Joe, I feel for you as I have been in your shoes before. I can also feel for the buyer because I am sure we have all been where they are too.
I honestly feel you made several mistakes and hopefully you will take some constructive criticism. But I do not feel what you did means that you should in anyway be held responsible for what has happened to those corals or that you should have to refund any part of the money that he paid!
One, you did not have an explained and understood "Arrive Alive" Guarantee, which stated that once the coral the coral arrived they they (the customer) has one hours to contact you with any problems with pictures. If these are not received within that hour time frame then you have no further responsibility. Once these corals are in you tank for several hours you have to be out of your mind to cnatact someone and tell them that they are dying!
Second, you did not have an explained and understood specific acclimation procedure? Although I would not say that this was what happened because there have been so many times where I have had to take newly arrived corals out of the bags and unceremoniously just dump them in the tank, Now this is not something that I would recommend doing but when they come in and you can tell that if left in the bag for one more minute that will die you have to do some extreme things. And to be completely honest with you I can pretty much count on one hand the corals that I have lost doing this over the years.
Third, you did not have an explained and understood specific Dipping procedure? I would have to say looking at those corals that you are right in saying that he must have dipped them in a solution that was to strong or possibly that they were dipped in a solution that contained fresh water. While dipping in fresh water with healthy corals other than SPS can and sometimes is OK, dipping a coral especially and SPS coral that has been stressed due to shipping is a sure Death Sentence!
And believe me I am not saying that he did anything correct, in fact I am still trying to understand why he would take strange corals and put them in what looks like his display tank with other established corals and I quote "which is also causing a lot of stress to my other, healthy corals." hasn't he heard of Monti eating Nudis or Red Bugs both of which dipping is like p1$$ing in the wind!
I am also trying to understand why he said " I bought some reef dip but that has not stopped the flesh from coming off the corals" which leads me to believe he did not dip the corals when he got them but only as an after thought in hopes of stopping the RTN. Which in its self is a mistake because that means he had to handle corals that were already extremely stressed again which most likely led to even more death!
Any coral that is shipped is going to release chemicals into the water and of course its going to smell, that is a given. But just because the water smelled does not mean the that coral is dying, it is normal! And to put these corals in a tank with healthy corals is extremely irresponsible and if he looses his other "healthy corals" he has no one to blame but himself.
So all in all I would tell him that as far as your concerned it is his fault that this has happened, and that your not sending him anything. You might offer to send him some small frags (which in my experience do so much better that whole colonies) in replacement and if he refuses then your done with him
