I wrote to PA to tell them that I would not be renewing my contract with them come next year. (I wish I had never fallen for their evil ways.) They responded quickly with this letter.

"We have received your request to not renew the contract. Therefore, your contract will expire and your book will go out of print on 3/19/14. If or when your contract is terminated or expires, you own the unformatted text only, and you can do as you choose with that alone.

PublishAmerica continues to own the ISBN number, the cover design, and the layout design of the text. Any use of any of these items would be a serious and very clear case of infringement. Therefore, you can use the same design only if we transfer the rights to you, or to your new publishing company. If you would like to use the cover or layout design, we would transfer the rights to your cover design and/or text layout, and provide you with high resolution pdf files of each. The cover design would cost $500, and/or the text layout would cost $250.

Again, you own the unformatted text only, and you can do as you choose with that alone."

Now tell me how can they possibly say they own the cover when I am the artist that designed the cover as well as every illustration in the book?! Are they saying that the book can't be printed in the same formation as they printed it? No problem I wasn't thrilled with that format any way. So I move my illustrations around revamp them and what alter some text, again no problem. But how can they say they own the cover I designed and sent to them to use? Grrrrrr!
What if I take this book and add it to a compilation of three other stories that follow, that changes the whole book entirely into a new book, right? There has to be a work around to this. I am not paying them $500 for my own art work.

Any advice?