That response does not surprise me, although I am shocked that you got a response at all. Many of us are currently fighting to get our rights back after shabby treatment, and have been unable to get any answers. I am not certain what the future of Spencer Hill Press is at this point.
It's hard, I know. I had a lot good friends caught in the meltdowns of Musa and Ellora's Cave. I watched another great publishing house spiral down dramatically over the last few years, and I'm selfishly glad I got out from under them. AllRomance Ebooks caught many of us by complete surprise, because we didn't know it was a Ponzi Scheme.
This business changes on a dime, so never go by what a publisher or agent was like a few years ago. Check them out *now*, before you query. It saves you the embarrassment and second-guessing of having to politely refuse an offer, if one comes.