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F:IFILESIClientsIMumma 5844.1 (estate) 8747 (Kim)15844.l.Mumma Estate\58441.petjudiciaInotice2
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George B. Faller, Jf., Esquire
J.D. No. 49813
MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER
MARTS ON LAW OFFICES
10 East High Street
Carlisle, PA 17013
(717) 243-3341
Attorneys for Barbara McK. Mumma and Lisa M. Morgan
(..)
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INRE:
Estate of Robert M. Mumma,
Deceased
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 21-86-398
ORPHAN'S COURT DIVISION
PETITION FOR JUDICIAL NOTICE
AND NOW, come Lisa M. Morgan and Barbara McK. Mumma by and through their
attorneys MARTSON DEARDORFF WILLIAMS OTTO GILROY AND FALLER and bring this
Petition for Judicial Notice pursuant to P A Rule of Evidence 201, and aver as follows:
1. Petitioners are Lisa M. Morgan and Barbara McK. Mumma.
2. Respondent is Robert M. Mumma, II.
3. On February 13, 1989, this Court entered an Order in Barbara McK. Mumma. et aI.
v. Robert M. Mumma. II. et aI., No. 66 Equity 1988 (Cumberland County Court of Common Pleas)
and No. 21-86-398 (Cumberland County Court of Common Pleas - Orphan's Court Division). A
certified copy of the Opinion and Order is attached hereto as Exhibit "A".
4. On March 24, 1992, this Court entered an Order in Barbara McK. Mumma. et al. v.
Robert M. Mumma. II. et aI., No. 66 Equity 1988 (Cumberland County Court of Common Pleas).
A certified copy of the Opinion and Order is attached hereto as Exhibit "B".
5. On November 5, 1992, this Court entered an Order in Barbara McK. Mumma. et al.
v. RobertM. Mumma. II. et aI., No. 66 Equity 1988 (Cumberland County Court of Common Pleas).
A certified copy of the Opinion and Order is attached hereto as Exhibit "C".
6. On August 4, 1993, this Court entered an Order in In Re: Estate of Robert M.
Mumma. Deceased, No. 21-86-398 (Cumberland County Court of Common Pleas - Orphans' Court
Division). A certified copy of the Opinion and Order is attached hereto as Exhibit "D".
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7. On July 29,2002, this Court entered an Order in Robert M. Mumma, II v. Pennsy
Supply, Inc., No. 99-2765 (Cumberland County Court of Common Pleas). A certified copy of the
Opinion and Order is attached hereto as Exhibit "E".
1 O. The contents of certified copies of public records are deemed to be self-authenticating
pursuant to PA Rule of Evidence 902(4).
WHEREFORE, Petitioners respectfully request that this Honorable Court take judicial notice
ofthe above-listed orders and decisions.
\.Respec..ttffirK\ 1 suubbmml...tted'
~~
Ivo V. Otto, III
George B. Faller, Jr.
MARTSON DEARDORFF WILLIAMS OTTO
GILROY & FALLER
MARTS ON LAW OFFICES
10 E. High Street
Carlisle, P A 17013
(717) 243-3341
Joseph A. O'Connor, Jr.
Brady L. Green
MORGAN, LEWIS & BOCKIUS LLP
1701 Market Street
Philadelphia, PA 19103-2921
(215) 963-5212, 5079
Attorneys for Barbara McK. Mumma
Lisa M. Morgan
BARBARA MeR. MUMMA AND
LISA M. MORGAN, individually
and as executrixes of the
ESTATE OF ROBERT M. MUMMA,
Deceased,
Plaintiffs
v
ROBERT M. MUMMA, II,
Defendant
BARBARA MeR. MUMMA AND
LISA M. MORGAN, individually
and as executrixes of the
ESTATE OF ROBERT M. MUMMA,
Deceased,
Plaintiffs
v
ROBERT M. MUMMA, II,
BARBARA M. McCLURE, AND
LINDA M. ROTH,
Defendants
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
.
.
NO. 66 EQUITY 1988
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
NO. 21-86-398
IN RE: DEFENDANT ROBERT M. MUMMA, II IS MOTIONS TO DISQUALIFY
MORGAN, LEWIS & BOCKIUS FROM LEGAL REPRESENTATION
OF THE ESTATE OF ROBERT M. MUMMA, DECEASED
BEFORE SHEELY, P.J.
ORDER OF COURT
AND NOW, this
day of February, 1989,
13ft!
defendant's motion to disqualify the law firm of Morgan, Lewis &
..;;:~
Bockius from legal representation of the Estate of Robert M.
Mumma, deceased, is DENIED.
A TRUE COPY FROM RECORD
In Testimony wherof. I hereunto
set my hand and the seal
91 said Court at Carlisle. PA rO.
T ... day of 20lil..
By the Court,
;~E<j:.
Harold E. Sheely, P.J.
EXHIBIT "A"
Thomas M. Kittredge, Esquire
John F. Stillmun, III, Esquire
William F. Martson, Esquire
For the Plaintiffs
John B. Fowler, III, Esquire
Jon A. Baughman, Esquire
Anthony Vale, Esquire
For the Defendants
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~
BARBARA Melt. MUMMA AND
LISA M. MORGAN, individually
and as executrixes of the
ESTATE OF ROBERT M. MUMMA,
Deceased,
: IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
:
Plaintiffs
V
:
ROBERT M. MUMMA, II,
Defendant
: NO. 66 EQUITY 1988
BARBARA Melt. MOMMA AND
',' LISA M. MORGAN, individually
'and as executr ix.s of the
ESTATE OF ROBERT M. MUMMA,
Deceased,
.
.
IN THE COU~T OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
:
.
.
:
.
.
.\~
Plaintiffs
.
.
.
.
v
.
.
:
ROBERT M. MUMMA, II,
BARBARA M. McCLURE, AND
LINDA M. ROTH,
Defendants
.
.
.
.
: NO. 21-86-398
:
IR RBI DBPBNDAN'J.' ROBBRT M. MUMMA, II'S MorIORS ro DISQUALIFY
MORGY, LBWIS , BOCKItJS PROM LBGAL RBPRBSBN'l'A"!'IOR
OF '1'BB BS'l'A"l'B OP ROBBR"!' M. MOMMA, DEBASED
BBPORll - SBBBLY, P .J .
OPI1U08 Aim ORDBR OF CooR"!'
On Janul~Y 25, 1989, a hearing was held before this
court concerning Robert M. Mumma, II's (Hr. Mumma) motion to
disqualify Morgan, Lewis, Bockius (Morgan, Lewis' as counsel for
plaintiffs in both of the above-captioned actions. What follows
is this court's findings of facts, discussion, and conclusions of
law.
T"UE Cr.",""'" ,~p~r'.:'"l r~:-'n~D,
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IIiI Testimony v,!hC~tof, l ;:J:-: U':~~: ,::.:i' my hand
and the seal of saiO (CUrT iH Um.s\J, Pa.
This .....&:......... day of...I!1.~:....:;., ~
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...............~...........P...;thonot.ry ~
PINDINGS OF FACTS
1. Robert M. Mumma, II, is a defendant in both of the
above actions.
2. The decedant, Robert M. Mumma, died testate on
April 12, 1986.
3. On June 5, 1986, letters testamentary for the
Estate of Robert M. Mumma were granted to Barbara McK. Mumma and
Lisa M. Morgan as executrixes under instruments dated May 19,
1982 and October 12, 1984.
4. Morgan, Lewis represents the plaintiff executrixes,
Barbara Mcl. Mumma and Lisa M. Morgan in both of the above
actions and have been legal counsel to the estate since the death; .
of the decedan t.
5. At a meeting with Arthur Ilein of Morgan, Lewis in
Mayor June, 1986, at which all members of the immediate family
were present, Mr. Klein explained in d~tail the provisions of the
will and discussed with the family various s~ggestions and
options to pursue regarding the administration of the estate.
6. Mr. Klein of Morgan, Lewis attended this meeting as
legal counsel for the eGtate, however, he did not specifically
.
state tha~ be only represented the estate.
7. Duri~g the ~eeting, Mr. Ilein discussed with all
present the possibility of the children disclaiming their
interest under the will in favor of their children in order to
gain some tax benefit by avoiding -double- taxation.
8. On August 21, 1986, Mr. Mumma met with Mr. Klein in
order to discuss his own personal estate planning needs.
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.NO. 1526 CIVIL 1988
9. As a result of that meeting, Mr. Mumma retained the
legal services of Morgan, Lewis for his own estate planning
needs.
10. Mr. Klein began working on Mr. Mumma's estate
planning needs, however, by letter dated September 5, 1986,
Morgan, Lewis through Mr. ~lein, informed Mr. Mumma that Morgan,
Lewis represents the Mumma Estate by stating:
One matter we discussed which I did not
note in the memorandum is that if you or any
of your companies were to become involved in
negotiations with your father's Estate to buy
the operating company (or anytbing else for
that matter), Morgan, Lewis' Bockius would
represent the Estate and your would obtain
other counsel. I know that Lisa and your
mother are satisfied witb that understanding
and you indicated that you were also.
Defendant's Exhibit No.1.
..~
11. ~r. Mumma understood that Morgan, Lewis was only
representing him concerning his -estate planning and related
matters.w Mr. Mumma understood that he would need separate legal
counsel if he or any of his companies were to enter negotiations
with the Estate to purchase the operating company (pennsy Supply,
Inc.) or to purchase anything else for that matter from the
Estate.
12. Mr..Mumma provided Mr. Klein with documentation of
his financial assets and liabilities in order to facilitate his
estate planning.
13. These statements and documentations of Mr. Mumma's
financlal status were returned to Mr. Mumma.
14. Mr. Mumma has substantial and extensive experience
with attorney-client relationships as he has retained at least
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NO. 1526 CIVIL 1988
twelve different attorneys to represent him concerning personal
as well as business matters.
15. In early January, 1987, Mr. Mumma and Mr. Klein
had a discussion concerning Mr. Mumma disclaiming his interest
under his father's will in favor of his children.
16. Mr. Mumma authorized Mr. llein to draft a .
disclaimer of his interest for his review.
11. Mr. Klein informed Mr. Mumma by letter, dated
January 6, 1981, that for the disclaimer to be effective, it must
be filed witb the Clerk of the Orpbans' Court Division of
Cumberland County. (Defendant's Exhibit No.1).
18.
...i
Mr. Mumma executed the qualified disclaimer of bis- .
interest on January 6, 1981, (Plaintiff's Exhibit No.1) and said
disclaimer was filed with the Court of Common Pleas of Cumberland
County, Orphans' Court Division on January 12, 1987, in Book 115
at Page 20 witb the knowledge and autborization of Mr. Mumma.
(See, Plaintiff's Exhibit No.1 and No.2).
19. On March 26, 1987, Morgan, Lewis received a
retainer in the amount of $20,000 from Mr. Mumma. The $20,000
was drawn from the corporate account of 11Mbob, Inc.
(Defendant-' i Exhlbi t No.8).
.
20. In November, 1986, Morgan, Lewis counseled the
executrixes on the advisability of liquidating two family
companies prior to the end of 1986. The two companies were Kim
Company and Pennsylvania Supply Company.
21. Mr. Mumma was vice-president of both companies in
November, 1986, and as such, was their senior officer.
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NO. 1526 CIVIL 1988
22. The shareholders of Kim Company were as follows:
pennsylvania Supply Company (7,241 shares), Mr. Mumma (334
shares), Mrs. McClure (333 shares), Mrs. Roth (333 shares), Mrs.
Morgan (333 shares), and Mrs. Mumma (106 shares).
23. The shareholders of Pennsylvania Supply Company
were as follows: the decedent (700 shares), Mr. Mumma (3
shares), Mrs. McClure (3 shares), Mrs. Roth (3 shares), and Mrs.
Morgan (3 shares).
24. Both lim Co. and Pennsylvania Supply Company held
substantial real estate althougb they were non-operating.
25. In November, 1986, Morgan, Lewis met witb tbe
shareholders of the two above named companies to discuss the
possible liquidation of the companies.
26. Present at the meeting in addition to all the
shareholders, were Mr. Klein and Mr. Badley, the family .
.
.":." ..
accountant.
27. At the meeting Mr. Mumma raised questions
concerning the possibility to liquidating the companies while
maintaining their corporate shell or identity for possible future
use.
21. All family members/sbareholders w~r~ concerned
witb the answer to the above questions although Mr. Klein could
not answer the questions without conducting some legal research.
29. After conducting legal research concerning Mr.
Mumma's various questions, Mr. Klein sent Mr. Mumma a letter
dated November 11, 1986, with a blind carbon copy going to, among
others, the executrixes of the estate. The letter contained
-5-
NO. 1526 CIVIL 1988
answers to Mr. Mumma's questions regarding the feasibility and
mechanics of the liquidation of the corporations as proposed by
Mr. Mumma. (Defendant's Exhibit No.2).
30. Mr. Klein's associate, Martha E. Manning, sent Mr.
Mumma' a letter dated Oecember 3, 1986, at Executrix Morgan's
request in which Section 1103 of the Pennsylvania Business
Corporation Law relating to the dissolution of corporations was
relayed to Mr. Mumma.
31. In December, 1986, William Skinner, an associate
in the corporate department of Morgan, Lewis, met in Harrisburg
with the executrixes and Mr. Mumma to review a draft of a
tenants-in-common agreement which concerned the handling of the "..-
liquidated assets of Itim Company and Pennsylvania Supply Company.
32. Mr. Skinner appeared at this meeting as legal
counsel for the estate, however, he did not mention that Morgan,
Lewis was not acting as legal counsel of the shareholders.
33. After the meeting was under way, Mr. Itlein
participated in this meeting via telephone from Philadelphia to
answer questions concerning the proposed agreement and certain
changes were suggested by Mr. Mumma.
J(. The changes suggested included the right of first
refusal provision, which would give any shareholder (who wf~uld
become a tenant-in-common) the right to buy the interest of any
other shareholder who wanted to sell his or her interest. The
other suggested change pertained to the ability of the tenant-in-
common to pledge their interest, to grant gifts, etc.
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NO. 1526 CIVIL 1988
35. Morgan, Lewis sent all shareholders including Mr.
Humma a revised copy of the tenant-in-common agreement under
cover of letter dated March 11, 1987 (Defendant's Exhibit No.4).
36. In December, 1986, Mr. Mumma executed a power of
attorney to enable the liquidation of the corporations to proceed
while he was in Colorado during the month of January, 1987.
37. During the Spring of 1987, Morgan, Lewis met with
the tenants-1n-common at the Estate's request to discuss drafts
of tenants-in-common agreements as well as the management
agreements for the jointly-held properties.
38. During a February or March, 1987 meeting with 80me
... i .
of the tenants-in-common present, Mr. Mumma signed two unattached
signature pages for the draft agreements. These pages were later
attached to the final agreements of the tenants-in-common.
39. In July, 1987, the executrixes called a meeting at
Mrs. McClure's home which was attended by all of the tenanta-in-
common. Th. meeting was called to discuss the aale of some
property in Lemoyn., Pennsylvania owned by the tenants-in-common.
40. Mr. Mumma opposed this sale. However, he agreed
to sign a power of attorney to permit the sale only upon
obtaining "t&e agreement of all the shareholders of Nine Ninety-
.
Nine, Inc. (999) that he would have right of first refusal to buy
pennay Supply, Inc.
41. No representative of Morgan, Lewis was present at
this above meeting-
42. After the meeting, Executrix Horgan consulted with
Mr. Klein who advised against the granting of the right of first
refusal to Mr. Mumma.
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NO. 1526 CIVIL 1988
43. Morgan, Lewis continued to represent Mr. Mumma
with regard to his personal estate planning needs until August
14, 1987, at which time Mr. Mumma advised Mr. Klein that he would
seek other representation. (Defendant's Exhibit No.9).
44. Morgan, Lewis, by letter dated August 14, 1987,
returned $6,100 from the $20,000 retained on Mr. Mumma's account
after deducting charges for work performed on his personal estate
planning matters as well as the disclaimer matter. (Defendant's
Exhibit No.9).
45. Mr. Mumma was not charged for any consultation,
legal research or work performed by Morgan, Lewis concerning the
tenants-in-common agreements or any other matter of the Mumma
Estate. (Plaintiff's Exhibit No.3).
46. On December 27, 1988, a complaint for declaratory
judgment and relief was filed by the above plaintiffs at 21-86-
398 of the Cumberland County Court of Common Pleas, Orphans'
Court Division.
41. The complaint generally seeks declaratory judgment
under 42 Pa. C.S.A. 51533 and 20 Pa. C.S.A. 5111 that Article
Thirteenth of decedent'. will does not bar plaintiffs from
selling shares of Nine Ninety-Nine, Inc. (999) and Hummelstown
Ouarrie., Inc. (Bummelstown) owned by the estate to a publicly
traded overseas entity.
48. Morgan, Lewis represents the plaintiffs in this
current matter before the Orphans' Court.
49. On December 27, 1988, Executrixes Barbara McK.
Mumma and Lisa M. Morgan petitioned this court for the Estate of
.'j .
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NO. 1526 CIVIL 1988
Robert M. Mumma, deceased, for declaratory judgment under 42 Pa.
e.S.A. 57533 and for other relief under 20 Pa. C.S.A. Subeh. 33C
[sic] and 17133.
50. The petition generally seeks a confirmation of the
petitioners' authority to sell 999 and Hummelstown and certain
other related real estate owned by the estate and Mumma family
members and for an order under 20 Pa. C.S.A. Subch. 33C [sic]
57133 that the estate may submit any issues nonselling
shareholder raises in connection with the 8ale of his/her
interest in 999 and Hummelstown to voluntary judicial arbitration
in the Court of Common Pleas of Cumberland or Dauphin County.
51. Morgan, Lewis represents the petitioners in this ""i
matter.
52. On December 27, 1988, a complaint in equity and
declaratory judgment at No. 66 Equity 1988 was brought by the
above plaintiffs against the defendants in the Cumberland County
Court of Common Pleas.
53. The complaint generally seeks a declaratory
judgment declaring that the right of first refusal asserted by
Mumma with respect to Pennsy Supply, Inc., is invalid and that
the Mumma-Realty Associates power of attorney executed by Mumma,
.
is valid and enforceable and entitles plaintiffs to act as
attorney in fact to execute in Mumma's name the deeds and other
documents necessary to complete the sale of Mumma Realty
Associates I and Mumma Realty Associates II properties to a
proposed buyerf and finally declare that the MRA I and MRA II
agreements are valid, enforceable and binding on Robert M. Mumma,
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NO. 1526 CIVIL 1988
II and enter an order requiring Mr. Mumma to specifically perform
his duties and obligations under the MRA I and MRA II agreements.
54. Morgan, Lewis represents the plaintiffs in this
equity matter.
55. On December 29, 1988, Robert M. Frey, EsqUire was
appointed by this court as Guardian Ad Litem for the minor
persons interested in the estate of Robert M. Mumma, deceased,
with authorization to represent said minor persons in all matters
related to the sale of 999 and Hummelstown and the actions for
declaratory judgment and other relief pertaining thereto to
actions now pending before this court and in any further
proceedings in the Court of Common Pleas of Cumberland or Dauphin
County, Pennsylvania.
56. Mr. Mumma does not dispute he intends his
qualified'disclaimer to be effective, nor does he claim that it
is now invalid.
.'J .
DISCOSSIOR
Mr. Mumma's motion to disqualify Morgan, Lewis aa legal
counsel for the plaintiff in the' pending litigation draws our
attention to the Rule. of Profesaional Conduct (Rules) as adopted
by the Pennsylvania Supreme Court. The Rules became effective on
April 1, 1988 and, aa such, superseded the former Code of
Professional Responsibility (Code).
Defendant's motion is based on the argument that
Morgan, Lewis represented Mr. Mumma in prior matters which were
substantially related to the pending Orphans' Court and Equity
matter. In essence, Mr. Mumma alleges that a conflict of
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NO. 1526 CIVIL 1988
interest exists in Morgan, Lewis' continued representation of the
plaintiffs. Mr. Mumma points to Rule 1.9 as his authority for
his motion. Rule 1.9 reads as follows:
Conflict of Interest: por.er Client
A lawyer who has formerly represented a
client shall not thereafter:
(a) represent another person in the
same or substantially related matter in
which that person'. interests are
materially adverse to the interests of the
former client unless the former client
consents after a full disclo8ure of the
circumstances and consultation, or
(b) use information relating to the
representation to the disadvantage of the
former client except as Rule 1.6 would
permit with respect to a client or wben
the information bas become generally
known.
-J~
Rule 1.9, Rules of Professional Conduct, 42 Pa. C.S.A. (Purdon
Supp. 1988).
In considering a motion for disqualification of a
party's legal counsel, courts are relucta~t to grant such a
serious remedy because when presented with such a serious
request, courts must be careful -to preserve. balance, delicate
t~ough it may be, between an individual's right to his own freely
chosen counael and the need to maintain the highest ethical
.,tandard8 of professional responsibility.- Slater v. Rimar,
Inc., 462 Pa. 138, 338 A.2d 584, 590 (1975). Because motions for
disqualification are at times interposed for tactical reasons,
courts must approach such motions with caution as a client whose
attorney is disqualified incurs a loss of time and money 1n being
compelled to retain new counsel who in turn have to become
-11-
NO. 1526 CIVIL 1988
familiar with the prior comprehensive investigation which is the
core of modern complex litigation. The client, moreover, may
lose the benefit of its long-time counsel's specialized knowledge
of its operations. See, e.Q., Government of India v. Cook
Industries, Inc., 569 F.2d 737 (2nd Cir. 1978), Ries v. MTD
Products, Inc., l~ D.&C.3d 566 (1980).
Pennsylvania's appellate courts have not directly
addressed conflicts of interest issues under the newly adopted
Rules. However, the comment to the Rules explains that Rule 1.9
merely incorporates the basic elements of Canons 4 (client
confidentiality), 5 (loyalty to client), and 9 (appearance of
impropriety) contained in the former Code. Thus, the Rules
hopefully provide clearer guidance to both the bench and bar when
..;.i
faced with questions of conflict of interest with a former client
than was provided by the Code.
Under Rule 1.9 the test for disqualification focuses on
the analysis of whether the subject matter of the representation
of the former client and the present client are .substantially
related.- In raising a conflict of interest challenge, the
burden is on the moving party to establish a violation of Rule
1.9. ~; Pa. Power' LiQht v. Gulf Oil Cor~., 74 D.&C.2d 431
(1975), lNA Underwriters Ins. v. Nalibotsky, 594 F.Supp. 1199
(E.D. Pa. 198~).
A court in addressing the .substantial relationship.
issue must answer the following questionsl
1. Did the lawyer have an attorney-client
relationship with the former client?
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NO. 1526 CIVIL 1988
2. What was the nature and scope of the
prior representation at issue?
3. What is the nature of the present lawsuit
against the former client?
See, ~, sugra, Nemours Foundation v. Gilbane, Aetna, Federal
Ins., 632 F.Supp. 418 (D. Del. 1986).
Under the present facts, there is no dispute that an
attorney-client relationship existed between Morgan, Lewis and
Mr. Mumma. Thus, the thrust of our analysis moves onto the
nature and scope of that prior representation. Mr. Mumma argues
that Morgan, Lewis represented him not only in his own personal
estate planning needs and disclaimer needs, but so, too, did
-J
Morgan, Lewis represent him with regard to the negotiations and
liquidations of Kim Company and Pennsylvania Supply Company and
the formation of the related tenancy-in-common. We do not
believe that the facts of this case, nor the applicable law in
regards to this matter, adequately supports Mr. Mumma's argument.
In reaching this conclusiQn., our attention is first
drawn to the letter, dated September 5, 1986, in which Mr. Klein
clearly states to Mr. Mumma the terms of Morgan, Lewis'
representation. (Defendant'. Exhibit No.1). In that letter,
Mr. Kleln.ciearly' stated that he was employed by Mr. Mumma solely
for estate plannlng purposes and disclaimer purposes under Mr.
Mumma's father's will. Moreover, Mr. Mumma was given express
notice that Morgan, Lewis would not act as Mr. Mumma's attorney
if Mr. Mumma entered into negotiations with the Estate for the
purchase of any Estate assets. Thus, Hr. Mumma had express
notice that Morgan, Lewis' duty of loyalty and representation
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NO. 1526 CIVIL 1988
attached to their representation of the Estate and that no
attorney-client relationship could exist with Mr. Mumma if he
sought to purchase Estate assets.
On further review of the facts, it is clear to this
court that Morgan, Lewis' attorney-client relationship with Mr.
Mumma did not expand beyond the understanding o~ the above-noted
September 5, 1986 letter. (Defendant's Exhibit NO.1). Although
there were meetings (both in Harrisburg and in Philadelphia) in
which Morgan, Lewis participated, those meetings were attended at
all times by the executrixes of the Estate and Morgan, Lewis as
legal counsel for the Estate. Even the correspondence that Mr.
.
Mumma received following some of these meetings advised him that-~ "
Morgan, Lewis was writing at the request of the Estate witb
regard to questions concerning tbe dissolution of some
corporations in which Mr. Mumma was a sharebolder. (!!s
Defendant's Exbibit No.3). We do note, however, that at some of
tbese meetings Mr. Mumma, upon reviewing drafts of documents, had
certain questions and suggestions. Because Morgan, Lewi.
undertook some legal researcb to answer these questions and
suggestions, Mr. Mumma now argues that Morgan, Lewis was acting
as hi. attorney when in fact" these legal answers were mutually
.
beneficial to the Estate. Moreover, we take special note that
Mr. Mumma was not chargee for such legal research. (~,
Plaintiff's Exhibit No.3).
In addressing a motion for disqualification, the Court
of Common Pleas of Lehigh County in Pennsylvania Power , LiQht
succinctly summarized the law of Pennsylvania regarding the
existence of an attorney-client relationship:
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NO. 1526 CIVIL 1988
Although the relationship of attorney and
client may be implied from the conduct of the
parties, such conduct must evidence an offer
or request by the client for legal services
and an acceptance of the offer by the
attorney. It is clear that an attorney-
client relationship exists only with the
consent of both parties. (SJuch relationship
is .personal, reciprocal, and confidentialW
and W(ilt must be entered into freely, fairly
and advisedly by the attorney and client.w
Such relationship may Wnot be forced upon one
party without the consent of the other.w
Pennsylvania Power' LiQht, 74 D.,C.2d at 437 (1975) (Citations
omitted). Moreover, WPennsylvania courts have often stressed the
consensual nature of the attorney-client relationship.- Connelly
v. Wolf, Block, Schorr' Solis-Cohen, 463 ~.Supp. 914, 919 (E.D.
Pa. 1978).
-;
rhus, the mere fact that Mr. Mumma relied on the
Estate's legal research and received some answers to questions
from Morgan, Lewis attorneys (as authorized by the Estate1, is'
insufficient, in and of itself, to expand tbe basic attorney-
client relationship beyond the original scope of legal
representation as noted in the September 5, 1986 letter.
Indeed, Mr. Mumma'. arguments concerning his expanded legal
representation by Morgan, Levis are no more than unilateral
.assumptiobs. or .understandings. Which do not overcome the very
clear and precise ~eflnltlon of their relationship from the very
start.
Mr. Mumma argues, however, that because he reviewed
certain documents prepared by Morgan, Lewis for the Estate,
Morgan, Lewis had expanded their legal representation of Mr.
Mumma. We do not agree. In Stainton v. Tarantino, 637 F.Supp.
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NO. 1526 CIVIL 1988
1051 (E.D. Pa. 1986), the court found that an attorney-client
relationship did not arise between the attorney and his partners
in a real estate partnership even though the attorney had drafted
documents for real estate transactions from which the other
partners derived a benefit. The court stated that:
Although [the attorney] prepared some of the
legal documents in the real estate
transactions in question, he was performing
sucb work for himself and for the
partnership. Be was not performing personal
legal services in connection with these real
estate deals for the [partners], although as
bis partners in the transactions they
benefited from [the attorney's) work.
Stainton, 637 P.Supp. at 1066.
Similarly, in PennsYlvania Power' Liqht, the court
.
.':..~
stressed that the mere reliance upon legal work performed for
another person that happened to also benefit the party seeking
disqualification, is not sufficient to establish an attorney-
client relationsbip. ~, at 437-438. Mr. Mumma's role, like
that in Pennsylvania Power , Liqht, was limited to reviewing and
commenting upon documents prepared for the Estate by Morgan,
Lewi.. Moreover, there was no evidence that Mr. Mumma paid any
fee. to Morgan, Lewi. for work in connection with the
liquidations, and more importantly any -advice- he may have
.
received wa. provided to him (as well as to the other
shareholders) as a service by the Estate in an effort to persuade
him to participate voluntarily in these transactions. Finally,
we note the most telling observation is that during this hearing
held on January 25, 1989, Mr. Mumma testified repeatedly that' he
knew Morgan, Lewis was the attorney for the Estate.
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NO. 1526 CIVIL 1988
In summary, then, it is clear that Mr. Mumma has failed
to carry the burden of persuasion to establish that the existence
of an attorney-client relationship extended beyond that of legal
counsel for estate planning purposes and disclaimer purposes, to
that of legal counsel representing his interests in the company
liquidations and tenancies-in-common issues.
Moving on, our next question to answer is .what is the
nature of the present lawsuit against the former client?- As
stated in our findings of fact, the Orphans' Court matter and the
Equity matter basically concerns a dispute over the sale of
certain Estate assets. More specificallY, the Orphans' Court
matter focuses on two issuesl 1) the interpretation of the -\; .
decedent's will, and 2) the offering of appraisal rights to Mr.
Mumma. At this point we find it necessary to note that although
Mr, Mumma seems to find some dissatisfaction with Morgan, Lewis'
implementation of the qualified disclaimer under his father's
will, Mr. Mumma does not seek to void its effect or intent.
Therefore, we find the disclaimer is not at issue or 1n dispute
in either of these pending matters. Thus, the issue of the
disclaimer is not -substantially related- to the issues raised in
either of-the present proceedings. Consequently, Morgan, Lewis'
prior repreaentatton of Mr. Mumma with regard to ~he disclaimer
is not a basis for disqualification of Morgan, Lewis.
Moving on, we find that the thrust of the pending
proceedings focuses on will interpretation issues which are
clearly unrelated to Morgan, Lewis' prior representation of Mr.
Mumma. The other thrust of these proceedings focus on proposed
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NO. 1526 CIVIL 1988
corporate restructuring and the propriety of offering appraisal
rights to Mr. Mumma. These matters, then, are subjects which we
find unrelated to Morgan, Lewis' prior representation of Mr.
Mumma.
The remaining inquiry under the .substantial
relationships. test is whether during the course of his
representation, Mr. Mumma may bave disclosed confidential
information to Morgan, Lewis that is now relevant to the issues
in the present lawsuits. INA Underwriters, auora. We also note,
as the court did 1n Realco Services, Inc. v. Bolt, 479 P.Supp.
867 (B.D. Pa. 1979), thata
If a client in a prior representation might
have imparted confidential information to bis
lawyer in dealing with particular i.suea, and
if issues arise in the second suit which
would permit the use of such confidences
aqainst the original client, the substantial
relationship test ia met, and
disqualification is required.
!.!L..,. 479 F.Supp. at 871. (Or1ginal empbasia).
In this case, though, we will not wallow [our]
imagination to run free with a view to bypotbesizing conceivable
but unlikely situations in which confidential information 'might'
.
..~i .
bave been d~sclosed. which is relevant to the pending suitn.
Onderwriter. suora~ Mr. Mumma's attorney-c11ent relationship
with Morgan, Lewis and their legal representation of Mr. rtumma's
INA
-
peraonal .state planning and disclaimer under this father'. will,
conceivably included the intimation of confidential financial
information. Sowever, we do not believe that that type ot
information 1s now relevant to the present lawsuits or will even
become an issue. Thus, the size of Mr. Mumma's personal assets
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NO. 1526 CIVIL 1988
assets and the size of the tax benefits be stood to gain under
the disclosure are not relevant to the present lawsuits, and
therefore do not provide a basis for disqualification under Rule
1.9 or the applicable caselaw.
CONCLOSIORS OP LAW
1. The subject matter of the pending lawsuits are not
substantially related to any prior legal representation Morgan,
Lewis provided Mr. Mumma;
2. Any confidential information Morgan, Lewis acquired
during their prior legal representation of Mr. Mumma is not now
relevant to the pending lawsuits,
3. Horgan, Lewis have not violated Rule 1.9 of the
Rules of Profe.sional Conduct in their current representation of
.
.0:,.' ~
the Estate of Robert M. Mumma, deceased.
tn accordance with the.e findings of facts, discussion,
and conclusions of law, we ordera
ORDU or COOR'f
AND NOW, this 1.3 ~
day of February, 1989,
defendant's motion to disqualify the law firm of Morgan, Lewis,
Bockius from legal representation of the Estate of Robert M.
Mumma, deceaaed, i. DENIED.
By the Court,
/s/ Harold E. Sheely
P.J.
-19-
BARBARA HcK. MUMMA and
LISA M. MORGAN, individually
and as Executrices of the
Estate of ROBERT H. MUMMA,
deceased, and LINDA H. ROTH,
Plaintiffs
copy FROM RECORD
T~UE '",,:hcrscf, \ hE;\,C U::'i~:Q S(}t my hand
\Q TestlmOny\ f aid Court at Cariis\c, Pa.
and the sea 0 S ;;rt'Pf{.
h. -1. day of......!fl.?!?t~....~ < a~
T IS .................., J<.~ ~
-iN..T~~7.fr~~ ..~8~~~~i~ OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
.
.
.
.
.
.
.
.
:
.
.
v
ROBERT M. MUMMA, II and
BARBARA M. McCLURE,
Defendants
.
.
.
.
NO. 66 EQUITY 1988
IN RE: DECLARATORY 'JUDGMENT
BEFORE SHEELY. P.J.
OPINION AND ORDER OP COURT
On March 4, 5, 6, and 13, 1991, a hearing was held to
determine through a declaratory judgment 1) whether the two
tenancy-in-common agreements (MRA I and II) were validly executed
on December 19, 1986, 2) whether the MRA power of attorney
executed by Robert M. Mumma, lIon December 19, 1986 was
irrevocable, and 3) whether Robert M. Mumma, II had a right of
first refusal to purchase pennsy Supply, Inc. From this hearing
we make the following findings of fact:
FINDINGS OF FACT
1. On April 12, 1986, Robert M. Mumma died testate.
2. Plaintiffs, Barbara McK. Mumma (Mrs. Mumma) and
Lisa M. Morgan (Lisa) are executrices of the Estate of Robert M.
Mumma (the Estate).
3. At the time of Mr. Mumma's death the following
conditions existed with respect to the family owned business,
Pennsylvania Supply Co. (pennsy Supply):
~~C~iV'E[J APR I) ~ i~~1
EXHIBIT "B"
NO. 66 EQUITY 1988
a) The Estate owned approximately 98 percent of the
stock of pennsy Supply.
b) Pennsy Supply owned more than 82 percent of the
outstanding stock of Kim Company, the second tier holding
company.
c) Kim Company was the largest shareholder of Nine
Ninety-Nine, Inc. (999).
d) The Estate controlled, through its majority stock
holdings, both Pennsy Supply and Kim Company.
e) pennsy Supply was a whoLly-owned subsidiary of 999.
f) The Estate, Mrs. Mumma, Lisa, Linda M. Roth
(Linda) , Robert M. Mumma II (B ob) , and Barbara M. McClure
(Barbar a) were the shareholders of Kim Company.
g) The Estate, Mrs. Mumma, Lisa, Lind a, Bob and
Barbara were also the shareholders of 999.
4. At a meeting at the offices of Pennsy Supply on
November 5, 1986, Arthur L. Klein, a tax specialist at Morgan,
Lewis and Bockius, brought to the attention of the shareholders
of pennsy Supply and Kim Company, the unfavorable changes in the
federal tax laws caused by the passage of the 1986 Tax Reform
Act.
5. The 1986 Tax Reform Act overruled the General
Utilities doctrine which had previously permitted corporations to
liquidate and pay only one tax on the appreciation in the value
of corporate assets rather than two taxes; one at the corporate
and the other at the shareholder level.
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NO. 66 EQUITY 1988
6. The November 5, 1986 meeting at pennsy Supply was
attended by Mr. Klein, Mrs. Mumma, Lisa, Bob, Linda, Barbara, and
George W. Hadley.
7. Mr. Hadley is a partner in the accounting firm of
Lucker, Kennedy and Felmeden in Buffalo, New York and is the
accountant for the Mumma family businesses.
8. At the November 5 meeting, the shareholders, Mr.
Klein and Mr. F.adley discussed the desirability of liquidating
pennsy Supply and Kim Company prior to December 31, 1986, in
order to take advantage of the grace period allowed by the 1986
Tax Reform Act.
9. Mr. Klein advised Mrs. Mumma and Lisa that they
could avoid the unfavorable consequences of double taxation if
the assets of pennsy Supply and Kim Company were transferred to
the shareholders as tenants-in-common.
10. If the assets of Kim Company and pennsy Supply had
been transferred to the family members as a partnership, both the
transferors and the recipients would have been required to pay
real estate transfer taxes to the Commonwealth of Pennsylvania.
11. It was the understanding of Mr. F.adley that the
tenancies-in-common which were formed to receive the assets of
the dissolved corporations would function similar to
partnerships. (Hadley Direct, Vol. II, p.302).
12. The tenancy-in-common agreements were drafted to
include provisions for majority-in-interest control over the
management of the properties and voting control of the tenants-
in-common based upon their percentage holdings in Pennsy Supply
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NO. 66 EQUITY 1988
and Kim Company. (Klein Direct, Vol. I, pp.33-35, Hadley Direct,
Vol. II, p. 303.
13. Following the November 5, 1986 meeting, Mr. Klein
sent Bob a letter explaining that complete liquidation of the
corporation could take place and the charter of Pennsy Supply
would not be terminated as long as no corporate actions were
taken for a sufficient length of time following the dissolution.
14. Lisa circulated a single draft agreement among
tenants-in-common (Exhibit R-IO) to Mrs. Mumma, Bob, Linda, and.
Barbara along with a cover letter dated December 11, 1986. (Mrs.
Mumma Direct, Vol. II, pp. 189-190, Klein Cross, Vol. I, p.74).
15. Following the circulation of the single draft
agreement among the tenants-in-common, it was decided that
because Kim Company was not a wholly-owned su~sidiary of pennsy
Supply, it would be preferable to have two separate agreements
among the tenants-in-common due to the different shareholding
percentages for the two companies. (Lisa Direct, Vol. II,
p.37l) .
16. One tenancy-in-common agreement would govern the
properties formerly owned by Kim Company (agreement commonly
referred to as MRA I) and .the other tenancy-in-common agreement
would control the properties formerly held by pennsy Supply
(agreement commonly referred to as MRA II) (Exhibits P-l, P-2).
17. As of December 18, 1986, the two separate tenancy-
in-common agreements (MRA I and II) concerning the liquidation of
pennsy Supply and Kim Co~pany had been prepared. (Lisa Cross,
Vol. III, p.481).
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NO. 66 EQUITY 1988
18. Both MRA I and MRA II contained additional
language under Section 14 that had not been included when the
single draft agreement among tenants-in-common was circulated on
December 11, 1986.
19. On the evening of December 18, 1986, language was
added to Section 14, entitl~d "Further Assurances," which
provided that each tenant would execute a power of attorney to
facilitate any transactions to be made pursuant to the agreement.
(Lisa Cross, Vol. III, pp. 482-463).
20. MRA I and MF~ II were completed by the morning of
December 19, 1986.
21. The signature pages of MFA I and MRA II agreements
differed because each agreement set forth the percentage interest
of each tenant-In-common. The percentages used corresponded with
the percentage interests of the tenants-in-common as shareholders
of pennsy Supply and Ki~ Company. (Klein Cross, Vol. I, p.74),
Skinner Direct, Vol. I, p.135).
22. The other difference between the two agreements
was that MRA I contained language referring to the Union Quarries
stock owned by Kim Company which language die not appear in MRA
II.
23. Mr. Skinner inserted additional language into
Section 2 of MRA I after speaking to Mr. Klein and Mr. Hadley on
the morning of Decemoer l~, 1986. (Skinner Direct, Vol. I,
p.136) .
24. The inserted language in Section 2 stated:
"except for $272,617.95 being distributed to the individual
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NO. 66 EQUITY 1988
owners [of Kim Company] in lieu of Union Quarries, Inc. ~tock,
which shall be held by Manager for distribution to them in 1987."
(Exhibit P-l, p.8, Skinner Direct, Vol. I, p.136).
25. Prior to December 19, 1986, Kim Company owned
fifty percent of the stock of Union Quarries and the Hempt family
owned the remaining fifty percent of the stock. (Klein Direct,
Vol. I, pp.37-38).
26. The language was inserted into Section 2 upon the
advice of Mr. Hadley that the Union Quarries shares should be
held in a block. This would preclude the possibility that one or
more of the Kim Company shares might be transferred to the
Hempts, giving the Hempts voting control over the corporation.
(Hadley Direct, Vol. II, p.295, Lisa Direct, Vol. II, pp. 368-69,
Bob Direct, Vol. III, p.640).
27. Bob and the other shareholders of Kim Company
agreed that the Union Quarries' shares should be helc in a block.
(Klein Direct, Vol. I, p.38).
28. As a result of the Estate owning more than eighty
percent of the Kim Company stock, the Estate would hold the block
of Union Quarries' shares. (Hadley Direct, Vol. II, p.295, Lisa
Direct, Vol. II, p.370).
29. The figure of $272,617.95 inserted into Section 2
of MRA I representecl the proportional value of the individual
holdings of Mrs. Mumma, Lisa, Linda, Bob, and Barbara, through
their respective interests in Kim Company, in Union Quarries at
the time of the liquidation of Kim Company. (F.adley Direct, Vol.
II, p.295).
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~o. 66 EQUITY 1988
30. On the morning of December 19, 1986, William S.
Skinner, an associate at Morgan, Lewis & Bockius's Philadelphia
office brought the two tenant-in-common agreements in addition to
several deeds and documents to Harrisburg. (Klein Cross, Vol. I,
p.71).
31. On the afternoon of December 19, 1986, a meeting
was held at the offices of Pennsy Supply in Harrisburg to execute
the two tenancy-in-cornmon agreements and other documents
concerning the liquidations of Kim Company and pennsy Supply.
Another purpose of the rn~eting was to take the necessary steps to
create the two new corporations, Mumma Realty Associates, Inc.
and Hummelstown Quarries, Inc. (Skinner Direct, Vol. I, pp.143-
147) .
32. Mrs. Mu~rna, Eob, and Mr. Skinn~r attended the
December 19, 1986 meeting in person. Lisa anc Mr. Klein were
present by telephone from the offices of Morsan, Lewis & Bockius
in Philadelphia and Linda was present by telephone from St.
Louis. Barbara was not present at the meeting. (Skinner Direct,
Vol. I, p.372, Barbara eirect, Vol. III, p.579, Bob Direct, Vol.
III, p.638).
33. Mr. P.adley was also present in Harrisburg for
portions of the December 19, 1986 meeting which pertained to the
valuation figure used for the Union Quarries' shares in Section 2
of MRA I. (Hrs. Humma Cross, Vol. II, pp.232-33, Hadley Cross,
Vol. II, p.322).
34. Mr. Ekinner provided Mrs. Mumma and Bob with
copies of the two tenancy-i~-common agreements. During the
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NO. 66 EQUITY 1988
course of the meeting Mrs. Mumma and Bob reviewed the agreements
with Lisa, Linda, Mr. Klein and Mr. Skinner. (Skinner Direct,
Vol. I, p.139, Mrs. Mumma Direct, Vol. II, p.193, Lisa Direct,
Vol. II, p.373, Bob Direct, Vol. III, pp.636, 639).
35. At the meeting, Bob had some concerns about
whether the agreements would affect his ability to pledge his
interest as collateral and transfer his interest in the
properties in trust for the benefit of his children. (Klein
Direct, Vol, I, pp.46-47, Skinner Direct, Vol. I, pp.l40-l42,
Mrs. Mumma Direct, Vol, II, pp.193-94, Lisa Direct, Vol. II, p.
374, Bob Direct, Vol. III, pp.640-4l, Bob Cross, Vol. IV, pp.690-
91) .
36. During the meeting, Bob also had questions about
Section 2 of MRA I and was told that the provision was inserted
to maintain the Union Quarries'.stock as a block. (Skinner
Direct, Vol. I, p.142, Lisa Direct, Vol. II, p.374).
37. Mrs. Mumma and Bob signed the two tenancy-in-
common agreements (MRA I and MRA II) at the December 19, 1986
meeting. The signature pages were attached to the original
agreements when Mrs. Mum~a and Bob signed them. (Skinner Cross,
Vol. I, pp.147, 167-168, Mrs. Mumma Direct, Vol. II, pp194-95,
Mrs. Mumma Cross, Vol. II, pp.236-37, Exhibits P-l, P-2).
38. In addition, Mrs. Mumma and Bob signed several
additional loose signature pages identical to those attached to
the agreements. (Skinner Cross, Vol. I, pp.167-G8, Mrs. Mumma
Cross, Vol. II, p.23?).
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NO. 66 EQUITY 1988
39. Bob admits that his signature appears on Exhibit
P-1 and Exhibit P-2. (MRA I and MRA II agreements). (Bob
Direct, Vol. III, pp.642-43).
40. Lisa signed the MRA agreements on the evening of
December 18, 1986, at Morgan, Lewis & Bockius in Philadelphia.
(Lisa Direct, Vol. II, p.376).
41. Mr. Skinner and Lisa attest that Exhibits P-l and
P-2 are exact copies of the MRA agreements as signed by Mrs.
Mumma and Bob. (Skinner Cross, Vol. I, p.167, Lisa Direct, Vol.
II, p.376).
42. Following the December 18, 1986 meeting, both Mr.
Skinner and Lisa saw the executed originals of MRA I and MRA II.
(Skinner Cross, Vol. I, pp.158-S9, Lisa Cross, Vol. III, pp.499-
500) .
43. At the end of the December 19, 1986 meeting, Pam
Smeltzer, an employee of pennsy Supply, was given the MRA
agreements and extra signature pages signed by Mrs. Mumma, Lisa,
and Bob. (Skinner Direct, Vol. I, p.148, Mrs. Mumma Cross, Vol.
II, p.239).
44. Linda signed both MRA agreements around Christmas,
1986. (Linda Direct, Vol. III, p.S67, Lisa Cross, Vol. III,
p.S71, Exhibit P-1, Exhibit P-2).
45. Barbara signed both MRA agreements and remembers
signing some documents prior to December 31, 1986, ~n connection
with the liquidations. (Barbara Direct, Vol. III, p.S83, Exhibit
P-l, Exhibit P-2).
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NO. 66 EQUITY 1988
46. Mrs. Mumma explained that she would not have gone
forward with the liquidation of pennsy Supply and Rim Company if
Bob had refused to sign the two tenancy-in-common agreements on
December 19, 1986. (~rs. Mumma Direct, Vol. II, p.195).
47. Section 3(e} of each of the MRA agreements
provides in part as follows:
Except as hereinafter provided in this
Section, no owner shall dispose of, sell,
transfer, assign, convey, mortgage, pledge,
grant a security interest in, hypothecate, or
encumber part or all of his or her undivided
interest in the Premises without the prior
consent of the owners. (Exhibit P-l, pp.8-
II, Exhibit P-2, pp.8-ll).
48. Section 4 of each of the MRA agreements provides
as follows:
General, overall management of the
Premises and of all matters arising out of or
in connection with the Premises, including a
sale or mortgage of the entire prerr.ises or
any.part thereof, shall be vested in the
Owners jointly and each Owner ~hall abide by
the policies and decisions in respect
thereof. Any agreement, approval, decision,
consent, request or other action of the
Owners shall be by majority (in interest)
vote and in writing unless otherwise
indicated. (Exhibit P-l, p.12, Exhibit P-2,
p.12).
49. Section 3(b) applies to the situation where a co-
owner desires to independently sell his or her interest. In this
situation the other fa~ily members possess a right of first
refusal to buy the interest and preclude the entry of a stranger
into the ownership of the properties. (Klein Direct, Vol. I,
pp.43, 86-87, Lisa Cross, Vol. III, pp.548-49, 553-55).
50. In contrast, Section 4 was meant to govern
situations where a majority-in-interest of the tenants-in-common
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NO. 66 EQUITY 1988
desire to sell one or more pieces of property owned by the
tenancies-in-comrnon. Under this section, the will of the
majority prevails. (Klein Cross, Vol. I, pp.87-88, 116 Lisa
Cross, Vol. III, pp.554-57).
51. Section 14 of the MRA agreements requires that the
incividual tenants-in-common execute documents or perform other
necessary actions to carry out the intent of the agreement or to
effectuate decisions of the majority in interest. (Exhibit P-l,
Exhibit P-2, Klein Direct, Vol. I, pp.44-45, Skinner Direct, Vo~.
I, pp.148-149).
52. In addition to the execution of the MRA agreements
on December 19, 1986, the shareholders of Kim Company and pennsy
Supply, including Bob, executed a bill of sale transferring
certain real and personal property of Kim Co~pany and Pennsy
Supply to themselves in proportion to thei~ respective
shareholdings in the two corporations. {Exhitit P-3, Skinner
Direct, Vol. I, pp.l46-47).
53. On December 19, 1986, Bob in his capacity as Vice-
President of Kim Company and Pennsy Supply, also executed a jOint
deed transferring all real estate owned by Kim Company and pennsy
Supply to their shareholders as tenants-in-common under the MRA I
and MRA II agreements. (Exhibit P-4, Skinner Direct, Vol. I,
pp.146-47).
54. In addition to the master deed, Bob, in his
capacity as Vice-President of pennsy Supply, also executed on
December 19, 1986, four deeds transferring various rights and
interests from pennsy Supply to Hurnmelstown Quarries, Inc.
(Skinner Direct, Vol. I, pp.145-46).
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NO. 66 EQU I TY 1988
55. The shareholders took possession of the
transferred property as tenants-in-common under the fictitious
name of Mumma Realty Associates.
56. A fictitious name certificate and a certificate of
incorporation for Mumma Realty Associates, !~c. was filed with
the Secretary of State on December 19, 1986. (Skinner Direct,
Vol. I, p.136).
57. A certificate of incorporation for Hummelstown
Ouarries, Inc. was also filed with the Secretary of State on
December 19, 1986. (Skinner Direct, Vol. I, p.136).
58. Pursuant to Section 1 of the MRA agreement, Mumma
Realty Associates, Inc. was appointed manager of both of the
properties governed by MRA I and MRA II. (Klein Direct, Vol. I,
p.42).
59. Mrs. Mumma and Lisa are the officers and directors
of Mumma Realty Associates, Inc.
60. Mrs. Mumma is the sole shareholder of Mumma Realty
Associates, Inc. (Skinner Direct, Vol. I, p.144).
61. On December IS, 1986, Bob executed a power of
attorney (the MRA power of attorney) pursuant to Section 14 of
the MRA agreements. (Skinner Direct, Vol. I, pp.148-49, Mrs.
Mumma Cross, Vol. II, pp. 140-41, Bob Direct, Vol. III, p.644,
Exhibi t P-l2).
62. The BRA power of attorney named the other tenants-
in-common, including the Estate, Mrs. Mumma and Lisa, as Bob's
attorneys in fact to execute on his behalf any deeds or other
instruments necessary and desirable to carry out any of the
purposes under the MRA agreements. (Exhibit P-12).
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NO. 66 EQUITY 1988
63. The MRA power of attorney states that it is
coupled with an interest and is irrevocable. (Exhibit P-l2).
64. Mrs. Mumma, Lisa, and Linda executed similar
powers of attorney. Mrs. Mumma and Lisa also executed a power of
attorney as executrices of the Estate. (Mrs. Mumma Cross, Vol.
II, pp.242-43).
65. The purpose of the MRA powers of attorney signed
by the tenants-in-common was to enable a majority in interest of
the tenants to proceed with transactions pursuant to the majority
control provisions of Section 4 of the MRA agreements and
effectuate decisions with or without the subsequent cooperation
of an individual tenant. (Klein Direct, Vol. I, p.45, Skinner
Direct, Vol. I, p.149).
66. The MRA power of attorney signed by Bob on
December 19, 1986, was not connected with or motivated by Bob's
upcoming trip to Colorado. (Klein Cross, Vol. I, pp.9l-92).
When Mr. Skinner prepared the power of attorney, he was not aware
that Bob would be out of town in late December and early January.
(Skinner Direct, Vol. I, p.149).
67. One of the reasons powers of attorney were needed
for all of the tenants-in-common was because Bob was seldom in
town, Barbara was often unavailable, and Linda was living in St.
Louis. (Mrs. Mumma Cross, Vol. II, pp.240-41, Lisa Direct, Vol.
II, p.377).
68. Following the execution of the MRA agreements in
December, 1986, Gerald T. Brawner, a partner at Morgan, Lewis &
Bockius, was asked to review the MRA agreement and make
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NO. 66 EQUITY 1988
appropriate changes or revisions.
02) .
(Klein Cross, Vol. I, pp.lOl-
69. On March 11, 1987, Mr. ~rawner sent the revised
MRA agreements with a cover memorandum to the tenants-in-common
and to Mr. Klein for their review and comment. (Klein Cross,
Vol. I, pp.lOl-02, Lisa Direct, Vol. II, p.380, Exhibit P-7).
70. On April 21, 1987, Mrs. Mumma, Lisa, Bob, and
Barbara met with Mr. Brawner at the offices of pennsy Supply to
review the revised agreements among tenants-in-common. (Lisa
Direct, Vol. II, pp.381-82, Barbara Direct, Vol. II, p.579,
Ex h i b it P -1 0) .
71. Following the April 21, 1986 meeting, Mr. Brawner
prepared ~ revised agreements among tenants-in-common and sent
them to Lisa. (Lisa Direct, Vol. II, p.386. The signature page
was paginated "18". Exhibit P-16).
72. On June i, 1987, upon Lisa's request, all of the
tenants-In-common signed the revised agreement except for Bob.
An acknowledgement of the agreement was taken by Charlie Lear, a
notary at Pennsy Supply. (Lisa Direct, Vol. II, pp.386-87,
Exhibit P-16).
73. The possibility of Bob making an offer to purchase
Pennsy Supply became a subject of discussion in the autumn of
1986. (Lisa Direct, Vol. II, p.387).
74. On November 10, 1986, Lisa sent Mr. Hadley a cover
letter and a copy of a draft letter to Bob which explained that
the executrices were willing to consider an offer from Bob for
the purchase of Pennsy Supply. (Exhibit P-7). .Lisa and Mr.
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Klein had prepared the draft letter. (Lisa Direct, Vol. II,
p.388).
75. Mr. Klein explained to Lisa that the executrices
had to be careful when giving Bob an opportunity to buy the
business that they did not violate their duties as fiduciaries to
obtain a fair price for the business and that an arm's length
transaction existed. (Klein Direct, Vol. I, pp.S4-56, Lisa
Direct, Vol. II, p.388).
76. A decision was made not to send the letter drafte~
by Lisa and Mr. Klein. (Lisa Direct, Vol. II, p.389).
77. On Novemter 2C, 1986, Mrs. Mumma sent Bob a
different letter from the one drafted by Lisa and Mr. Klein which
invited Bob to make an offer for pennsy Supply. (Mrs. Mumma
Oirect, Vol. II, pp.19S-9E, Lisa Direct, Vol. II, p.3~9, Exhibit
P-9) .
78. Under the instruction of the executrices, Mr.
Hadley provided Bob with certain financial information which he
desired in reference to the company. (Mrs. Mumma Direct, Vol.
II, p.196, Hadley Cross, Vol. II, p.312, Lisa Direct, Vol. II,
p.389).
79. Mr. Hadley provided Bob with extensive financial
information regarding Pennsy Supply in a letter dated March 2,
1987. (Hadley Direct, Vol. II, pp.297-98, Hadley Cross, Vol. II,
pp.312-13, Lisa Direct, vol. II, p.390, Bob Direct, Vol. III,
p.645, Exhibit P-37). Bob was previously provided with
depreciation schedules for equipment and facilities. (Hadley
Direct, Vol. II, pp.297-98, Bob Direct, Vol. II, p.64S).
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80. In March, 1987, a meeting was held at Mrs. Mumma's
home to give Bob the opportunity to present his offer to purchase
Pennsy Supply. Mrs. Mumma, Lisa, Bob, and Mr. Hadley were all
present at the meeting. (Hadley Direct, Vol. II, pp.298-99, 300,
Lisa Direct, Vol. II, pp.390-9l).
81. Mrs. Mumma, Lisa, and Mr. Hadley expected Bob to
make an offer for the purchase of pennsy Supply at the meeting
because Bob had already received the financial information he had
requested in reference to the company. (Mrs. Mumma Direct, Vol~
II, p.199, Hadley Direct, Vol. II, p.299, Lisa Direct, Vol. II,
p.390).
82. At the beginning of the March, 1987 meeting, there
was a discussion of an appropriate price for pennsy Supply.
(Hadley Direct, Vol. II, p.300, Lisa Direct, Vol. II, pp.39l-92,
Bob Direct, Vol. III, p.646). Bob explained that he was
interested in buying Elco Concrete, a wholly-owned subsidiary of
Pennsy Supply. (Mrs. Mumma Direct, Vol. II, pp.197-200, Hadley
Direct, Vol. II, p.300, Lisa Direct, Vol. II, p.39l).
83. At the March, 1987 meeting, Mrs. Mumma informed
Bob that she was not interested in selling Elco separately from
the rest of pennsy Supply. (Hadley Direct, Vol. II, p.300, Mrs.
Mumma Direct, Vol. II, pp.l99-200, Lisa Direct, Vol. II, p.392).
84. Bob left the meeting and never made an offer to
purchase pennsy Supply or Elco Concrete. (Hadley Direct, Vol.
rI, p.300, Lisa Direct, Vol. II, pp.392-93).
85. During March or April of 1987, the executrices
began considering the sale of Lot I-B located in Lemoyne,
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Pennsylvania. The lot was owned by Mumma Realty Associates under
the MRA I agreement. (Mrs. Mumma Direct, Vol. II, p.201, Lisa
Direct, Vol. II, pp.40l-02).
86. Lot I-E was one of two adjacent parcels of realty
owned by the Mumma family interests in Lemoyne. The second lot
was owned by High Spec, Inc., a corporation owned 50 percent by
Bob and 50 percent by the Estate.
87. Mrs. Mumma tole Eob that Taco Bell had approached
the executrices about buying Lot I-B. (Mrs. Mumma Direct, Vol. .
II, p.202).
88. Bob explained to Mrs. Mumma that the executrices
should not accept less than $500,000 as the asking price for Lot
I-B. (Mrs. Mumma Direct, vol. II, p.202).
89. Taco Bell was not willing to pay the asking price
of $500,000 for Lot I-E. (Mrs. Mu~ma Direct, Vol. II, p.202).
90. Subsequently, the executrices were approached by
Tom Flynn, a developer from Camp Hill, Pennsylvania who was
interested in Lot I-B. Mr. Flynn agreed to the price of $500,000
quoted by the executrices for Lot I-B. (Mrs. Mumma Direct, Vol.
II, p.203, Lisa Direct, Vol. II, pp.402-04).
91. Bob explained to Mrs. Mumma in a telephone
conversation that SSOO,ono would be the asking price for Lot l-B
(the middle lot) and $60C,000 would be the asking price for ~he
adjacent corner Lot 2. Bob thought that the middle lot should be
sold before the corner lot. (Lisa Direct, Vol. II, p.403).
92. During a trip to Europe in April, 196~, Job told
Mrs. Mumma that he hac heard that-she sold Lot 1-8 to Tom Flynn.
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Mrs. Mumma explained to Bob that she had negotiated the lot, but
no settlement had been reached with respect to the lot at that
time. During this conversation, Bob did not voice any protest or
objection to the sale of Lot I-B. (Mrs. Mumma Direct, Vol. II,
pp.203-04).
93. After the April, 1987 trip to Europe, Mrs. Mumma
and Lisa learned that Bob indicated that he would not go along
with the sale of Lot I-B to Mr. Flynn. (Mrs. Mumma Direct, Vol.
II, p.20S, Lisa Direct, Vol. III, p.42S, Bob Direct, Vol. III,
p.647).
94. On June 30, 1987, a meeting was held at Barbara's
house to discuss the sale of Lot I-B. (Mrs. Mumma Direct, Vol.
II, p.206, Mrs. Mumma Cross, Vol. II, p.254, Barbara Direct, Vol.
III, pp.S86-87).
95. Mrs. Mumma, Lisa, Linda, Bob, and Barbara attended
the June 30, 1987 meeting. (Mrs. Mumma Direct, Vol. II, p.206,
Lisa Direct, Vol. III, p.426, Bob Direct, Vol. III, p.650).
96. At the June 30, 1987 meeting, Lisa told the family
members about the proposed sale of Lot I-B to Mr. Flynn for the
price of $500,000. (Lisa Direct, Vol. III, pp.426-27).
97. During the June 30, 1987 meeting, Lisa als~
explained to the family members the reason they needed to execute
new powers of attorney in connection with the sale of Lot I-B.
By executing new powers of attorney, the family members could
avoid filing the MRA ! agreement which would have been required
had the MRA powers of attorney been used to complete the sale of
Lot I-B. (Lisa Direct, Vol. III, p.427).
.
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98. At the June 30, 1987 meeting, Bob had no objection
to the $500,000 asking price for Lot I-B and said that the price
was a fair one. (Mrs. Mumma Direct, Vol. II, p.206, Lisa Direct,
Vol. III, pp.427-28, Bob Direct, Vol. III, p.6S0, Bob Cross, Vol.
IV, p.70l).
99. On June 30, 1987, in the middle of discussions
regarding the sale of Lot I-B, Bob stated that he wanted a right
of first refusal as to pennsy Supply. (Mrs. Mumma Direct, Vol.
II, p.206, Lisa Direct, Vol. III, p.427, Bob Direct, Vol. III,
pp.65l-52).
100. After Bob brought up the subject of a right of
first refusal as to Pennsy Supply, Barbara asked Bob if the
family members could resolve the sale of Lot I-B first, and then
discuss the right of first refusal issue. (Mrs. Mumma Direct,
Vol. II, p.207, Lisa Oirect, Vol. III, p.427).
101. Bob agreed to sign the necessary documents for
the sale of Lot I-B to Mr. Flynn. (Mrs. Mumma Direct, Vol. II,
p.207).
102. On June 30, 1987, each of the family members
signed a power of attorney. (Exhibit P-lS, Exhibit P-13). The
powers of attorney signed by Kim, Lisa, Barbara, and Linda were
identical and were provided to Lisa by Mr. Brawner. (Lisa
Direct, Vol. III, p.423).
103. Bob's power of attorney was different from the
other family members because Bob insisted upon the removal of
paragraph 4 from his power before he would sign it. After the
meeting, Lisa returned to the offices of pennsy Supply and had
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the power retyped without paragraph 4. The revised power was
then hand delivered to Bob who signed the power on the same day
as the other family members. (Lisa Direct, Vol. III, pp.423-24,
428, Exhibit P-13).
104. All of the powers of attorney signed by the
family members on June 30, 1987, were notarized. (Exhibit P-13,
Exhibit P-15).
105. After Bob agreed to sign for the sale of Lot 1-B,
the discussion at the June 30, 1987 meetinq turned to Bob's
request for a right of first refusal as to pennsy Supply. (Mrs.
Mumma Direct, Vol. II, p.207, Lisa Direct, Vol. III, p.429).
106. Mrs. Mumma and Lisa told Bob at the June 30, 1987
meeting that they were not willing to grant him a right of first
refusal as to pennsy Supply without first speaking to their
lawyers and accountants. (Mrs. Mumma Cross, Vol. II, pp.255-S6,
Lisa Direct, Vol. III, p.429, Linda Cross, Vol. III, p.S7l).
107. At the June 30, 1987 meeting, there was no
discussion of the duration, terms, contingencies or other
specifics regarding Bob's proposed right of first refusal. (Lisa
Direct, Vol. III, p.430).
108. After the June 30, 1987 meeting at Barbara's
house, Lisa told Mr. Klein that Bob had asked for a right of
first refusal as to Pennsy Supply. Lisa asked Mr. Klein for his
advice as to whether the executrices should grant Bob such a
right. (Klein Direct, Vol. I, pp.S3-S4).
109. Mr. Klein responded to Lisa's question by stating
that the executrices could give Bob the first opportunity to bid
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on pennsy Supply, but Mr. Klein stressed that the executrices
should not give Bob a right of first refusal as to pennsy Supply.
(Klein Direct, Vol. I, pp.54-56, Lisa Direct, Vol. III, p.437).
Mr. Klein explained that giving Bob such a right would jeopardize
the marketability of the company. Potential purchasers of the
company would be unwilling to incur the costs of due diligence if
Bob had the ability to simply match whatever offer they put
together and buy the company himself. By granting Bob a right of
first refusal, the executrices could handicap themselves. The
executrices would eliminate the chance of selling pennsy Supply
to anyone but Bob, and as a result could potentially breach their
fiduciary duties to the Estate. (Klein Direct, Vol. I, p.S7).
110. In addition to Mr. Klein, Lisa consulted with Mr.
Hadley, who also strongly advised against giving Bob a right of
first refusal. (Lisa Direct, Vol. III, p.437).
111. Mrs. Mumma also talked with Mr. Klein and Mr.
Hadley about whether Bob should be given a right of first
refusal. Both Mr. Hadley and Mr. Klein advised against giving
Bob the right. (Mrs. Mumma Cross, Vol. II, p.257).
112. Subsequent to the discussions Mrs. Mumma and Lisa
had with Mr. Klein and Mr. Hadley, Mrs. Mumma explained to Linda,
Bob, and Barbara, that following the advice of their advisors,
the executrices were unwilling to give Bob a right of first
refusal as to pennsy Supply. (Mrs. Mumma Cross, Vol. II, p.2S8,
Lisa Direct, Vol. III, pp.437-438, Linda Cross, Vol. III, pp.S7l-
72, Barbara Direct, Vol. III, p.592, Bob Direct, Vol. III,
p.654) .
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113. Early in July, 1987, Bob telephoned Lisa and
demanded that the power of attorney he executed on June 30, 1987
be returned. (Lisa Direct, Vol. III, pp.432-33, Bob Direct, Vol.
III, pp.654-5S).
114. Following a discussion with Mr. Klein, Lisa
returned Bob's June 30, 1987 power of attorney. (Lisa Direct,
Vol. III, pp.433-34, Bob Direct, Vol. III, p.65S).
115. The sale of Lot l-B was closed on or about July
7, 1987. The executrices used Bob's original MRA power of
attorney, in addition to excerpts of the MRA I agreement provided
by Mr. Skinner, to close the sale of Lot I-B instead of using
Bob's June 30, 1987 power of attorney. (Lisa Direct, Vol. III,
pp.434-35, Exhibit P-58).
116. During the late summer and early fall of 1988,
the executrices were approached and began discussions with a
foreign company interested in purchasing pennsy Supply. (Lisa
Direct, Vol. III, pp.441-43).
117. On November 2, 1988, Bob sent a letter to Barbara
in which he asserted a right of first refusal as to pennsy
Supply. Bob claimed the right stemmed from the June 30, 1987
meeting at Barbara's house. (Lisa Direct, Vol. III, p.444,
Barbara Direct, Vol. III, pp.S93-94, Exhibit P-84). Lisa also
received a copy of the letter. (Lisa Direct, Vol. III, p.444).
118. Prior to the November 2, 1988 letter, Bob had
never asserted to the executrices that he possessed a right of
first refusal as to pennsy Supply. (Lisa Direct, Vol. III,
p.444) .
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119. Following receipt of Bob's letter of November 2,
1988, Barbara had her attorney draft a response to Bob, which she
never sent, explaining that Barbara did not believe that Bob was
granted a right of first refusal as to pennsy Supply as a result
of the June 30, 1987 meeting. It was Barbara's understanding
that Mrs. Mumma decided not to give Bob a right of first refusal
when her attorney told her that granting such a right to Bob
would dissuade other potential purchasers from making offers.
(Lisa Direct, Vol. III, p.446, Barbara Cross, Vol. III, pp.61~-
19, Exhibit P-18, Exhibit P-35).
120." Linda never gave Bob a right of first refusal to
pennsy Supply at either the June 30, 1987 meeting or at any other
time. (Linda Direct, Vol. III, p.568).
CONCLUSIONS OF LAW
In declaratory judgment actions, the burden of proof in
the vast majority of the cases rests with the moving party.
PhiliD A. Bunt v. Mallinckrodt Chemical Works, 72 F.Supp. 865
(1947). Having sought the declaratory judgment on the MRA
agreements, Mrs. Mumma and Lisa are the moving parties in this
case and therefore have the burden of proof.
In addressing the first issue, this court finds that
MRA I and MRA II, the two tenancy-in-common agreements were
validly executed on December 19, 1986. Mr. Skinner, Mrs. Mumma,
and Bob were the only ones present in person at the meeting on
December 19, 1986, and both Mr. Skinner and Mrs. Mumma testified
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that Bob signed the signature pages which were attached to the
complete copies of the MRA agreements. (Sk inner Cross, Vol. I,
p.167). Mrs. Mumma's testimony parallels Mr. Skinner's. She
stated that the draft agreements signed by both Bob and herself
on December 19, 1986, had signature pages attached to them.
(Mrs. Mumma Direct, vol. II, p.195). Mrs. Mumma confirms that in
addition to the complete agreements, Hr. Skinner also supplied
Bob and herself with loose signature pages. It is clear that
Mrs. Mumma remembers Bob signing the agreements, because she said
that if Bob had refused to sign the agreements, she would not
have-gone forward with the liquidation of pennsy Supply and Kim
Company. (Mrs. Mumma Direct, Vol. II, p.195).
Having established that MRA I and MRA II were validly
executed, we now must address whether the language in~ections 3
and 4 of the two agreements provided Bob with a right of fi~st
refusal with respect to all transfers of MRA properties.
Sections 3 and 4 of the tenancy-in-common agreements do not grant
Bob the expansive right of first refusal to all transfers of MRA
properties which he claims he is entitled to under the tenancy-
in-common agreements.
In construing a contract, this court shall look at the
intentions of the parties and the purposes the parties sought to
accomplish when executing the agreements. ~ Walton v.
Philadelphia National Bank, 376 Pa. Super. 329, 338-40, 545 A.2d
1383, 1388 (1988): In Re Carter's Claim, 390 Pa. 365, 371-372,
134 A. 2d 908 , 912 (19 5 7) .
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Mr. Klein testified that the two tenancy-in-common
agreements (MRA I and MRA II) were drafted with the intent of
providing provisions that would be substantially identical to
those found in a partnership agreement. (Klein Direct, Vol. I,
p.34). Under the tenancy-in-common agreements, the participants
would vote on the basis of their proportionate interest just as
they would have done in a partnership, but would not be penalized
by the Pennsylvania realty transfer tax which would have applied
to a partnership. (Klein Direct, Vol. I, pp.33-35).
Mr. Klein explained the significant difference in the
application of Sections 3 and 4 of the two MRA agreements.
Section 3(b)1 applies to the situation where a co-owner desires
to independently sell his or her interest. The provision
provides that the tenant who wishes to sell tis or her interest
must offer it to the co-tenants before the interest can be sold
to a stranger. (Klein Direct, Vol. I, p.43). Section 3(b) thus
represents a very limited right of first refusal meant to prevent
outsiders from entering into the family tenancy-in-common.
(Klein Cross, Vol. I, p.116).
I Section 3(b) of each of the MRA agreements provides in
part as follows:
Except as hereinafter provided in this section, no
owner shall dispose of, sell, transfer, assign, convey,
mortgage, pledge, grant a security interest in,
hypothecate, or encumber part or all of his or her
undivided interest in the premises without the prior
consent of the owners and any such transaction
purported to be accomplished contrary to the provisions
hereof shall be absolutely void. (Emphasis supplied,
Exhibit P-l, Exhibit P-2).
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By contrast Section 42 applies when the majority in
interest of the tenants-in-common (i.e., the Estate and
executrices) vote to dispose of one or more pieces of property
owned by the tenants-in-common. Under Section 4 the decision to
sell is made by majority rule. (Klein Cross, Vol. I, pp.87-88,
116, Lisa Cross, Vol. III, pp.553-557). The Estate, therefore,
being the largest shareholder of both pennsy Supply and Kim Co.,
would exercise majority control over the properties because the
properties held by the tenants-in-common were to be based upon
the interests of the respective tenants in the pre-existing
corporations of Pennsy Supply and Kim Company. (Klein Direct,
Vol. I, pp.33-35, Hadley Direct, Vol II, p.303).
It is clear from the testimony provided by Mr. Klein
and Mr. Hadley that the MRA agreements were never draf~ with
the intention of providing any tenant-in-common with a right of
first refusal as to individual parcels of property owned by the
tenants-in-common. Section 3(b) only granted a very narrow right
of first refusal to the MRA tenants-in-common and pertained to a
single tenant-in-common selling his or her undivided interest in
2 Section 4 of each of the MRA agreements provides as
follows:
General, overall management of the Premises and of
all matters arising out of or in connection with the
Premises, including a sale or mortgage of the entire
Premises or any part thereof, shall be vested in the
Owners jointly and each Owner shall abide by the
policies and decisions in respect thereof. Any
agreement, approval, decision, consent, request or
other action of the Owners hereunder shall be by
rnaioritv (in interest) vote and in writing unless
otherwise indicated. (Emphasis supplied). (Exhibit
p-l, Exhibit P-2).
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the premises. (Klein Cross, Vol. I, p.116). The provision was
not intended to provide a broad right of first refusal over every
independent property transfer. Citizen Care v. Dept. of Public
Welfare, 118 Pa. Cmwlth 397, 401, 545 A.2d 455, 457 (1988) (when
a written contract is clear and unequivocal, its meaning must be
determined by its contents alone). Unless, therefore, there is a
sale of an undivided interest by an individual tenant, in which
case Section 3(b) would apply, the majority rule set forth in
Section 4 serves as approval for all transfers of MRA properties.
This court notes that Bob's percentage interest in the
two tenancy-in-common agreements is very minimal in compariso~ to
the total value. Bob hold 4.24708 percent of MRA and .47847
percent of MRA II. (Exhibit P-l, Exhibit P-2.). By contrast,
however, Mrs. Mumma and Lisa, through their individual or
representative capacities, hold 87.28 percent in MRA I and 98.56
percent in MRA II. (Exhibit P-l, Exhibit P-2). Under the
majority rule of Section 4 of the MRA agreements, Bob therefore
has no right of first refusal with respect to any transfers of
MRA assets, and because of his minimal holdings he also has no
effective control over these assets. The intent of the MRA
agreements was to place the power and control of the MRA assets
with the majority-in-interest because this paralleled the set up
in the pre-existing majority-controlled corporations of Kim
Company and pennsy Supply Co. Under the MRA agreements, as with
the pre-existing corporations, Bob, therefore, has no right of
first refusal or control over the transfer of MRA assets. Bob is
only entitled to a share of the assets held by the MRA tenancies-
in-common that are proportionate to his percentage interest.
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NO. 66 EQUITY 1988
In addressing the second issue, this court finds that
the MRA power of attorney executed by Robert M. Mumma, II on
December 19, 1986 was irrevocable. The MRA power of attorney
(Exhibit P-12) states that it "is coupled with an interest, is
irrevocable and shall be binding upon the successors and assigns
of the undersigned." We consider the MRA power of attorney
irrevocable because the language of the power of attorney is to
be strictly construed, Fiest v. Com Land Title Ins. Co., 499 Pa.
68, 74, 451 A.2d 674, 677 (l982) and both Mrs. Mumma and Lisa
have a direct interest in the MRA properties.
With respect to the construction of the power of
attorney, the Pennsylvania Supreme Court in Nuzem v. SpriQQs, 357
Pa. 531, 55 A.2d 402 (l947) held that "powers expressly granted
will not be restricted by implication, nor will a construction be
made which will effectively defeat the vety purpose of the
agency." ~. 357 Pa. at 533, 55 A.2d at 403. In this case, the
MRA power of attorney expressly provided that it was irrevocable
and coupled with an interest.
When the power of attorney is coupled with an interest,
the power is irrevocable.
".
The agent's interest must be in the
subject matter of the power. See Hartley's Appeal, 53 Pa. 212,
213-214 (le66). In this case, when Bob executed the power of
attorney, appointing Mrs. Mumma and Lisa as his agents, the power
was clearly coupled with an interest. Mrs. Mumma and Lisa, as
co-owners of the MRA properties, controlling more than 85 percent
of each of the tenancies, had an interest in the power of
attorney because the value and disposition of the MRA properties
would have a direct effect upon their holdings.
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NO. 66 EQUITY 1988
In addition to the power of attorney being irrevocable,
there is nothing in the language of the power of attorney, or in
Section 14 of the MRA agreements,3 which provides Bob with a
right of first refusal as to transfers of MRA Rroperties which
would be subject to the exercise of the MRA power of attorney.
With respect to the third issue, this court finds that
Robert M. Mumma, II was never granted a right of first refusal to
purchase pennsy Supply. There is nothing in the record which
indicates that an agreement ever existed between the parties that
Bob would be granted a right of first refusal in exchange for his
signature on the power of attorney to sell the Lemoyne lot. In
contrast, the testimony is uncontradicted that Bob agreed to the
transfer of Lot I-B at the June 30, 1987 meeting, before any
discussion of his interest in a right of fir:t refusal as to
Pennsy Supply occurred.
Even if this court were to consider Bob's agreement to
sign the power of attorney as an offer of a quid pro quo in
exchange for a right of first refusal, it was subject to an
express condition precedent. At the meeting on June 30, 1987,
Mrs. Mumma and Lisa explained to Bob that their acceptance of his
offer was conditioned upon their attorneys' and accountants'
approval. "It is a basic principle of the law of contracts that
an acceptance must be unconditional and absolute," Thomas A.
Armbruster, Inc. v. Barron, 341 Pa. Super. 409, 418-19, 491 A.2d
3 Section 14 of the MRA agreements provides that the power
of attorney will enable the owners of the MRA properties to
"carry out any of the purposes under this agreement or to
effectuate a decision of the owners thereunder." (Exhibit P-l).
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NO. 66 EQUITY 1988
882, 887 (1988). In this case, the approval of the executrices'
counsel was required before Mrs. Mumma and Lisa would accept
Bob's offer.
When Mrs. Mumma and Lisa consulted counsel they were
told that granting Bob a right of first refusal could create
serious problems. It would diminish the value of the Estate by
making Pennsy almost impossible to sell, and could also be
considered a breach of the executrices' fiduciary duties. The
executrices have a duty to use care and diligence in managing ~he
Estate, ~ Estate of Kurkowski, 487 Pa. 295, 301-02, 409 A.2d
357, 361 (1979), and if the Estate were to diminish in value,
Mrs. Mumma and Lisa would be liable to the Estate for any loss or
waste which their negligent conduct had caused. Estate of Lohm,
440 Pa. 268, 273, 269 A.2d 451, 454 (1970); Estate of Albriqht,
376 Pa. Super. 201, 215-16, 545 A.2d 896, 904 (1988) appeal
denied, 522 Pa. 571, 559 A~2d 33 (1989). Thus, the executrices
were strongly advised by Mr. Hadley and Mr. Klein against
granting Bob a right of first refusal as to Pennsy Supply. The
condition precedent to granting the refusal right, therefore,
never materialized.
Even if this court were to find that no express
condition precedent existed with respect to giving Bob the right
to purchase Pennsy Supply, Bob did not offer any consideration
for the right of first refusal. Bob agreed to the sale of Lot
l-B prior to any discussion of his right of first refusal. Even
if Bob claims that his promise to execute a power of attorney was
made in exchange for a right of first refusal as to pennsy
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NO. 66 EQUITY 1988
Supply, Bob's promise would not constitute consideration to
support the agreement.
"Consideration is a bargained for exchange, evidenced
by a benefit to the promisee and a detriment to the promisor."
Estate of Beck, 489 Pa. 276, 282, 414 A.2d 65, 68 (1980). "There
can obviously be no such bargained for exchange if one of the
parties is already legally bound to render the performance
promised." Com. Dept. of Transp. v. First Pennsylvania Bank, 7;
Pa. Cmwlth 551, 553, 466 A.2d 753, 654 (1983) (citing, Chatham
Communications, Inc. v. Gen. Press. Corp., 463 Pa. 292, 344 A.2d
837, 840 (1975)). The Superior Court in Warren Tank Car Co. v.
Dodson, 330 Pa. 281, 199 A. 139 (1938) elaborated further by
stating that "a promise to carry out a contract subsisting
between the parties or the performance of such a contractual
duty, is not a consideration which will support a cont~act..
Id.
-
330 Pa. at 284-286, 199 A. at 141.
In this case, Bob had a contractual duty under Section
14 of the MRA agreements to execute the power of attorney on
June, 1987, to enable the majority in interest to effectuate
property transfers of the holdings in MRA I and II. Bob's
promise to execute a power of attorney permitting the transfer of
Lot l-B in June, 1987, was not consideration for any right of
first refusal, because Bob was only complying with his
contractual duties under Section 14 of the MRA agreements.
In addition, Bob had already executed a power of
attorney on December 19, 1986, pursuant to Section 14 of the MRA
agreements, which was ultimately used by Mrs. Mumma and Lisa in
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NO. 66 EQUITY 1988
completing the transfer of Lot I-B. Bob cannot argue that his
execution of the MRA power of attorney on December 19, 1986,
serves as valid consideration for his claimed right of first
refusal because "past consideration . . . will not support a
subsequent agreement." Russell Houser, et ale v. Victor F.
Houser, 36 Northampton 364, 365 (Pa. c. 1962).
ORDER OF COURT
AND NOW, this
.. ., -+..'-
"-
day of /"\'1. <:...:,,- , 1992, in
accordance with the foregoing findings of fact and conclusions of
law, it is hereby ordered that the declaratory judgment shall be
entered as follows:
1) The two tenancy-in-common agreements MRA I and MRA
II signed by Robert M. Mumma, lIon December 19, 1986, are
binding upon him and grant him no right of first refusal as to
any transfers by the executrices, Barbara McK. Mumma and Lisa M.
Morgan, of the real estate held by the MRA tenants-in-common when
there is approval by a majority in interest:
2) The MRA general power of attorney which Robert M.
Mumma, II executed on December 19, 1986, is valid and
irrevocable, and pursuant to Section 14 of the MRA agreements,
empowers Mrs. Mumma and Lisa to transfer properties held by the
MRA tenancies-in-common; and
3) Robert M. Mumma, II was never given an oral right
of first refusal to purchase pennsy Supply, Inc., in June, 1987,
in exchange for his promise to execute a power of attorney for
Lot I-B in Lemoyne.
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NO. 66 EQUITY 1988
By the Cour t,
Isl Harold E. Sheely
P.J.
Thomas M. Kittredge, Esquire
Richard W. Stevenson, Esquire
John Hardin Young, Esquire
Anthony Vale, Esquire
William F. Martson, Esquire ~~ ~~
Charles E. Shields, III, Esquire -~ f.~-117 ~M..;i/IY7:l.
:pbf
(
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/301
BARBARA MeK. MUMMA AND
LISA M. MORGAN, individually
and as Executrices of and
Trustees under the Will of
ROBERT M. MUMMA, deceased
AND LINDA M. ROTH,
Plaintiffs
TRUE COpy FROM REC~~D
\Q Testimony whereof, \ h;:;re Ui\~.? 58! nIt hand
and the seal of said Court at Cariis\e, Pa. ,
// d of JtJ1~ ~g
Th' ~ ay ..../..'.~... ........, ~
IS .............. ~
.... ,
~. 1/' . fJ
fl;::..-:-.. .' .,,,... ...
...................... . ..... '''Prothonotary
IN THE COURT OF COMMON PLEAS OF
COMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
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V
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ROBERT M. MUMMA, I I AND
BARBARA M. McCLURE,
Defendants
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: NO. 66 EQUITY 1988
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IN RB: MOTION or DEFENDANT ROBERT M. MtJJO(A. II
FOR POST-TRIAL RELIEF
BEFORE SHEELY. P.J.
OPINION AND ORDER or COURT
PACTS
Based upon our findings of fact of March 24, 1992,
which we herein adopt in toto, with the agreed upon amendments,
the following is a factual and procedural summary of the events
surrounding this action:
Mrs. Mumma and Lisa Mumma Morgan (Lisa) are executrices
of the Estate of Robert M. Mumma.! They, along with plaintiff
Linda M. Roth (Linda), Robert M. Mumma, II (Bob), and nominal
defendant Barbara M. McClure (Barbara), are the former
shareholders of Kim Company and Pennsylvania Supply Company,
Harrisburg, Pennsylvania (Pennsylvania Supply). On December 19,
1986, those two corporations were liquidated and their respective
1 Robert M. Mumma died testate on April 12, 1986.
EXHIBIT "e"
NO. 66 EQUITY 1988
assets were conveyed to the former shareholders of the
corporation as tenants-in-common. Two written agreements among
tenants-in-common were executed by the former shareholders
contemporaneously with the liquidation of the corporations. Bob
signed those two agreements, commonly referred to as MRA I and
MRA II, on December 19, 1986. By its terms, MRA I expressly
governed the properties previously held by Kim Company, and HRA
II governs the assets of Pennsylvania Supply.
The liquidation of Pennsylvania Supply and Kim Company
were motivated solely by tax considerations and not by any desire
to alter the management and control structures of the
corporations. The parties sought to retain structures
functionally resembling as closely as possible the pre-existing
corporate arrangement. The shares of the family members in the
tenancies-in-common thus remained identical to their proportional
stock ownership in the corporations. The MRA agreements also
maintained the majority-based decision-making arrangement which
existed in the corporations.
Pursuant to section 1 of the MRA agreements, MRA, Inc.
was appointed manager of both of the tenancies-in-common. Mrs.
Mumma and Lisa are the officers and directors of MRA, Inc. On
December 19, 1986, Bob executed a power of attorney (the MRA
power of attorney) pursuant to Section 14 of the MRA Agreements.
See Exhibit P-12. The MRA power of attorney named the other
tenants-in-common, including the Estate, MIs. Mumma and Lisa, as
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NO. 66 EQUITY 1988
Bob's attorneys in fact to execute on his behalf any deeds or
other instruments necessary and desirable to carry out any of the
purposes under the MRA agreements. The MRA power states on its
face that it is coupled with an interest and is irrevocable.
Similar powers of attorney were executed by the other family
members.
The Estate, Mrs. Mumma, Lisa and Bob are also among the
shareholders of the Nine Ninety Nine, Inc. (999), a privately
held corporation. The Estate owns the largest interest in 999.
pennsy Supply, Inc. (pennsy) is, in turn, a wholly owned
subsidiary of 999. On June 30, 1987, the tenants-in-common under
the MRA agreements held a meeting to discuss the proposed sale by
Mrs. Mumma and Lisa, as officers of MRA, Inc., 0: a Lot l-B
located in,Lemoyne, Pennsylvania. To facilitate the sale, and in
order to avoid the necessity of filing the MRA agreements, Mrs.
Mumma and Lisa souqht to procure from the other owners powers of
attorney specifically referring to the Lemoyne property. Bob
agreed to, and did, sign the new power of attorney. Bob
subsequently demanded the return of the later power, and Lisa
complied with the request. The sale of the Lemoyne lot was
completed in July of 1987. In order to effectuate the sale, Mrs.
Mumma and Lisa used the still valid MRA power of attorney
executed by Bob in December, 1986, rather than the June, 1987
power.
Followinq his aqreement to siqn the new power of
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NO. 66 EQUITY 1988
attorney for use in the sale of the Lemoyne lot, Bob requested
that he be given a right of first refusal to purchase pennsy,
should Mrs. Mumma and Lisa decide to sell it. Mrs. Mumma and
Lisa stated that they might be willing to grant Bob a right of
first refusal as to pennsy, but that they would not consent if
their financial and legal advisors did not approve the step.
Mrs. Mumma and Lisa's attorneys counseled them that granting the
first refusal right sought by Bob would not be in their financial
or legal interests because it would impair the value of the
Estate by rendering pennsy, one of the Estate's largest assets,
virtually impossible to sell for its full market value.
In November, 1988, while Mrs. Mumma and Lisa were
engaged in negotiations with a prospective buyer for a sale of
stock of 999, and thus Pennsy, and real property owned by the MRA
tenancies, Bob sent a letter to Barbara in which he claimed that
he held a right of first refusal stemming from the June 30, 1987
meeting. On December 27, 1988, Mrs. Mumma and Lisa commenced
this action in equity, upon information and belief that Bob would
attempt to disrupt a proposed sale of stock of 999 and real
properties owned by the MRA tenancies. Mrs. Mumma and Lisa
sought a declaratory judgment removing Bob's threatened
obstruction of the transfer and declaring the MRA agreements and
the MRA power of attorney signed by Bob on December 19, 1986,
were valid and enforceable.
Following three and one-half days of testimony in this
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NO. 66 EQUITY 1988
matter, this court entered a lengthy thirty-three page opinion
and order on March 24, 1992. The opinion and order set forth
exhaustive and detailed findings of fact and conclusions of law.
Based upon those findings and conclusions, the court entered a
declaratory judgment as follows:
1) The two tenancy-in-common agreements
MRA I and MRA II signed by [Bob] on December
19, 1986, are binding upon him and grant him
no right of first refusal as to any transfers
by the executrices, (Mrs. Mumma and Lisa], of
the real estate held by the MRA tenants-in-
common when there is approval by a majority
in interest;
2) The MRA general power of attorney,
which [Bob] executed on December 19, 1986, is
valid and irrevocable, and pursuant to
Section 14 of the MRA agreements, empowers
Mrs. Mumma and Lisa to transfer properties
held by the MRA tenancies-in-common; and
3) [Bob] was never given an oral right of
first refusal to purchase pennsy Supply, Inc.
[pennsy Supply], in June, 1987, in exchange
for his promise to execute a power of
attorney for Lot I-B in Lemoyne.
Bob now seeks our reconsideration on the matter. In
his motion for post-trial relief and his brief in support
thereof, he sets forth a wide variety of arguments in an attempt
to persuade this court to reconsider its findings. Among the
arguments, Bob asserts that our decision is in error because:
1) Bob did not sign the MRA I and MRA II
agreements, and therefore they are not valid,
enforceable and binding upon him;
2) The common law provides for a right of
first refusal with a tenancy-in-common;
3) Even assuming that the tenancy-in-
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NO. 66 EQUITY 1988
common agreements are enforceable, they give
each of the tenants a right of first refusal;
4) The general power of attorney executed
by RMM II (Bob) does not empower the
executrices to transfer properties held by
the tenancies in common;
5) RMM II (Bob) was granted an oral right
of first refusal with respect to the sale of
pennsy Supply, Inc.;
6) Morgan, Lewis , Bockius should be
disqualified from representing the
plaintiffs.
We will dispense with each point for reconsideration
seriatim.
DISCUSSION
Bob's first argument in support of his motion for post-
trial relief is that the MRA agreements among tenants-in-common
are not valid and binding upon him because he never signed those
agreements. Bob alleges on Page six of his brief that he did
not sign the documents purporting to be MRA I and MRA II, and he
certainly could not have signed any such agreements at the
meeting on December 19, 1986, since he was only tendered one
agreement which he substantially revised. Be also asserts that,
"It is further clear that whatever agreement was presented to Mr.
Mumma on December 19, 1986, was not signed by all the parties at
such a time since not all the parties were then present, and no
signature pages were attached to the document at the time of
signing (December 16, 1986)." RMM II brief at p.6.
Bob's contention that he "never manifested any
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NO. 66 EQUITY 1988
intention to sign the agreements in the form in which they were
presented to the court" is, however, belied by the testimony
presented to this court. Both Mrs. Mumma and Mr. Skinner
testified that at the outset of the meeting, Mr. Skinner gave Bob
copies of two distinct and separate aqreements among tenants-in-
common. ~ Skinner Direct, vol. I, p.139; Mrs. Mumma Direct,
Vol. II, p.193; Lisa Direct, Vol. II, p.373; Findings of Fact No.
34, p.7. Moreover, Mrs. Mumma and Mr. Skinner testified that,.
after reviewing the language of the agreements and raising some
questions, Bob signed the agreements among tenants-in-common on
December 19 and that, at the time of these signatures, the
signature pages were attached to the original agreements. See
Skinner Cross, Vol. I, p.167; Mrs. Mumma Direct, Vol. II, pp.194-
95; Mrs. Mumma Cross, Vol. II, pp.236-37, Exhibit P-1, Exhibit p_
2; Findings of Fact Nos. 35, 35, 37, p.8. In addition, Bob
admits that his signature appears on MRA I and MRA II. Bob
Direct, Vol. III, pp.642-43; See also Exhibit P-l; Exhibit p-2;
Findings of Fact No. 39, p.9.
We find no record to support, other than Bob's own
testimony, his contention that he did not sign the MRA I and MRA
II agreements on December 19, 1986. Indeed, no other witness who
appeared at the trial of this case supported his version of the
events at the December 19, 1986 meeting. Thus, in a last ditch
effort, Bob directs our attention to the fact that not all the
parties were present at the December 19, 1986 meeting and that
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NO. 66 EQUITY 1988
the Best Evidence Rule should be applicable here. First, we
agree with the plaintiffs that whether the other signatories were
or were not present on December 19, 1986, or at any other time is
wholly irrelevant to the gravamen of Bob's position which is
whether ~ in fact, signed the agreements that night. We are
confident as we found in Findings of Fact No. 32 that Mrs. Mumma,
Bob and Mr. Skinner attended the December 19, 1986 meeting in
person and that Lisa and Mr. Klein were present by telephone from
the offices of Morgan, Lewis and Bockius in Philadelphia and that
Linda was present by telephone from St. Louis. The only person
not present was Barbara. See Skinner Direct, Vol. I, p.312;
Barbara Direct, Vol. III, p.519; Bob Direct, Vol. III, p.638.
Secondly, Bob contends that "there is no substantial
evidence that there ever existed original executed MRA
agreements.- Bob's brief at p.1. At Page 6 of his brief, he
asserts that "under Pennsylvania's Best Evidence Rule, the
executrices bore the burden of producing the original documents
or of offering a satisfactory explanation for their absence." Be
cites us to L.C.S. Collurv. Inc. v. Globe Coal Co., 369 Pa. 1, 84
A.2d 116 (1952); Anderson v. Commonwealth of Pennsylvania, 121
Pa. Commw. Ct. 521, 550 A.2d 1049 (1988). It has been pointed
out several times to the court that no original agreements have
been produced, and that plaintiffs have given no satisfactory
explanation as to why no originals have been made available for
production. Mr. Mumma also asserts that there has been no
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NO. 66 EQUITY 1988
substantial evidence that there ever existed original executed
MRA agreements. We disagree.
First, at the trial Mr. Skinner, in addition to
testifying as to having seen Bob sign the MRA agreements, stated
that he recalls having seen fully executed, original copies of
the agreements among tenants-in-common following the December 19,
1986 meeting. ~ Skinner Direct, Vol. II, p.1S8. In addition,
Lisa testified that she recalls seeing such originals sometime
during December, 1986 or January, 1987. Lisa Direct, Vol. II,
p.379, Lisa Cross, Vol. III, pp.498-99. Thus, we believe that
our findings that Exhibits P-1 and P-2 are copies of the
agreements as executed at the December 19th meeting is amply
supported by the record.
Nor do we believe that the best evidence rule in any
way Lmpacts upon our conclusion that the MRA I and MRA II
agreements, as signed by Bob, are valid and enforceable. A party
seeking to prove the terms of a writing must either 1) produce
the original writing or, 2) show that the original is
unavailable. See e.g., Hamill-Ouinlan. Inc. v. Fisher, 404 Pa,
Super. 482, 489, 591 A.2d 309 (1991) (quoting Nobel C. Quandel
Co. v. Stou~h Floorin9. Inc., 384 Pa. Super. 236, 241, 558 A.2d
99 (1989); 1 Packel & Poulin, Pennsylvania Evidence 51001, at
693-94 (1987). In general, courts have recognized that
destruction or loss is a satisfactory explanation for failure to
produce an original writing. See 2 McCormick on Evidence S237,
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NO. 66 EQUITY 1988
at 76 (1992); 1 Packel , Poulin SIOOl.3, at 698-99. In such
circumstances, a copy of the original may be admitted if properly
proven, inter alia, by testimony of witnesses familiar with the
circumstances surrounding the production of the copy. See
Brenner v. Lesher, 332 Pa. 522, 526, 2 A.2d 131 (1938). For
example, in Olson' French. Inc. v. Commonwealth, 399 Pa. 266,
271-12, 160 A.2d 401 (1960), the original of a document had been
mislaid. Plaintiff sought to introduce a photocopy of the
document. The Supreme Court held that testimony of the
plaintiff, as well as of the attorney who prepared the document,
that the proffered photocopy was a true and correct copy of the
original supported admission of the copy under the Best Evidence
Rule. Id.
The testimony in the instant case reveals a situation
almost identical to that in Olson , French, SUDra. As noted
above, both Lisa and Mr. Skinner testified that they had seen
fully executed MRA agreements subsequent to the December 19th
meeting. The mere fact that the documents subsequently were lost
or mislaid in the files of Morgan, Lewis , Bockius or otherwise
disappeared does not in any way preclude the admission of
photocopies of those documents or testimony regarding their terms
and provisions. Moreover, the trial court is vested with
discretion to determine whether a party has offered sufficient
evidence of the unavailability of a document, See McCormick S237
at 77. We held in our March 24, 1992 opinion and order, at Page
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NO. 66 EQUITY 1988
23, that Exhibits P-l and P-2 are "exact copies of the MRA
agreements as signed by Mrs. Mumma and Bob." See Findings of
Fact No. 41.
Bob's second point of contention is that the common law
provides for a right of first refusal with a tenancy-in-common.
At Page 9 of his brief, Bob asserts, "The Court has authorized
the sale of family-held properties on terms that are in complete
derogation of defendant's common law rights." If it was the
parties' intention to create a common law tenancy-in-common then
Bob's assertions would be accurate. At common law, each co-
tenant enjoys an interest in the whole of the property held in
common. In re Enael's Estate, sucra, 413 Pa. 478, 198 A.2d at
507. Regardless of what the parties entitled these agreements,
we do not believe that the parties sought to enter into a common
law tenancy-in-common agreement. To believe that Mrs. Mumma and
Lisa, with their financial and managerial savvy, would agree to a
common law tenancy-in-common agreement flies in the face of
reason.
What the parties sought in drafting and executing the
MRA I and MRA II agreements was to procure the tax advantages
flowing from the liquidation of Kim Company and Pennsylvania
Supply, while at the same time preserving as nearly as possible
the pre-existing corporate structures, including majority based
control of the assets held by Kim Company and Pennsylvania
Supply. See Findings of Fact Nos. 9-12. There was never any
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NO. 66 EQUITY 1988
expressed intent on the part of any of the shareholders of Kim
Company and Pennsylvania Supply that the assets of those
corporations would be transferred into common law tenancies-in-
common. Rather, it was envisioned from the outset that the
tenancies would be governed by written agreements. Because it
was intended that the tenancies-in-common created at the time of
the liquidation of Kim Company and Pennsylvania Supply would be
governed by the written MRA agreements, invocation of common laws
are inapplicable.
As we stated earlier, it flies in the face of reason to
think that Mrs. Mumma and Lisa would have agreed to create common
law tenancies in which, as Bob notes, "tenants in common 'own and
possess in equal shares an undivided interest in the whole
property.'" Bob's brief at 17. Clearly, the ~state, which at
all times controlled the overwhelming majority of the stock and
voting power of Kim Company and Pennsylvania Supply, would not
for the sake of gaining a tax advantage, voluntarily have entered
into an arrangement in which it would hold only an "equal share"
with Bob and the other tenants-in-common. In fact, as the
signature pages and the language of the MRA agreements, as well
as the testimony at trial, make clear, the Estate's majority
control of the assets was to be carried over from the corporate
into the tenancy-in-common structures. To create a tenancy-in-
common at common law would have diminished the majority control
of the Estate, which just does not seem that such a move would
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NO. 66 EQUITY 1988
have been prudent or efficacious on behalf of the executrices.
Bob also argues that our interpretation of paragraphs 3
and 4 of the MRA agreements is at variance with four rules of
contract construction. First, he contends that the plain meaning
of the MRA agreements grants him a sweeping right of first
refusal with respect to any property owned by the tenancies-in-
common. In doing so, he focuses upon Section 1(e)(i) of the
Agreements. That section provides that:
[n]o manager (or owner) on behalf of the
owners, without the consent of the owners,
shall have any right or authority implied or
apparent . . . to sell or encumber the
premises or any part thereof or any interest
of an owner therein except as provided in
Section 3 below.
Exhibit P-l at 6, Exhibit P-2 at 6 (emphasis supplied). Thus,
the only circumstance in which Section 3 of the agreement is
implicated in the context of a sale of a property owned by the
tenancies-in-common is when such a sale is attempted without the
consent of. the owners, and, under Section 4 of the agreements,
consent of the owners "shall be by a majority (in interest)
vote." Exhibit P-l at 12; Exhibit P-2 at 12. As a result, the
provisions of Section 3 are not triggered at all in the event of
a sale consented to by a majority in interest of the tenants-in-
common.
Based upon the clear language of the HRA agreements, we
concluded that Section 36, which states:
Except as hereinafter provided in this
Section, no owner shall dispose of, sell,
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NO. 66 EQUITY 1988
transfer, assign, convey, mortgage, pledge,
grant a security interest in, hypothecate, or
encumber part or all of his or her undivided
interest in the premises without the prior
consent of the owners. . . .
represents "a very limited right of first refusal" applicable
only in instances where a co-owner desires to independently sell
his or her interest. See March 24, 1992 opinion and order at 25.
Under the terms of the MRA agreements, should the
Estate, the tenant controlling a majority in interest, elect to
sell the Estate's interest, the Section 3(b) first refusal right
would be triggered, and tenants owning minority shares would
retain and may exercise a limited right of first refusal.
Contrarily, should a majority in interest decide to sell the
tenancy's interest in a particular property, the 3(b) right is
not triggered.
Bob argues, however, that the language in the MRA
agreements is unclear and ambiguous. As a result, he urges us to
apply the maxim that doubtful language in a contract should be
construed most strongly against its drafter. We, however, found
the provisions of the MRA agreements to be clear and free from
ambiguity. Even assuming, ar9uendo, that Sections 3 and 4 of the
MRA agreements are ambiguous, rigid application of the maxim
touted by Bob is inappropriate. Although it is well-settled that
in the case of ambiguous writings, writings should be construed
most strongly against the drafter:
Where a document is found to be ambiguous,
inquiry should be made into the circumstances
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NO. 66 EQUITY 1988
surrounding the execution of the document in
an effort to clarify the meaning that the
parties sought to express in the language
which they chose. Se. New Charter Coal Co.
v. McKee, 411 Pa. 304, 307, 191 A.2d 830
(1963)1 Commonwealth v. Fitzmartin, 376 Pa.
390, 393, 102 A.2d 893 (1954)1 Wiegard v.
American stores, 346 Pa. 253, 256, 29 A.2d
484 (1943). It is only when such an inquiry
fails to clarify the ambiguity that the rule
of constructions . . . should be used to
conclude the matter against the party
responsible for the ambiguity, the drafter of
the document.
~ A. Corbin, Corbin on Contracts 5559 (one vol.ed 1953);
Restatement of Contracts 5236(d) (1932). Burns Mfa. Co.. Inc. v.
Boehm, 467 Pa. 307, 313 n. 3, 356 A.2d 753 (1976).
Therefore, in the case of ambiguity, the court should
attempt to determine, from the circumstances surrounding the
preparation of the contract and the intention of the parties, the
intended effect of the contractual language. See March 24; 1992
opinion and order at 24 (citing Walton v. PhiladelDhia National
Bank, 376 Pa. Super. 329, 338-40, 545 A.2d 1383 (1988) and In re
Carter, 390 Pa. 365, 371-72, 134 A.2d 908 (1957)). In the case
sub iudice, we carefully considered the testimony of Arthur Klein
and George Badley relating to the reasons for the liquidation of
Kim Company and Pennsylvania Supply and the drafting of the MRA
agreements. See March 24, 1992 opinion and order at 25-26. We
also carefully considered the effect that a common law tenancy-
in-common agreement would have on the majority rule provision and
found that a pure common law tenancy-in-common agreement would be
a self-defeating entity for the Estate. Why would the Estate
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give up its majority share interest to stand on equal footing
with the minority shareholders? We could not answer this
proposition. Thus, based upon the outside circumstances, and the
actions of the parties, we believe that the intent behind the MRA
agreements was clear.
Bob also contends that this court misinterpreted the
MRA agreements by failing to apply the concept that specific
provisions in contracts control more generalizations. As a
result, he argues that Section 3(b) overrides Section 4 of the
MRA agreements. We disaqree. After a careful and thorough
reading of Sections 3(b) and 4, Section 3(b) is longer and more
detailed than Section 4. The fact remains, however, that the two
provisions are aimed at entirely different types of transactions.
Bob also does not believe that our interpretation of
the MRA agreements is consistent with the "real nature and
character of the transaction." We believe that we have
reiterated throughout our previous opinion, as well as this one,
that even though the parties may have agreed to call the
agreement presently before us, a tenancy-in-common agreement,
which is probably a misnomer, a tenancy-in-common, as it exists
at common law is not what the parties intended. Unlike a
tenancy-in-common where interests are equally shared among the
co-tenants, these MRA agreements souqht to retain majority
control interest. Therefore, the parties did not intend for the
common law rules to apply.
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Bob also contends that this court erred in finding that
the MRA power of attorney that he executed contemporaneously with
this signing of the MRA agreements is valid. Bob contends that
he executed the power of attorney only to facilitate the
liquidation of Kim Company and Pennsylvania Supply while he was
in Colorado in early 1987. Bis assertion, however, is completely
at odds with the testimony of Mr. Skinner, Mr. Klein, Mrs. Mumma
and Lisa. According to both Mr. Skinner and Mr. Klein, the
purpose of the MRA powers of attorney signed by the tenants-in-
common was to allow a majority in interest of the tenants to
proceed with transactions pursuant to the majority control
provisions of Section 4 of the MRA agreements in the event an
individual tenant was unavailable or refused to cooperate. Klein
Direct, Vol. I, p.4S~ Skinner Direct, Vol. I, p.149.
The MRA powers of attorney were expressly provided for
in paragraph 14 of the MRA agreements. See Exhibit P-l, p.8
(power of attorney will enable owners of MRA properties "to carry
out any of the purposes under the agreement or to effectuate a
decision of the owners thereunder"), Exhibit P-2, p.18 (same).
Additionally, the MRA power of attorney which Bob signed
expressly states that it is intended to enable the other tenants-
in-common "to execute on [Bob's] behalf any deeds or other
instruments necessary or desirable to carry out any of the
purposes under the Agreement Among Tenants-in-Common. . . ." We
believe that this language contradicts the notion that the MRA
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power of attorney was intended only for use during January, 1987,
or only for purposes of the liquidations.
We found, previously, based upon the testimony of Mr.
Klein and others that the MRA power of attorney was in no way
related to Bob's upcoming trip to Colorado, and that Mr. Skinner,
the drafter of the power of attorney, was not even aware that Bob
would be out of town in December and January. ~ Findings of
Fact 66. Rather, the need for the powers of attorney from ea~h
of the tenants-in-common stemmed, in part, from the fact that Bob
was seldom in town, Barbara was often unavailable and Linda was
living in St. Louis. See Findings of Fact 67. As a result,
obtaining the signatures of the tenants-in-common on various
documents posed practical difficulties.
Bob also contends that the power is not valid because
he was not informed of the insertion of language stating that the
MRA power of attorney was "coupled with an interest." We believe
this to be' irrelevant. Even had the MRA power of attorney not
contained such language, it was in fact coupled with an interest
and therefore was irrevocable. See Daughters of American
Revolution v. Schenley, 204 Pa. 572, 54 A. 366 (1903) (where
facts indicate that power is coupled with interest, power is
irrevocable); c.f. Krauss v. American Tobacco Co., 283 Pa. 146,
150, 129 A. 60, 61 (1925). We based our initial findings that
the MRA power was valid and irrevocable upon both the language of
the power itself and the fact that Mrs. Mumma and Lisa possessed
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NO. 66 EQUITY 1988
an interest in the subject matter of the power. See March 24,
1992 opinion and order at 28.
In addition, Bob also contends that Lisa's desire to
obtain a second power of attorney at the time of the sale of the
Lemoyne lot evidences an acknowledgement that Bob's MRA power of
attorney could not be used to consummate the sales of the MRA-
owned properties. This theory does ask us to speculate upon
Lisa's motives for seeking a latter power. We believe, howev~r,
that there was sufficient testimony presented at the trial to
answer her motivation.
Lisa testified, to our satisfaction, that counsel for
the buyer in the Lemoyne lot transaction had requested that the
entire MRA agreements be filed along with the MRA powers of
attorney. In order to avoid the need to file the MRA aqreements
and thereby to make public, confidential matters relating to the
MRA properties and the structure of their ownership, Lisa
decided, after consultation with Mr. Klein, to prepare new powers
of attorney for each of the tenants-in-common. Lisa Direct, Vol.
III, pp.40S-07. See also Findings of Fact 97 (citinq testimony
of Lisa). Therefore, the evidence illustrates that Lis~'s
motivation for having Bob sign a second power of attorney stemmed
from a desire to keep the MRA agreements confidential.
Bob further contends that he was granted an oral riqht
of first refusal with respect to the sale of pennsy at the June
30, 1987 meeting at Barbara's house. Bob alleqes that his
-19-
NO. 66 EQUITY 1988
agreement to sign the power of attorney was performed in exchange
for a right of first refusal. We disagree.
Bob initially argues that this court previously found a
right of first refusal when Bob's motion to disqualify Morgan,
Lewis & Bockius was denied on February 13, 1989. However, this
court's findings of fact in our March 24, 1992 opinion and order
are herein adopted in toto and replace and supersede any prior
inconsistent findings. The March 24th findings in regard to t~e
declaratory judgment in no way referenced the February 13, 1989
findings regarding Bob's motion to disqualify counsel.
The argument Bob has presented is contrary to the
testimony heard on this issue at trial. The uncontradicted
testimony indicated that Bob agreed to the transfer of Lemoyne
Lot 1-B at the June 30, 1987 meeting prior to any discussion
regarding a right of first refusal. The fact that he did not
sign the power of attorney until later that same day, after the
meeting had ended, does not detract from the finding that Bob
agreed to the transfer of Lot 1-B before the right of first
refusal discussion took place.
Additionally, we previously found that Mrs. Mumma's and
Lisa's assent to the proposed right of first refusal was subject
to an express condition precedent. Lisa testified that she and
Mrs. Mumma wanted to discuss the issue of Bob's right of first
refusal with Mr. Klein, the Estate's attorney, and Mr. Hadley,
the Estate's accountant, before actually granting Bob a right of
-20-
NO. 66 EQUITY 1988
first refusal. (Lisa Direct, Vol. III, pp.429-30). Linda also
supported Lisa's testimony during her testimony at trial. (Linda
Cross, Vol. III, p.S?1). Thus, by conditioning their assent upon
the Estate's counsel's approval of the right of first refusal,
the acceptance was not unconditional and absolute. See Thomas A.
Armbruster. Inc. v. Barron, 341 Pa. Super. 409, 491 A.2d 882
(1988).
We are also unable to find any evidence which would
support Bob's assertion that the alleged agreement was subject to
a condition subsequent. There is no evidence to indicate that a
contract was ever in existence whereby Bob gained a right of
first refusal. The right of first refusal was not solely
conditioned upon Mr. Klein's finding of illegality in the alleged
agreement. Rather, Bob gaining this right was also expressly
conditioned upon the approval of Mr. Klein and Mr. Badley
regarding the best interests of the Estate. Thus, when the
Estate's counsel strongly advised the executrices against
granting Bob this right, the condition precedent was not met and
Bob was not granted a right of first refusal.
Furthermore, Bob did not offer any consideration for
the right of first refusal. As stated earlier, Bob agreed to the
transfer of the Lemoyne lot prior to the discussion concerning
the right of first refusal. Additionally, Bob had a pre-existing
contractual obligation under Section 14 of the MRA agreements to
execute a power of attorney. There can be no consideration, no
-21-
NO. 66 EQUITY 1988
bargained for exchange, where one party "is already legally bound
to render the performance promised.M Com. Dept. of Trans9. v.
First Pennsylvania Bank, 77 Pa. Commw. 551, 553, 466 A.2d 753,
754 (1983) (citing, Chatham Communications. Inc. v. Gen. Press
Corp., 463 Pa. 292, 344 A.2d 837, 840 (1975)). Thus, Bob is
unable to argue that he offered consideration by signing the
power of attorney due to the fact that he was already obligated
to do so.
Bob further contends that a promise to compromise a
disputed legal claim may serve as consideration. However, we
find no merit in this argument because Bob has failed to identify
any disputed claim which he agreed to compromise in the instant
action.
Bob has also accused Lisa of breaching her .fiduciary
duty by failing to deal fairly and openly with him and other
attorneys. Bob claims that Lisa, inter alia, breached her
fiduciary duty by not informing fellow attorneys that Bob would
resist the sale of the Lemoyne lot once the right of first
refusal was not granted. However, as we stated earlier, Bob
agreed to the sale of the Lemoyne lot prior to discussions
concerning a right of first refusal with regard to Pennsylvania
Supply. Therefore, Lisa could not have advised another attorney
concerning Bob's unexpressed position. We believe Bob's
allegations of unethical behavior on the part of Lisa are
meritless.
-22-
NO. 66 EQUITY 1988
Bob also alleges that he was entitled to specific
enforcement of an exclusive right to make an offer for pennsy
within sixty days after receiving complete financial information
from Mr. Badley. Bob claims that this exclusive right was the
result of a second agreement made at the June 27, 1987 meeting.
In his brief Bob states that it is "undisputed" that he
never received year-end financial information that would allow
him to make an offer within the sixty day limitation. While we
.
do believe that the family agreed to give Bob an opportunity to
make an offer, it is disputed that he has not received the
necessary financial information to make the offer for pennsy.
Lisa testified that either she or Mrs. Mumma called Mr.
Hadley and informed him to send Bob any financial information he
did not already have. (Lisa Direct, Vol. III, p. 439; Lisa
Cross, Vol. III, p. 516). Lisa also testified that Bob had
already received most of the financial information because the
fiscal year ended June 30th. Thus, any information Bob did not
have would have been limited in amount and significance. Lisa
testified that, with the fiscal year ending June 30th, there
might not have been anything additional to supply to Bob in order
to allow him to make an offer. (Lisa Direct, Vol. III, p. 430;
Lisa Cross, Vol. III, p. 516).
Even if this court determined that Bob did not receive
adequate financial information, the promise to give him an
opportunity to make an offer on Pennsy still lacks consideration.
-23-
NO. 66 EQUITY 1988
Bob contends that the consideration for this promise was his non-
opposition to the sale of the Lemoyne lot. However, as was the
case in the discussion concerning the right of first refusal,
this alleged "exclusive right" did not take place until after Bob
had agreed to the sale of the Lemoyne lot. Bob's agreement to
the sale was not contingent upon his receiving this -exclusive
right.M
Additionally, in the case sub iudice, Bob has never
asked this court for relief in any form, including specific
enforcement of the alleged "exclusive right." Therefore, we do
not believe that Bob is entitled to specific enforcement of the
alleged "exclusive right" to make an offer for pennsy.
Bob's final argument contends that this court erred in
denying to disqualify Morgan, Lewis , Bockius in our lengthy
opinion and order dated February 13, 1989. Bob raises the same
argument in the present action as he raised in the initial action
to disqualify, namely, that Morgan, Lewis gave Bob advice with
regard to the MRA agreements, while at the same time also
representing him in regard to Bob's personal estate planning.
However, in our February 13, 1989 opinion and order,
this court concluded that "the subject matter of the pending
lawsuits are not substantially related to any prior legal
representation Morgan, Lewis provided Mr. Mumma." (February 13,
1989 opinion and order, at 19). Additionally, this court cited a
letter from Mr. Klein to Bob dated September 5, 1986, in which
-24-
NO. 66 EQUITY 1988
Mr. Klein clearly stated that Morgan, Lewis and Bockius solely
represented Bob for estate planning purposes and diselaimer
purposes under the will of Mr. Mumma, Sr. (Id., at 13)
We do not believe that Bob has argued any issue novel
to our February 13, 1989 opinion and order. Therefore, we do not
believe Bob's contention that Morgan, Lewis should be
disqualified from the present action contains any merit. For the
reasons set forth within, the defendant's motion for post-trial
relief is denied.
ORDER 0,. COURT
AND NOW, this 6.:d. day of 7/..:"7-e! tL/-< i-/ , 1992,
the defendant's motion for post-trial relief is hereby DERIED.
This opinion shall be considered a FINAL DECREB.
By the Court,
1st Harold E. Sheelv
Harold E. Sheely, P.J.
-25-
IN THE ESTATE OF
ROBERT M. MUMMA, Deceased
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
NO. 21-86-398
IN RE: REQUEST FOR PRELIMINARY INJUNCTION
BEFORE SHEELY, P.J.
ORDER OF COURT "_'_
~f
AND NOW, this'-i \L\day of jJ.~\"g~{()1993, we hereby DENY
the petition for a preliminary injunction and REFUSE to enter a
rule to show cause on the above-captioned matter.
A. TRUE Copy FROM RECORD
In Testimony wherof,l hereunto
set my hand and the seal
Af said Court at CaJ1isIe. PA A~
rhi' day f 20~
By the Court,
\ -\' {i (,__~
t /, ;L/" 1",-','----
I L '--' 'I '"
j.. \
Harold E. Sheely,
Esquire ~ ~. ~:;r;:> 8"-S~13
Marc J. Sonnenfeld, Esquire In 0. &.('....\i C~'f'>""'1 .- 8' -,5 S:13
Brady L. Green, Esquire Q
For Barbara McK Mumma and Lisa M. Morgan
Ivo V. Otto, III, Esquire
For Barbara McK Mumma and Lisa M. Morgan (V\.,[); vJ. '\, C
Richard W. Stevenson, Esquire fl)c\JI.'1,'-\ ['I:'>f'o-S"'5 .t:l3
For Barbara M. McClure
John H . Young, Esquire r)/Ct&,--IlV (~-I~(j - ~'.5~ '-<:13
For Linda M. Roth
Gerald K. Morrison, Esquire lnct~l(A C."'/~~ .-8' -.$'<(.3
For Robert M. Mumma, II
r' " ," \ / ' ^, -:;:;___.. "..{) ~
.'4'"rvt y~-\ ji..-,-u."'1\. ~.) J I~)
.7 d
:pbf
(l~<"~/-, i h) \lebu--r G, rr(1;
~L3f--J.~
Robert M. Frey, Esquire,
Guardian ad litem
2"""")8
dN"
EXHIBIT liD"
IN THE ESTATE OF
ROBERT M. MUMMA, Deceased
.
.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
.
.
NO. 21-86-398
IN RE: REQUEST FOR PRELIMINARY INJUNCTION
BEFORE SHEELY, P.J.
OPINION AND ORDER OF COURT
Here we are asked to decide; 1) whether there is a
threat of immediate and irreparable harm that damages cannot
remedy; 2) whether the injury as a result of denying the
injunction must be greater than the injury as a result of
granting the equitable relief; and 3) whether the grant of the
injunction will properly restore the parties to the situation as
it existed prior to the alleged wrongful conduct. Hearings were
held for a preliminary injunction on July 26 and July 27, 1993,
upon which the following findings of fact are made.
FINDINGS OF FACT
The Disclaimer
1. Robert M. Mumma (hereinafter the Decedent) died on
April 12, 1986.
2. His wife, Barbara McK. Mumma (hereinafter Barbara
McK.), and his daughter, Lisa M. Morgan (hereinafter Lisa), are
the executrices of the Estate of the Decedent and trustees of the
Marital Trust under the will.
3. The Decedent's son, Robert M. Mumma, Jr.
(hereinafter Robert), filed a disclaimer under his father's will
,,~ 'lOA
NO. 21-86-398
on January 12, 1987.
4. The effect of the disclaimer is that Robert is
treated as if he pre-deceased his father. Thus Robert's children
would receive his interest under the Decedent's will.
5. Robert M. Frey, Esquire (hereinafter Guardian), was
appointed as guardian ad litem to represent the interest of
Robert's minor children on December 29, 1988.
6. On June 20, 1989, Robert filed a petition to revoke
his disclaimer.
7. This court allowed Robert to revoke his disclaimer
on March 21, 1991.
8. The effect of the revocation is that Robert will no
longer be treated as if he pre-deceased his father. Thus, Robert
rather than his children, will take under the Decedent's will.
9. Guardian plans to appeal the March 21, 1991
decision to the Pennsylvania Superior Court on behalf of the
minor children.
10. Guardian's standing is dependent on the Superior
Court's ruling on this court's March 21, 1991 decision.
The Negotiations
12. Lisa and Barbara McK. as officers of the
corporations entered into negotiations to sell various assets and
properties comprising the Pennsy Supply businesses to CRH
Industries in the latter part of 1988.
13. CRH offered to buy pennsy Supply, but the deal
2
2330
NO. 21-86-398
fell through because of threats of litigation made by Robert
costing pennsy Supply approximately $20 million dollars.
14. In the summer of 1989, Robert made an offer of his
own to buy the pennsy Supply businesses.
15. On December 9, 1991, Robert made an offer to enter
negotiations for the purchase of the pennsy Supply businesses for
$35 million dollars.
16. The terms of the December 9 offer include:
a) Robert would own all stock and assets
of Nine Ninety-Nine, Inc., pennsy Supply,
Inc., Hummelstown Quarries, Inc., Newport
Quarry, Bender's Quarry, Silver Spring
Quarry, Lebanon Rock, Inc., and Mumma Realty.
b) Robert would own these companies and
their assets free and clear of all existing
liens, encumbrances, and liabilities,
including long term contracts, employment
contracts, executive covenants, option rights
and any rights of first refusal to which they
may be subject.
c) The purchase agreements would contain
representations and warranties with non-
complete agreements of Lisa and Barbara McK.
d) Such purchase price of $35 million
dollars is subject to adjustment for any
"material adverse" change of such assets
since the date of the Decedent's death.
e) Robert would own a right of first
refusal in Union Quarries with the agreement
that his mother's power to withdrawal from
the marital trust would not extend to Union
Quarries.
f) Robert would be paid one-fourth of the
estate and trust assets either in cash or in
property in such manner as is satisfactory to
Robert, offsetting the purchase price.
3
2331
NO. 21-86-398
g) The Estate and Marital Trust will
indemnify Robert against subsequently
developing tax liens or liabilities and any
environmental clean-up responsibilities
relating to activities prior to the closing.
h) All parties will discontinue all legal
actions presently pending.
17. On December 30, 1991, Lisa and Barbara McK. as
corporate officers rejected Robert's offer in a formal reply, the
basis of which was; the amount offered, the assets involved, the
status of the litigation between parties and other pending
claims.
18. On March 24, 1992, this court held in a
declaratory judgment action in equity that Robert was never given
a right of first refusal to purchase the pennsy Supply
businesses. Barbara McK. Mumma and Lisa Morgan, individually and
as Executrices of the Estate of Robert M. Mumma, deceased and
Linda M. Roth, plaintiffs v. Robert M. Mumma, II and Barbara
McClure, Defendants, No. 66 Equity 1988, Opinion and Order filed
March 24, 1992.
19. During the Spring of 1992, Lisa and Barbara McK.
went forward and tried to market the pennsy Supply businesses to
several other people.
20. In the summer of 1992, negotiations resumed with
CRH.
21. As of January 1, 1993, Lisa and Barbara McK. were
strictly dealing with CRH because they were far along enough that
they did not consider selling to other potential buyers.
4
2332
NO. 21-86-398
22. January 5, 1993, Lisa and Barbara McK. entered
into a confidentiality agreement.
The Terms of the Sale
23. As of May 8, 1993, Lisa and Barbara McR. entered
into a letter of intent.
24. The terms of the sale include:
a) In exchange for the $32 million
dollars from CRH, these five separate
business interests were sold;
i) stock in Nine Ninety-Nine, Inc.,
the holding company for the pennsy Supply
businesses,
ii) stock in Hummelstown Quarry, the
corporation that actually holds the real
estate which Pennsy Supply leases,
iii) one hundred per cent ownership of
Benders Quarry in Mt. Holly Springs,
iv) the Paxton Street yards, the main
office building in Harrisburg, and
v) for an additional $2 million
dollars, CRH would be given 120 days from
the date of closing to exercise an option
to buy a 50% in Lebanon Rock, Inc.,
raising the total purchase price to $34
million dollars.
b) The money from the sale would be
allocated over the five separate business
interests and distributed according to each
shareholder's percentage of ownership with an
escrow account for dissenting shareholders.
c) CRH insisted that a corporation be
formed so that they could buy the five
business interests as a whole from a single
seller in order to maximize tax benefits and
to avoid law suits with Robert over the sale
of each interest. Kodie Corporation was
formed to comply with this demand.
5
2333
NO. 21-86-398
d) By purchasing the separate interests
through Kodie Corporation, CRH assumes all of
the liabilities of each individual interest.
e) Non-business assets were retained by
pennsy Supply in proportion to the stock
owners' percentage of ownership for future
development.
f) CRR agreed to honor existing long term
contracts including employment contracts
protecting long term employees and a cap on
CRR's right of indemnification.
g) CRH would own no interest in Union
Quarry and could only obtain a 50% interest
in Lebanon Rock by paying an additional $2
million dollars.
h) The purchase price was fixed at $32
million dollars, no adjustments, no
financing, no pledging of pennsy Supply's
assets, the full amount in cash.
25. Lisa put $4 million dollars in escrowfor CRH, $2
million dollars for breaches of warranty or covenants for the
businesses and $2 million dollars for family litigation.
26. As owners of Kodie Corporation, Lisa and Barbara
McK. received no separate consideration , employment contract or
consulting contract, or separate benefits.
27. The closing of the sale was set up into two
stages: Stage I was scheduled for July 8, 1993, and completion
of the sale closing; Stage II was scheduled at least ten days
after the notice of Stage I was mailed.
The Notice
28. Stage I was scheduled for July 8, 1993, but no
assets would be transferred until there was confirmation that CRH
6
2331
NO. 21-86-398
released the $32 million dollars.
29. On July 9, 1993, notices were mailed to the non-
participating stockholders, who, at that time, were Robert and
Barbara McClure.
30. By way of power of attorney, Barbara McClure
signed on as a participating stockholder leaving Robert as the
only non-participating shareholder.
31. Notice was sent to all shareholders pursuant to
Business Corporation Law (BCL), 15 Pa. C.S.A. S1766(b), and since
the minor children were not shareholders, no notice was sent to
Guardian.
32. Stage II was scheduled for July 20, 1993, in order
to comply with BCL regulation, 15 Pa. C.S.A. S1766(c).
The Preliminary Injunction
33. Robert actually received his notice of Stage I of
the sale closing on July 12, 1993.
34. Guardian learned of the Stage I closing on Friday,
July 16, 1993, from Robert who encouraged Guardian to file a
petition for an ex parte preliminary injunction.
35. There was an understanding between Robert and
Guardian that Guardian would file for the preliminary injunction
which Robert would later join and Robert would once again
disclaim any interest under his father's will.
36. Guardian filed a petition on Monday, July 19,
1993, for a preliminary injunction seeking to enjoin the sale of
7
2335
NO. 21-86-398
Nine Ninety-Nine, Inc., and Hummelstown Quarry and a rule to show
cause why the sale of those assets should not be approved by this
court.
37. Robert joined in the petition July 21, 1993, but
to date has not disclaimed his interest in his father's will.
38. A copy of the petition was not served on Lisa,
Linda, Barbara McK., or Barbara McClure.
39. On July 21, 1993, this court denied the ex parte
injunction but set a date for a hearing on July 26, 1993.
40. Stage II of the sale closing was completed July
21, 1993, and they did not learn of the petition for the
injunction until after the closing.
41. A shareholders' meeting was held July 22, 1993,
where Stage I and II of the sale closing was ratified by a
majority of the shareholders.
42. The proceeds from the sale were allocated over
each of the five business interests and distributed according to
each shareholder's percentage in ownership of those interests
with an escrow account for dissenting shareholders.
DISCUSSION
The Standard of Review
Injunctive relief, in particular a preliminary
injunction is considered an extraordinary remedy and may only be
8
2~}3~r
u'O
NO. 21-86-398
granted if the moving party has established a clear right to the
relief sought. Soja v. Factoryville Sportsmen's Club, 361 Pa.
Super. 473, 477, 522 A.2d 1129, 1131 (1987). Furthermore, a
preliminary injunction which goes beyond restraint and commands
action is reserved for unusual cases. rd. The threshold issue
the court must address is whether the moving party will succeed
on the merits of its claim. See Leonard. et al. v. Thornburqh,
et al., 75 Pa. Commw. 553, 558, 463 A.2d 77, 80 (1983). A
preliminary injunction will only be granted where the moving
party can demonstrate that three pre-requisites exist; 1) there
is a threat of immediate and irreparable harm that damages cannot
remedy; 2) the injury as a result of denying the injunction must
be greater than the injury as a result of granting the equitable
relief; and 3) the grant of the injunction must properly restore
the parties to the situation as it existed prior to the alleged
wrongful conduct. Schaeffer v. Frev, 403 Pa. Super. 560, 565,
589 A.2d 752, 755 (1991). Finally, a review of this decision is
limited to whether there are any apparently reasonable grounds
for the action taken by this court. rd. at 564, 589 A.2d at 754.
II. Establishing a Clear Right to Relief by Demonstratinq the
Likelihood of Success on the Merits.
The crux of this issue revolves around the legality of
the sale of the Kodie Corporation to CRH. On one hand, Robert
maintains that the sale violated the notice provisions of the
Business Corporate Law (BCC), 15 Pa. C.S.A. S1766(c) which
9
2337
NO. 21-86-398
provides:
(c) Effectiveness of action by partial
written consent--An action taken pursuant to
subsection (b) (relating to action permitted
to be taken without a meeting upon partial
written consent) shall not become effective
until after at least ten days written notice
of the action has been given to each
shareholder entitled to vote thereon who has
not consented thereto. This subsection may
not be relaxed by any provision of these
articles.
Under the BCL, a person is deemed to have been given notice when
the notice is deposited in the mail. 15 Pa. C.S.A. ~1702(a)
provides:
(a) General rule--Whenever written notice
is required to be given to any person under
these provisions of this subpart or by the
articles or by laws of any business
corporation, it may be given to the person
either personally or by sending a copy
thereof by first class or express mail. . . .
If the notice is sent by mail, telegraph or
courier service, it shall be deemed to have
been given to the person entitled thereto
when deposited in the United States mail or
with a telegraph office or courier service
for delivery to that person or, in the case
of telex or TWX, when dispatched (emphasis
added).
Robert maintains that the Stage I closing was ineffective because
he received notice through the mail on July 12, 1993, so it could
not be in effect until July 23, 1993. However, the notice was
deposited in the mail July 9, 1993, so Robert is deemed to have
been given notice on the 9th. Thus, the Stage I closing was in
effect on July 21, 1993, when the Stage II closing was finalized.
The shareholders had a meeting July 22, 1993, and ratified the
10
2338
NO. 21-86-398
sale. We find therefore that notice was timely filed within the
provisions of 15 Pa. C.S.A. S1766(c).
Robert also disputed the form of the notice given. He
maintains that there was no expression of when the sale would be
complete. However, the notice said that the sale would be
completed as permitted under the provisions of 15 Pa. C.S.A.
S1766(c). We also find that the notice sent adequately informed
Robert of when the sale was to be completed. Since the notice
was adequate and was timely filed, we do not believe it is likely
that Robert will succeed on the merits of the case.
On the other hand, Guardian maintains that the sale
should be enjoined because the executrices and trustees needed
court approval. Obviously they have the power to sell estate
assets to CRH under 20 Pa. C.S.A. S3354. Other than the bald
assertion of self dealing by Robert, the evidence presented is
uncontradicted that 1) at the insistence of CRH, Kodie
Corporation was used as a vehicle for the sale, and 2) neither
the executrices or trustees received any separate or additional
compensation or benefit from the sale. It is our finding that
Guardian, whose standing is tenuous, is not likely to succeed on
the merits of a claim that the sale is void due to self-dealing.
III. The Injury in Denying the Injunction Versus the Injury in
Granting the Injunction.
Even if we assume for the sake of argument, that there
is an immediate and irreparable harm which damages cannot remedy,
11
2339
NO. 21-86-398
we are not persuaded from the evidence that the injury from
denying the injunction outweighs the injury from granting the
injunction. If we deny the injunction, Robert will not have an
opportunity to buy these particular businesses. However, we have
previously decided that Robert has no right of first refusal.
There simply is no duty to ever sell these businesses to Robert.
So he may never have the opportunity to buy these particular
businesses, even if we grant the injunction.
Alternatively, we have already made the finding that
the sale is complete and closed. So to grant the injunction at
this point would mean that the $32 million dollar sale and the
proceeds therefrom which have been distributed among the
shareholders, would be rescinded. This means that they would be
liable for their percentage of the earnings. eRH who has been
running pennsy Supply would have to stop and hand it back.
pennsy Supply would not only lose an attractive offer but other
potential investors would be discouraged form buying Pennsy
Supply causing the purchase price to fall even lower. Also, we
are not satisfied that Robert is presently financially able to
buy pennsy Supply. Granting the injunction would force pennsy
Supply to give up its bird in the hand for a handful of
uncertainties. Therefore, we are not satisfied that the injury
from denying the injunction outweighs the injury from granting
the injunction.
IV. preservinq the status Quo
12
2340
NO. 21-86-398
Our next determination is whether granting the
injunction will restore the parties to the situation as it
existed prior to the alleged wrongful conduct. Prior to the
closing of the sale, Robert had no right of first refusal and
Lisa and Barbara McK. decided not to sell to Robert. Robert
would be in the same position if we were to grant this
injunction. However, Pennsy Supply would not be in the same
position. Prior to the closing, they had a buyer willing to pay
$32 million dollars in cash along with favorable terms under the
sale. If the injunction were granted, pennsy Supply would suffer
a tremendous loss. Therefore, we find that granting the
injunction will not restore the parties to the situation as it
existed prior to the closing of the sale.
v. Conclusion
In short, neither party seeking the preliminary
injunction have established a clear right to the relief they
seek. Additionally, it is our opinion based on the evidence
presented that granting the injunction would result in doing more
harm than if we refuse to grant the injunction. Finally, it our
belief that granting the injunction will not restore the parties
to the situation as it existed prior to the closing of the sale.
Therefore, we enter the following order.1
lSince we are denying a preliminary injunction, we are not
required to enter a,decree nisi. See, Petro v. Kennedy Township
Board of Commissioners, 49 Pa. Commw. 305, 311, 411 A.2d 849, 852
(1980).
13
2341
NO. 21-86-398
ORDER OF COURT
AND NOW, this
day of
, 1993, we hereby DENY
the petition for a preliminary injunction and REFUSE to enter a
rule to show cause on the above-captioned matter.
By the Court,
Isl Harold E. Sheely
Harold E. Sheely, P.J.
Charles E. Shields, III, Esquire
For Robert M. Mumma, II
Marc J. Sonnenfeld, Esquire
Brady L. Green, Esquire
For Barbara McK Mumma and Lisa M. Morgan
Ivo V. Otto, III, Esquire
For Barbara McK Mumma and Lisa M. Morgan
Richard W. Stevenson, Esquire
For Barbara M. McClure
John H. Young, Esquire
For Linda M. Roth
Gerald K. Morrison, Esquire
For Robert M. Mumma, II
Robert M. Frey, Esquire,
Guardian ad litem
:pbf
14
2342
ROBERT M. MUMMA, II,
Plaintiff
v.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANiA
CIVIL ACTION - EQUITY
PENNSY SUPPLY, INC.,
Defendant
NO. 99-2765 EQUITY TERM
IN RE: PLAINTIFF'S MOTION FOR POST~TRIAL RELIEF
BEFORE OLER. J.
OPINION and FINAL DECREE
OLER, J., July 29, 2002.
In this equity action, Plaintiff Robert M. Mumma, II, who is presently proceeding
pro se, requested a declaration that he retained an ownership interest in a corporation
known as Pennsy Supply Inc. (with no comma), which, according to Plaintiff, "ha[d]
survived for over fifty years as an entity separate and distinct from Penns)' Supply, Inc.
(with a comma). ,.1 This claim was based on a share certificate, dating to 1963, which was
held by Plaintiff and which facially represented shares in a corporation known as Pennsy
Supply Inc. (with no comma). Plaintiff also requesled a declaration that a i 961
shareholders' agreement, under which Plaintiff arguably had an option to purchase
substantial assets presently operated by Pennsy Supply, Inc. (with a comma), represented
an enforceable instrument.2
Following a five-day nonjury trial, the court found for Defendant.3 On May 28,
2002, Plaintiff filed a mOlion for post-trial relief in which Plaintiff identified numerous
alleged errors in the court's adjudication of Plaintiffs case.'" Although the specific legal
lOp. & Decree Nisi, May 17,2002, at I.
2 Hereinafter, all references 10 "Pennsy Supply. Inc." should be construed as references to
Penns)' Supply, Inc. (with a comma), and all references to "Penns)' Supply Inc:' should
be construed as references 10 Penns)' Supply Inc. (with no comma).
3 See Op.' & Decree Nisi, May 17, 2002.
4 PJ.'s Mol. for Post-Trial Relief, filed May 28,2002
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contentions in the motion are somewhat difficult .to discern, owing to the prose style
employed by Plaintiff, the following assignments of error may be extracted:
I. "The Court made findings which are clearly erroneous and
not supported by substantial evidence that this case involves the sale of the
'Pennsy Supply business' to CRH."
2. "The Court made findings which are clearly erroneous and
not supported by substantial evidence in determining Plaintiffs prior
claims in other cases would require unraveling of the CRH transaction and
allow Plnintiffto reacquire assets sold to CRH."
3. "The Court crred in finding that 'Plaintiffs claims arc
predicated on the legal significance ofa comma or lack thereof.'"
4. "The Court erred in finding that the ownership interest
represented shares in a 'corporation that was built lip by Plaintiffs father.'"
5. "The Court erred in opining that resolution of the Plaintiffs
claim would require the unraveling of the sale of the 'Pennsy Supply
businesses' and would allow Plaintiff to reacquire control of assets that
were transferred to CRH pIc by Plaintiff for consideration of$3 million."
6. "The Court erred in finding that 'Plaintiff also requested a
determination that pre\'ious transfers of shares in Pennsy Supply Inc. were
void under the terms of an agreement executed by the shareholders of
Pennsy Supply Inc. in 1961 and that, pursuant to that agreement, Plaintiff
has the option to purchase a significant ownership interest in that
corporation at book value.'"
7. "The Court crred in finding that 'soon after executing this
release, Plaintiff initiated lawsuits against various corporations involved in
the transaction. ,.,
8. "The Court crred in finding that Plaintiff consented to this
sale and released his interest in the 'Pennsy Supply businesses' for
consideration of approximately $3 million:'
2
f '. 11-.. . ,.' " .. , '. T' ~ . . " . . . ~. I '. '.: \
9. "The Court cITed in its findings of fact .by relying on the
records of the Commonwealth as 'conclusive peoor and not the records
maintained by the corporate secretary of Pennsy Supply Inc."
10. "The Court erred in determining that the December 29, 1961
shareholders agreement was terminated by the August 1, 1963
agreement. . . ."
11. "[The Court erred in not admitting and considering] a
Dauphin Deposit bank memorandum . . . that clearly shows that there were
two Pcnns)' Supply companies co-existing in a parent-affiliate
relationship."
12. "[T]hc Court cITed in not admitting Plaintiffs exhibit 22, the
corporate records relating to Fiala, lnc."
13. "The Court [should] reconsider the Affidavit filed by Robert
M. Mumma, II in opposition to Dcfendant's Motion for Summary
Judgment:'
14, "[TI1C Court should review] the minutes of the special
meeting of shareholders of Nine Ninety-Nine, Inc. held January 7, 1989."s
Briefs have been submitted and oral argument has been held on the issues
presented in Plaintiffs motion. For the reasons stated in the accompanying opinion,
Plaintiffs motion will be denied.
STATEMENT OF FACTS
The issues and Hlcts of this case, which have been discussed in more dctail in the
underlying adjudication.1I \ll~Y be summarizcd briefly as follows:
5 Pl.'s Mot. for Post-Trial Relicf. filed May n. 2002 (footnotes omitted).
tJ Hereinafter. aI/ n:t'l'n:nccs to IIII.' "underlying case:' the "underlying opinion" or the
"underlying adjudication" should he construed as references to the opinion and decree
nisi entered hy the court 011 J\1ay 17. 2002. that disposed of the cJ~il1ls raised in the
Plaintiffs Action for DccJ:u:ltory Judg.ment, filed May 7, 1999.
3
The first issue presented in the underlying case was whether Plaintiffs share,
certificate bearing the name, "Pennsy Supply Inc." represented a valid ownership interest
in an existing corporation.7 According to the records of the Commonwealth, Pcnnsy
Supply Inc., which issued Plaintiffs certificate. was incorporated in 1958.8 Although the
records of the Commonwealth "inexplicably" insert a comma into Pennsy Supply Inc.
between 1979 and 1981. turning "Pennsy Supply Inc." into "pcnnsy Supply, Inc.," no
officially recognized change in corporate name or identity occurred until 1982, at which
time Pennsy Supply, Inc., changed its name to Nine Ninety-Nine, Inc.9
At the time of the name change in 1982, Nine Ninety-Nine, Inc., cancelled all
outstanding share certificates and issued replacement certificntes bearing the new
corporate name. Although Plaintiff retained his share certificate bearing the name
"Pennsy Supply Inc.," that certificate no longer represented a valid interest in any
corporation recognized by the Commonwealth. In 1995, Plaintiff consented to the sale of
Nine Ninety-Nine, Inc., to another corporation, CRH pic, and surrendered the share
certificate that represented his shares in Nine Ninety-Nine. Inc. However, Plaintiff still
held his defunct share certificate bearing the namc "Penns)' Supply Inc,"1O
The second issue presented in the underlying case was whether a 1961
shareholders' agreement, which purported to limit the ability of ClIrrent shareholders to
transfer shares without first offering these shares for sale to the corporation, represented
an enforceable instrument. \I This agrecment had been executed in 1961 by the
shareholders in Pennsy Supply Inc., and share certificates issued attcr the date of the
agreement bore a legend that identified the applicability of thc restrictions imposcd by it.
7 PI.'s Action for Declaratory J., filed May 7, 1999, at 5.
8 The corporation was originally known as Fiala Crushed Stone Corporation, but its name
was changed soon after incorporation to Pcnnsy Supply lnc. See Op. & Decree Nisi, May
17,2002, at 3-6.
<} See id.
10 See? id.
II PI.'s Action for Dcclar::ltol)' 1.. fikd May 7, ]999.:11 5.
In ,1963, the ,same shareholders executed a tennination agreement, which provided that
the restrictions imposed by the original agreement would not apply to subsequent share
transfers. Soon after the execution of this termination agreement, Plaintiff was issued his
share certificate, which did not bear the restrictive legend that had appeared on prior
certificates.12
DISCUSSION
With respect to Plaintiffs first seven assignments of error, as represented above,
the court is of the opinion that Plaintiff has not raised any material allegation of error.
When a party raises claims of error with respect to elements of a case that were not
material to the court's disposition, it is proper to dismiss those claims as predicated upon
harmless error. See, e.g., Snyder v. Gravell, 446 Pa. Super. 124, 128,666 A.2d 341, 343
(1995). In the present case, the first seven claims do not allege errors in the court's
findings of fact or conclusions of law, but object only to the language used to describe
Plaintiffs case in the introductory section of the underlying opinion.13 Because these
background statements were not essential to the court's disposition of the underlying
case, the assignments of error will be dismissed as based upon matters of harmless effect.
With respect to Plaintiffs eighth assignment, that the court erred in determining
that Plaintiff executed a sale and release of his interest in the "Pcnnsy Supply businesses"
for $3 million, the court is of the opinion that the finding at issue was supported by the
evidence presented in this case. In his testimony, Plaintiff stated that he had executed a
consent and joinder for the assets collectively denominated as the "Pennsy Supply
businesses," that he had signed over a share ccrtHicatc representing his ownership interest
in Nine Ninety-Nine, Inc., and that, upon doing so, a payment of approximately $3
million was made.14 Furthcr~ prior opinions of this court, admitted into evidence in the
current case, included the finding that Plaintiff had sold his ownership interest in Nine
12 See Op. & Decree Nisi, May 17.2002, at 3-6.
13 Compare supra text accompanying nole 5 with Op. & Decree Nisi. May 17, 2002, at 1-
2.
14 See NT. 170-76. Trial, Dec. 13-15.2000, May 30-31,2001 (hereinafter N.T.->.
5
Ninety-Nine for. consideration of $3 million.1S Although Plaintiff denied knowledg~ of..
the nature of the transaction,16 the court was of the opinion that no credible evidence was
offered to challenge the finding that such a transaction did, in fact, occur. Because the
finding was supported by substantial evidence from the record, it can not be considered
clearly erroneous. See MacKintosh-Hemphill Im'l, Inc. v. Gulf & Western, Inc., 451 Pa.
Super. 385, 402, 679 A.2d 1275, 1283 (1996).17
With respect to Plaintiffs ninth assignment, that the court "erred in its findings of
fact by relying on the records of the Commonwealth," rather than on the "records
maintained by the corporate secretary of Pennsy Supply Inc.," the court is of the view
that the court's findings with respect to the identity of the issuing corporation of
Plaintiffs share certificates were supported by substantial evidence. "In a bench trial, the
trial court is free to believe all, part, or none of the evidence presented, to make all
credibility determinations, and to resolve any conflicts in the evidence." Wallace v.
Pastore, 742 A.2d 1090, 1094 (Pa. Super. Ct. 1999). In this case, Defendant presented
evidence, in the fonn of the official articles of incorporation and amendments for Nine
Ninety-Nine, Inc., IS that showed, to the court's satisfaction, a complete record of the
'. 'f.
IS See Def:s Ex. 47, Trial, Dec. 13-15,2000, May 30-31, 2001 (hereinafter Pl.'s / Def.'s
Ex.~.
16See, e.g., N.T. 170-72.
17 It also could be argued that Plaintiffs eighth assignment of error does not raise a
material allegation of error. The underlying adjudication in this case was based primarily
on the finding that, in 1982, the issuing corporation of Plaintiffs share certificate
changed its name to Nine Ninety-Nine, Inc., cancelled all outstanding share certificates,
and issued replacemcnt certificates under the new corporate name. Accordingly, the court
concluded that, as of 1982, Plaintiffs share certificate bearing the name "Pennsy Supply
Inc." represented no valid ownership interest in any corporation recognized by the
Commonwealth. See Op. & Decrce Nisi, May 17, 2002, at 9. Because the eighth
assignment of error relates only to transactions subsequcnt to 1982, it is arguably
predicated upon harmless error.
18 Se,7 Dcf. 's Ex. 48. Pursuant to statutory rcquiremcnts, the records had been filed with
the Commonwealth of Pennsylvania Department of Stale. See id.: see a/so Op. & Decree
Nisi, May 17,2002, at ~.
6
incorporation and development of the issuing corporation. In its capacity as trier offact,
the court accorded the weight it felt appropriate to the testimony of Plaintiffs witnesses,
who could only, in response to Plaintiffs leading questions, agree that two "pennsy
Supply" corporations may have existed at some time.19 As such, the findings of fact
relating to the issuing corporation's structure and development and based on the records
of the Commonwealth can not be considered clearly erroneous.
With respect to Plaintifrs tenth assignment, that the court erred in finding that the
shareholders' agreement had been terminated in 1963, the court is of the view that the
finding was supported by the evidence presented in this case. At tria), the evidence tended
to show that an agreement to restrict share transfers was executed by shareholders in
Pennsy Supply Inc. in 1961,20 that share certificates issued after this date bore a
restrictive legend identifYing the applicability of the restrictions,21 that a tennination
agreement was executed by the same shareholders in 1963,22 and that share certificates
issued after that date -- including Plaintiffs certificate -- bore no such restrictive
legend?3 During trial, Plaintiff offered no evidence to refute these conclusions, and, as
such, the finding that the tennination agreement rendered the shareholders' agreement of
1961 unenforceable with respect to the shares issued to Plainti ff can not be considered
clearly erroneous.
With respect to Plaintirrs eleventh assignment, that the court erred in refusing to
admit II certain "Dauphin Deposit bank memorandum," the court is of the opinion that
Plaintiff failed to authenticate the document for admission. It is within the discretion of
19 See Op. & Decree Nisi, May 17, 2002, at 8 n.37. The court found unpersunsive
Plaintiffs vague assertions during trial and in the post-trial motion that unidentified
individuals tampered with the official records of the Commonwealth in a "purposeful
effort to remove the corporate existence of. . . Pcnnsy Supply. lnc,'" See PJ.'s Mot. for
Post-Trial Relief, filed May 28, 2002.
20 See PI.'s Ex. 5.
21 E.g., Pl.'s Ex. 3.
n Der."s Ex. 8.
23 See PI.'s Ex. I.
7
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the trial court to determine, ~~as a condition precedent to admissibility," whether sufficient
evidence has been presented "to support a finding that the matter in question is what its
proponent claims." Pa. R.C.P. 901(41); see Commonwealth v. Hudson, 489 Pa. 620, 630-
31,414 A.2d 1381, 1387-88 (1980) (applying abuse of discretion standard to review of
evidentiary rulings by trial court), cited ill Pa. R.C.P. 901 CO'lL In the present case,
Plaintiff relied upon the testimony of a single witness,H who was not author of the
memorandum and who had not assisted in its preparation, to authenticate the document,2s
In response to repeated questions, the witness could testify only that he had some
knowledge of the subject matter of the document: "I recognize the details that's on this
document. But can I recognize this particular document or not? I don't know."26 In light
of this testimony, it \vas not an abuse of discretion for the court to conclude that the
witness lacked personal knowledge of the document nnd that Plaintiff had failed to
authenticate the document for admission.
Further, the court is of the opinion that the document was excludable on grounds
of hearsay, Hearsay evidence, defined as any out-of-court statement Hoffcred in evidence
to prove the truth of the matter asserted:' is generally inadmissible. Pa. R.C.P. 801-02;
see also Hudson, 489 Pa. at 630-31, 414 A.2d at 1387-88 (applying abuse of discretion
standard to review of evidentiary rulings by trial court). In the present case, Plaintiff
sought to introduce the memorandum as proof of the existence of two. "Pennsy Supply"
corporations,27 at which time the court identified the document as hearsay.28 Defendant
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2~ Plaintiff also attempted to subpoena another witness to testify about the document at
issue; however, the subpoena was quashed on grounds of excessive burden and
inconvenience. Plaintiff has not challenged this ruling. See POl. R.C.P. 227.1(b) (stating
that post-trial relief may b~ granted only when "th~ grounds therefor. . . arc specified in
the motion").
25 N.T. 94-98.
2ft N.T. 97-98.
27 N.T. 95.
'8
- N.T.96.
R
offered no 90ntra~ argument, and it is believed that the court acted within its discretion
in refusing to admit the document as hearsay.
With respect to Plaintiff's twelfth assignment, that the CO\.lrt erred in refusing to
admit records pertaining to Fiala, Inc., the court is of the opinion that, because Plaintiff
offered no evidence to authenticate the records, the ruling could not be considered an
abuse of discretion. As stated previously, for authentication purposes, the proponent of
evidence must offer "evidence sufficient to support a finding that the matter in question is
what its proponent claims." Pa. R.C.P. 901{a). In the present case, Plaintiff oITered no
evidence, testimonial or othenvise, relating to the records of Fiala, Inc.29 As such, the
court properly ruled that the evidence was inadmissible.
With respect to Plaintiffs thirteenth assignment, that the court erred in refusing to
admit an affidavit that had been filed by Plaintiff in opposition to Defendant's motion for
summary judgment, the court is of the opinion that the affidavit was properly excluded as
hearsay. As stated previously, hearsay evidence is defined as any out-oF-court statement
"offered in evidence to prove the truth of the matter asserted." Pa. R.C.P. 801-02; see
also Hudson, 489 Pu. at 631-34, 414 A.2d at 1387-88 (applying abuse of discretion
standard to review of evidentiary rulings by trial court). In the present case, Plaintiff
sought to introduce the affidavit to support his claim of the existence of two "Pennsy
Supply" corporations. At that time, the court stated that the document represented "an
out-of-court statement introduced for the truth of the statement," and Plaintiff did not
suggest an argument to the contrary.30 Thus. the court acted within its permissible
discretion in refusing to admit the document.
With respect to Plaintiffs final assignment of error, that the court should admit
retrospectively into evidence the minutes of a special meeting oCthe shareholders of Nine
Ninety-Nine. lne.. the court is of the opinion that Plaintiff has waived this position by
failing to introduce this document during trial. Post-trial relief may be g.ranted only when
29 See N.T. 795.
30 N.T. 883-85.
9
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"the grounds therefor, . . . if then available, were raised. . . by motion, objection, point
for charge, request for findings of fact or conclusions of law, offer of proof or other
appropriate method at trial." Pa. R.C.P. 227 .1 (b). In the present case, Plaintiff did not
attempt to introduce the document during trial,3\ and, therefore, has waived any argument
that the court should have considered the document in the underlying case.
For the foregoing reasons, the following final decree will be entered:
FINAL DECREE
AND NOW, this 29th day of July, 2002, upon consideration of Plaintiffs Motion
for Post-Trial Relief, and for the reasons stated in the accompanying opinion, the motion
is denied and the Decree Nisi dated May 17,2002, is entered as a final decree.
~
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BY THE COURT,
Is! J. Wesley Oler. Jr.
J. Wesley Oler, Jr., J.
Robert M. Mumma, II
BoxE
Bowmansdale, P A 17007
Plaintiff, Pro Se
Michael A. Finio, Esq.
Penn National Insurance Tower
2 North Second Street
7th Floor
Harrisburg, P A 17101
Attorne)' for Defendant
3\ During trial, Plaintiff used the document in order to refresh the recollection of a
witness but did not attempt to havc the document markcd as an exhibit or to introduce it
into the record. See, e.g., N.T. 518 (concerning cross-examination by Plaintiff during
which Plaintiff was asked whether the minutes of a special meeting of the shareholders of
Nine Ninety-Nine, Inc., have "been marl.cd as an exhibit," to which Plaintiff responded
that "(ill's just to refresh. . . recollection").
10
CERTIFICATE OF SERVICE
I, Tricia D. Eckenroad, an authorized agent of Marts on Law Offices hereby certify that a copy of the
foregoing Petition for Judicial Notice was served this date by depositing same in the Post Office at Carlisle,
P A, first class mail, postage prepaid, addressed as follows:
Mr. Robert M. Mumma, II
Box 58
Bowmansdale, P A 17008
Mr. Robert M. Mumma, II
6880 S.E. Harbor Circle
Stuart, FL 34996-1968
Mr. Robert M. Mumma, II
840 Market Street, Suite 164
Lemoyne, P A 17043
Ralph A. Jacobs, Esquire
JACOBS & SINGER, LLC
1515 Market Street, Suite 705
Philadelphia, P A 19102
(Attorney for Barbara Mann Mumma)
Brady L. Green, Esquire
MORGAN, LEWIS & BOCKIUS LLP
1701 Market Street
Philadelphia, PA 19103-2921
(Attorney for Estate and Executrixes)
Ms. Linda Mumma Roth
P.O. Box 480
Mechanicsburg, P A 17055
Taylor P. Andrews, Esquire
ANDREWS & JOHNSON
78 West Pomfret Street
Carlisle, P A 17013
(Court-Appointed Auditor)
Date: May 30, 2008