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Home My WebLink About09-12-08IN RE: IN THE COURT OF COMMON PLEAS OF ESTATE OF LOY T. HEMPT CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION "°' ~~ -::a c~ `~~' NO. 21-77-231 ~? <~ ~., - ~~~~ ~ ~ -,`:a -, \ ..~ ,~ -_ ,_ _;: ~'~~ Y~ _,-~ --; APPLICATION FOR STAY AND FOR TERMS AND CONDITIONS ~ ~: OF APPROPRIATE SECURITY -~~-~ - - ~ ` `9 ~~ Gerald L. Hempt ("Gerald"), Trustee of the Loy C. Hempt Residuary Trust (the "Trust"), hereby makes the following application for stay and for terms and conditions of appropriate security: 1. Gerald has filed a Notice of Appeal of the Court's Order entered in this matter on August 14, 2008. A copy of that Order is attached hereto as Exhibit A. 2. The Order entered on August 14, 2008 granted in part and denied in part Gerald's exceptions to the Court's Order entered on April 16, 2008. A copy of that Order is attached hereto as Exhibit B. 3. The effect of the Court's Order entered on August 14, 2008 is to: remove Gerald as Trustee of the Loy C. Hempt Residuary Trust; propose the appointment of the Hershey Trust Company as the successor trustee of the Loy C. Hempt Residuary Trust; set aside the division of the residuary trust into three distinct trusts and order the trustee to reform the trusts into a single trust; confirm the distributions to the beneficiary Jean D. Hempt made before the death of trustee Max C. Hempt; and, surcharge Gerald in the total amount of $241,786.09. I. Application for Stay 4. A stay of the Court's Order of August 14, 2008 should be granted because: Gerald has made a substantial case on the merits; the Trust will suffer irreparable injury without a stay; the issuance of a stay will not substantially harm other interested persons; and, the issuance of a stay will not adversely affect the public interest. See Pennsylvania Public Utility Comm'n v. Process Gas Consumers Group, 467 A.2d 805, 808-09 (Pa. 1983) (standards for issuance of stay pending appeal). 5. Gerald has made a substantial case on the merits. The Court has found that Gerald did not act in bad faith (see Order of Court dated April 14, 2008 at p. 14), and has removed him because of aconflict-of-interest arising from the fact that he is the trustee of the Trust and also will be a beneficiary of the Estate of the sole lifetime beneficiary of the Trust, his incompetent aunt Jean D. Hempt. This same positional conflict-of-interest existed as to Max C. Hempt (Gerald's father), who was appointed an original trustee by the testator, Loy C. Hempt. There is no appellate case on point with respect to whether a successor trustee appointed by the Court upon the motion of the original trustee should be subject to the same waiver of conflict-of-interest so as to permit him to continue the pattern of distributions made by the original trustee. Gerald's contention that he should not be removed under these circumstances presents a substantial case on the merits. 6. The Trust will suffer irreparable injury without a stay. Gerald was appointed by this Court as a co-trustee of the Trust upon the petition of his father, Max C. Hempt, an original trustee who had been named by the testator, Loy Hempt. Max C. Hempt petitioned for Gerald's appointment as co-trustee on the grounds that Gerald was the most knowledgeable about the welfare of Jean D. Hempt, and because Gerald was a shareholder 2 and officer of Hempt Brothers, Inc., the company whose stock was (and is) a major trust asset. It is apparent from the terms of Loy Hempt's Will that he preferred that the trustee be a family member. Gerald has served as trustee without fee to the Trust. His removal prior to the final disposition of this matter will result in the appointment of a trustee without any familial relationship to Loy C. Hempt, without personal familiarity with Jean D. Hempt, and one who will charge fees to the Trust. Moreover, if the Order removing Gerald as trustee is not stayed and Gerald ultimately prevails on appeal, the Trust will have repeated changes of trustee, and the need for multiple accountings. 7. The issuance of a stay will not substantially harm other interested persons. The other interested persons are the lifetime beneficiary (Jean D. Hempt) and the remainder beneficiaries. As set forth above, the Court has found that Gerald has not acted in bad faith as trustee. In his capacity as trustee, he continues to be held to the appropriate standard of care. With respect to the amount of the surcharge, as set forth below, Gerald proposes that he deposit with the Court security in the amount of 120% of the surcharge amount. There is no basis to find that any of the beneficiaries will be harmed by Gerald continuing to act as Trustee pending the final disposition of this matter. 8. The issuance of a stay will not adversely affect the public interest. The interested persons in this matter are individuals. A stay will not adversely affect the public interest. Wherefore, for the reasons set forth above, Gerald L. Hempt, Trustee of the Loy C. Hempt Residuary Trust, respectfully requests that the Court stay the Order entered in this matter on August 14, 2008 pending appeal. 3 II. Alternative Application for Partial Stay 9. Paragraphs 1-8, above, are incorporated herein by reference. 10. In the event that the Court does not stay in its entirety the Order entered in this matter on August 14, 2008, Gerald requests that the Court issue a partial stay to operate as a supersedeas with respect to the surcharge requiring him to pay $241,786.09 to the Trust, upon the deposit of appropriate security by Gerald (as addressed below). Wherefore, in the alternative, for the reasons set forth above, Gerald L. Hempt, Trustee of the Loy C. Hempt Residuary Trust, respectfully requests that the Court issue a partial stay of the Order entered in this matter on August 14, 2008 pending appeal, so as to operate as a supersedeas with respect to the surcharge upon him. III. APPLICATION FOR TERMS AND CONDITIONS OF APPROPRIATE SECURITY 11. Paragraphs 1-10, above, are incorporated herein by reference. 12. The total payment of money required by the Order entered in this matter on August 14, 2008, as a surcharge to be paid by Gerald to the Trust, is $241,786.09. 13. An appeal from an order involving solely the payment of money operates as a supersedeas upon the deposit with the lower court of appropriate security in the amount of 120% of the amount found due by the lower court and remaining unpaid. Pa. R.A.P. 1731. 14. 120% of $241,786.09 is $290,143.30, which is just and proper security. 4 Wherefore, for the reasons set forth above, Gerald L. Hempt, Trustee of the Loy C. Hempt Residuary Trust, respectfully requests that the Court grant his application for stay as set forth above, and that the Court deem the amount of security to be $290,143.30, in a Form appropriate under Pa. R.A.P. 1734, which will operate as a supersedeas upon filing. Respectfully submitted, McNEES WALLACE & NURICK LLC By Donald B. Kaufman (I.D. N .49674) 100 Pine Street P.O. Box 1166 Tel: (717) 237-5373 Fax: (717) 260-1708 Attorneys for Gerald L. Hempt, Trustee of the Loy C. Hempt Residuary Trust (Dated: September 12, 2008 5 IN RE: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ESTATE LOY T'. HEMPT, Deceased Trust Created Under Item Fifth of the Will N0.21-77-231 ORPHANS' COURT ORPHANS' COURT DIVISION IN RE: GERALD L. HEMPT'S EXCEPTIONS TO THE APRIL 16 2008 OPINION AND ORDER BEFORE BAYLEY P.J., GUIDO. J. ORDER OF COURT AND NOW, this 13 rn day of AUGUST, 2008, after reviewing the briefs filed b}' the parties in support of their respective positions and having heard argument thereon Gerald L. Hempt's Exceptions to the April 16, 2008, opinion and order are GRANTED in part. The exception to the appointment of Orrstown Bank as successor Trustee is GRANTED. In lieu of Orrstown Bank we propose the appointment of the Hershey Trust Company to act as successor Trustee. This appointment shall become effective upon the acceptance by the Hershey Trust Company. In all other respects the exceptions of Gerald L. Hempt are DENIED and our order of April 16, 2008, is hereby made FINAL. William Duncan, Esquire Donald Kaufman, Esquire No V. Otto, III, Esquire Daniel L. Sullivan, Esquire Joel Zuliinger, Esquire By,,~:he'Court, , ,.._ c , ~_ -;~; :«. -? c, Edward E. Guido. J. ;~, - r _ '_ _ --, S ' . -. x .~ ~ ~1 W ~.. fN RE: IN THE COURT OF COMMON PLEAS OF :CUMBERLAND COUNTY, PENNSYLVANIA ESTATE OF LOY T. HEMPT, ~ '~' 21-77-231 ORPHANS' COURT '=o Deceased N0 -~-- . Trust Created Under Item Fifth of ~ ~' ~' t'' `-' The Will :ORPHANS' COURT DIVISION ''- yrn - f ~ , r-r, ~~>~ rn _.., ~a . ~- l IN RE: EXCEPTIONS TO AUDITOR'S REPORT AND RECOMMENDATIONS w ~' '^ BEFORE BAYLEY, P.J., GUIDO, J. f , ~_ ORDER OF COURT AND NOW, this !_ ~ day of APRIL, 2008, the exceptions to the Auditor's Report and Recommendations are sustained in pari and overruled in part. For the reasons set forth in the attached opinion it is hereby ORDERED and DIRECTED as follows: Gerald L. Hempt is removed as Trustee of the Loy T. Hempt Residuary Trust. We propose the appointment of Orrstown Bank to act as successor Trustee. This appointment shall become final unless any party or the proposed Trustee files a specific objection within 20 days. Gerald L. Hempt is surcharged for the following: {a.) $192,500 representing distributions to Jean D. Hempt after the death of Max C. Hempt. (b.) $41,215.31 for attorney fees paid in connection with the trust division. (c.) $8,070.78 representing 11 % of the principal and interest due the trust as a result of loans to Valley Land Company. The Trustee's exception to the Auditor's recommendation regarding the pro-rata distribution of assets upon the death of Jean Hempt is sustained and that recommendation is rejected. Except as modified above, the Auditor's Report and Recommendations are hereby confirmed and are entered as an Order of Court. Consistent therewith, the distributions to the beneficiary, Sean Hempt before the death of Max C. Hempt are CONFIRMED and the Trustee's Account is CONFIRMED (as modified by this order). Furthermore, the Trustee's division of the Residuary Trust into three distinct Trusts is set aside and the Trustee is hereby ordered to reform the Residuary Trust created under Article FIFTH of t_he Will of Loy T. Hempt into a single Trust. By the Co -t, William Duncan, Esquire One Irvine Row Carlisle, Pa. 17013 Edward E. Guido, J. Donald Kaufman, Esquire 100 Pine Street P.O. Box 1166 Harrisburg, Pa. 17108-1166 Iva V. Otto III, Esquire 10 East High Street Carlisle, Pa. 17013 Daniel L. Sullivan, Esquire METTE, EVANS & WOODSIDE 3401 North Front Street P.O. Box 5950 Harrisburg, Pa. 17110-0950 3oe1 Zullinger, Esquire 14 North Main Street Suite 200 Chambersburg, Pa. 17201 Trust Department Orrstown Bank CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing document was served upon this date by first-class mail, postage prepaid, addressed as follows: Daniel L. Sullivan, Esquire METTE, EVANS & WOODSIDE 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 Joei Zullinger, Esquire ZULLINGER & DAVIS 14 North Main Street, Suite 200 Chambersburg, PA 17201 Donald B. Kaufman Of Counsel for Gerald L. Hempt, Trustee of the Loy C. Hempt Residuary Trust Dated: September 12, 2008