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HomeMy WebLinkAbout05-27-08 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PA IN RE: Orphans Court Division Loy T. Hempt No. 21-77 - 231 c:? o -7) )='0 ~: C2:! ANSWER TO GERALD L. HEMPT EXCEPTIONS _: ,':I; ~~ TO THE APRIL 16, 2008, OPINION AND ORDER OF CO~~~ .-~' ..D -! ......., (~ ~= C:JO ".. :;: -< N -J -u :J: 1'..) N The following answer to exceptions of Gerald L. Hempt fil~ to the April 16, 2008, Opinion and Order of Court is made by Joel R. Zullinger, Attorney for W. Robert Mark, Forrest H. Mark and Steven E. Mark (hereinafter called "Mark Bros."): General Statement As to all of the exceptions filed by Gerald L. Hempt, it 1S the position of the Mark Bros. that the Court should deny all of the exceptions. Considering all of the exceptions in the case law cited by Gerald L. Hempt, we remind the Court that there is one basic and irrefutable fact in this case: Gerald L. Hempt as trustee sought to further his own interest to the detriment of the Kalbach and Mark interests. Proof of the lengths to which he went in this regard is established in the various letters from his attorney, Robert Freedman, which were placed in evidence. In Page 1 .'j C) -- 11 ',J c) :"r.'} addition, Attorney Freedman's objectivity in representing the trustee was reduced to the point of nonexistence when he admitted at the auditor's hearing that he also represented at the same time Gerald Hempt individually, Hempt Brothers, Inc., and George Hempt. For this conduct the actions of Gerald L. Hempt should not be allowed to stand. The Court could effectively dismiss all of Gerald L. Hempt's exceptions by finding upon further review that Gerald L. Hempt did act in bad faith. However, even if the Court does not so find, all of the exceptions should be dismissed for the reasons set forth herein. Exception No. 1 - Removal of Gerald L. Hempt as Trustee The Court was correct in removing Gerald L. Hemptj however, even if the Court adopted the exception to the conflict of interest rule, the trustee still is subject to the fundamental fiduciary duty of treating all beneficiaries fairly. This he did not do in that he sought to further his own interest above that of the Mark and Kalbach interests without ever asking them their opinion. Exception No. 2 - Appointment of Substitute Trustee It is our understanding that Orrstown Bank has refused to act as substitute trustee and therefore this objection appears mute. Exception No. 3 - Surcharqe of Gerald L. Hempt for Distributions Made to Jean Hempt Again, Gerald L. Hempt had a fiduciary duty to all Page 2 beneficiaries and every dollar that went to Jean Hempt's guardianship account was not available to the Kalbach interests. While the various tax calculations are interesting, the purpose of the surcharge is to make the trust whole. If Gerald L. Hempt were not surcharged, how would that be possible? The alternative argument made on behalf of Gerald L. Hempt that any funds to be refunded to the trust should come from Jean's guardianship account is inappropriate in this case. The Court, at Gerald L. Hempt's urging declined to accept the auditor's recommendation as to division of assets at Jean's death since it went beyond the scope of his duties. Similarly, were the Court to grant this portion of Gerald's argument, it would be going beyond what is necessary to resolve the objections to the account. Gerald's recourse would be to petition the Court as Jean's guardian to permit such paYment to be made. This would also give the Mark Bros. a forum to request, at the very least, that one of them or a bank trust department be named co-guardian for Jean's estate, which was essentially the position that existed when their mother and uncle Max Hempt acted as co-guardians of Jean's estate. Exception No.4 - Surcharqe for Attornev Freedman's Fees Gerald L. Hempt did not hire Attorney Freedman to act solely for his duties as trustee, but also to represent him personally as well as Hempt Bros. Inc., and his brother, George Hempt. Again, Gerald L. Hempt had a fundamental fiduciary duty to treat all beneficiaries fairly. Gerald attempted to gain greater control of Page 3 Hempt Brothers and Valley Land Company and cut the Kalbachs entirely out of these holdings and limit the Mark Bros. holdings in these assets by dividing the trust into three trusts. A reasonable man, when charged with a duty to view the interest of all fairly, and not give anyone an undue advantage, would not seek to do just the opposite. Exception No. 5 - Division of the Trust Whether the stock in Hempt Brothers, Inc., and Valley Land was or was not correctly valued does not reflect the underlying issue, which is, did Gerald L. Hempt in dividing the trust, act in the best interests of all three families as beneficiaries. How could he have, when he set out to seek his own objective and never even asked the Mark Bros. or Kalbachs what their objectives were in these assets? In the absence of case law interpreting Section 7191 of the Probate, Estates and Fiduciaries Code, it is difficult to believe that the legislature would have envisioned a trustee to use Section 7191 in such a way as to gain advantage over the other beneficiaries. Conclusions For the reasons set forth above, the Court's Opinion and Order dated April 16, 2008, should be upheld in all respects. In Page 4 addition the Court may wish to reconsider its findings that Gerald L. Hempt acted in good faith in his duties as trustee. Respectfully submitted, ZULLINGER DAVIS, PC el R. Zu li Supreme Court 14 North Main Suite 200 Chambersburg, PA 17201 717-264-6029 Attorney for Mark Bros. Dated May 27, 2008 Page 5 CERTIFICATE OF SERVICE I certify that I am this day serving a copy of the foregoing document by first-class mail, postage prepaid, to the persons below, addressed as follows: Daniel L. Sullivan, Esq. METTE, EVANS & WOODSIDE 3401 North Front Street P. O. Box 5950 Harrisburg, PA 17110-0950 Donald Kaufman, Esq. McNEES, WALLACE & NURICK 100 Pine Street P. O. Box 1166 Harrisburg, PA 17108-1166 Kimberly M. Colonna, Esq. 100 Pine Street P. O. Box 1166 Harrisburg, PA 17108-1166 Dated May 27, 2008 Joel R. reme Court 4 North Main Suite 200 Chambersburg, PA 17201 717-264-6029 Attorney for Mark Bros.