DeMusz and Robert Dempsey (Dempsey), Borden's plant manager at Cape May, were listed as directors of plaintiff corporation. The stock of plaintiff-corporation was owned equally by DeMusz, Dempsey and a William Gifford (Gifford). In early January 1985, Booker signed the contract on behalf of Borden. Booker then returned the signed document to DeMusz, who, on January 15, 1985, signed it on behalf of plaintiff.

At the time Booker signed the contract, he did not know that Dempsey had an undisclosed one-third interest in the plaintiff-corporation or that Dempsey had...

To continue reading

Request your trial
10 cases
  • DeCastro v. AWACS, Inc., Civil No. 96-1452.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • 2 Agosto 1996
    ...... destroying or injuring the right of the other party to receive the fruits of the contract." Sons of Thunder, Inc. v. Borden, Inc., 285 N.J.Super. 27, 49, 666 A.2d 549, 560 (App.Div.1995). See ......
  • Green v. City of Paterson, Civil Action No. 95-6028(AJL).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • 26 Junio 1997
    ......Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 ......
  • Sons of Thunder, Inc. v. Borden, Inc.
    • United States
    • United States State Supreme Court (New Jersey)
    • 11 Marzo 1997
  • In re Big V Holding Corp.
    • United States
    • U.S. Bankruptcy Court — District of Delaware
    • 14 Septiembre 2001
    ....... Big V Supermarkets, Inc., et al., Plaintiffs, . v. . Wakefern Food Corporation, ....          Sons of Thunder, Inc. v. Borden, Inc., 285 N.J.Super. 27, 47, ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT