HomeMy WebLinkAbout07-28-04--------------------------
IN RE: ESTATE OF
JOSEPH D. BRENNER, SR., JOSEPH D. IN THE COURT OF COMMON PLEAS
BRENNER, JR., and MARGARET B. BU5HEY, OF CUMBERLAND COUNTY,
PENNSYLVANIA
Petitioners,
ORPHANS' COURT DNISION
v.
No.21-2004-087
MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York corporation, DAVID C.
GORITY, an individual, and CURT R.
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STAUFFER, an individual, ~ r" ~'
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Respondents. ~
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PETITIONERS' REPLY TO NEW MATTER~'~~ ,
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Petitioners reply to the New Matters raised in paragraphs 0b hrou 130 of `-~~~~
Respondents' Verified Answer to Petitioners' Petition for Citation ("New Matters") as follows.
Each paragraph is numbered to correspond to Respondents' New Matters.
66. The statements in paragraph 66 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations contained in this paragraph.
67. Petitioners admit that certain Tyco shares were sold out of the Children's
Trusts and the Grandchildren's Trust on June 12, 2002, as a result of Respondents' breach of
fiduciary duty. Otherwise, Petitioners deny the allegations contained in paragraph 67.
68. Admitted.
69. Admitted.
70. Denied. Petitioners could not have completely reestablished the Tyco
positions in the Children's Trusts or the Grandchildren's Trust on July 25, 2002, because, among
other things, Manufacturers and Traders Trust Company ("M&T") would not have allowed them
to do so due to M&T policies regarding diversification in general and Tyco in particular.
71. Admitted.
72. Denied. Petitioners could not have purchased an "enhanced position in
Tyco" (which Petitioners understand to mean an even greater number of Tyco shares than
previously owned) in the Children's Trusts or the Grandchildren's Trust on July 25, 2002,
because, among other things, M&T would not have allowed them to do so due to M&T policies
regarding diversification in general and Tyco in particular.
?3. Petitioners admit that they did not purchase, or ask M&T to purchase,
Tyco shares on July 25, 2002. Otherwise, Petitioners deny the allegations contained in paragraph
73, including the implication of the words "once again."
74. Petitioners admit that Tyco shares were selling in the market on July 25,
2002 for an amount less than the amount at which Tyco shares were sold out of the Children's
Trusts and Grandchildren's Trust on June 12, 2002. Otherwise, the statements in paragraph 74
constitute legal arguments or conclusions to which no response is necessary. To the extent a
response is necessary, Petitioners deny the allegations contained in paragraph 74, except as
expressly admitted.
75. Petitioners admit that, generally speaking, the price of Tyco shares has
increased gradually since June 12, 2002, up to and including the present. Otherwise, Petitioners
deny the allegations contained in paragraph 75, including the ambiguous term "substantially."
76. The statements in paragraph 76 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners acted
reasonably under the circumstances, and they deny the allegations in this paragraph.
77. The statements in paragraph 77 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations in this paragraph.
78. The statements in paragraph 78 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
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allegations in this paragraph.
79. The statements in paragraph 79 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations in this paragraph.
80. Petitioners lack knowledge or information sufficient to form a belief as to
the truth or falsity of the allegations in paragraph 80 and therefore deny the same.
81. The statements in paragraph 81 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations in this paragraph.
82. Denied. Joseph D. Brenner, Sr. ("Brenner Sr.") never intended,
understood, or agreed to liquidate the Tyco stock in the Children's Trusts or the Grandchildren's
Trust, nor did he understand or agree to the use of a "stop loss" order.
83. Petitioners admit that M&T drafted the two documents constituting
"Exhibit C" to the New Matters, and that M&T had Brenner Sr. sign such documents even
though he did not understand or agree to the directions contained therein. Otherwise, Petitioners
deny the allegations contained in paragraph 83.
84. Denied. Neither Joseph D. Brenner, Jr. ("Brenner Jr.") nor Margaret B.
Bushey ("Bushey") "affirmatively agreed" with M&T's actions on June 12, 2002. Under
inappropriate pressure from M&T, and misled about her father's "consent," Bushey agreed to go
along with what she was told were her father's wishes regarding the Children's Trusts only.
Similarly, misled about his father's and sister's "consent," Brenner Jr. "agreed" to the sale of some
Tyco stock but did not agree to the placement of the stop loss order. To the extent Bushey or
Brenner Jr. verbalized any agreement, it was the direct result of inappropriate pressure and
misleading statements by Respondents.
85. The statements in paragraph 85 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
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allegations in this paragraph.
86. Denied. Respondents' conduct in connection with their "recommendation"
to sell on June 12 was entirely unreasonable and constituted a breach of fiduciary duty.
87. The statements in paragraph 87 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners lack
knowledge or information sufficient to form a belief as to the truth or falsity of the allegations in
paragraph 87 and therefore deny the same.
88. Upon information and belief, M&T analysts issued a "sell order" on Tyco
stock on or about June 7, 2002. Otherwise, Petitioners lack knowledge or information sufficient
to form a belief as to the truth or falsity of the allegations in paragraph 88 and therefore deny the
same.
89. "Exhibit D" to the New Matters is a document M&T produced to
Petitioners. Beyond the face of the document, Petitioners lack knowledge or information
sufficient to form a belief as to the truth or falsity of the allegations in paragraph 89 and therefore
deny the same.
90. Petitioners admit that M&T employees had talked to the co-trustees about
the Children's Trusts and Grandchildren's Trust being concentrated in one stock on more than one
occasion prior to June 12, 2002. However, Petitioners deny that M&T's actions on June 12,
2002, were "consistent" with M&T's prior actions, and otherwise deny the allegations contained
in paragraph 90.
91. Petitioners lack knowledge or information sufficient to form a belief as to
whether M&T's specific "concerns" about Tyco's viability as a company were "well taken" on
June 12, 2002, and therefore deny the allegations contained in paragraph 91.
92. Upon information and belief, Petitioners admit that Tyco's CEO was
arrested in June 2002 and that some members of the media questioned Tyco's liquidity and/or the
future of Tyco's CIT division at that time. Otherwise, Petitioners deny the allegations contained
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in paragraph 92.
93. Petitioners admit that several large companies, including Enron,
WorldCom, and Global Crossing, had experienced well-publicized difficulties and lost share
value prior to June 12, 2002. Otherwise, Petitioners deny the allegations contained in paragraph
93.
94. To the extent that M&T is alleging its own state of mind, or making legal
arguments about the "correctness" of its "concerns," no response is necessary. To the extent a
response is necessary, Petitioners admit that it was appropriate to monitor Tyco stock in June
2002, and otherwise deny the allegations contained in paragraph 94.
95. Denied. Petitioners have no way of knowing what information M&T
actually considered in making its "recommendation," but M&T failed to consider, at a minimum,
that it should have invited Brenner Jr. and Bushey to the June 12 meeting, that Brenner Sr. could
not give consent to something he did not understand, and that it is inappropriate and a breach of
fiduciary duty to unduly pressure a co-trustee in order to obtain his or her "consent" to one's own
desired course of action.
96. The statements in paragraph 96 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations in this paragraph.
97. Petitioners have no way of knowing how or why M&T selected the trigger
price it did for the stop-loss order. Petitioners know only that they did not want it and it
ultimately did not work. Lacking sufficient information to form a belief as to the truth or falsity
of the allegations contained in paragraph 97, Petitioners deny the allegations in this paragraph.
98. Denied. Petitioners have no way of knowing what internal processes
M&T went through, but its June "recommendation" was presented to Petitioners in an
unprofessional manner, including sounding panicked on the telephone with Bushey and Brenner
Jr., pressing all the co-trustees for immediate decision, and presenting the decision as a "done
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deal" to Bushey and Brenner Jr.
99. The statements in paragraph 99 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations in this paragraph.
100. Denied. Petitioners did not understand what M&T intended to do, nor
agree to what M&T actually did, on June 12, 2002.
101. Denied. The allegation contained in paragraph 101 is argumentative, not
factual in nature, and does not require a response. To the extent a response is necessary, this
action is based on M&T's breach of fiduciary duties, not "hindsight seller's remorse."
102. Petitioners admit that Brenner Sr. is a college graduate and that he is the
former CEO of Amp Inc., a company that was small when Brenner Sr. began working at it but
which grew large over time and was eventually acquired by Tyco. Otherwise, Petitioners deny
the allegations contained in paragraph 102.
103. Admitted.
104. Petitioners admit that Brenner Sr. is co-trustee of the Jane Brenner "B"
Trust (M&T account no. 32-1056-60-8}, the Jane Brenner "C" Trust (M&T account no. 32-1057-
60-6), and the Nancy B. Blakely Trust (M&T account no. 41-7090-60-2). Petitioners admit that
Brenner Jr. and Margaret B. Bushey are each co-trustees of the Grandchildren's Trust (M&T
account no. 43-1075-60-5). The allegations in paragraph 104 are ambiguous and may go beyond
the trusts at issue in this case, so Petitioners deny the allegations contained in paragraph 104
except as expressly admitted.
105. Admitted.
106. The statements in paragraph 106 constitute legal arguments or conclusions
to which no response is necessary.
107. The statements in paragraph 107 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners have not
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breached their fiduciary duties and deny the allegations in this paragraph.
108. The statements in paragraph 10$ constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners are not
liable to the trusts, or liable over M&T to the trusts, for losses suffered as a result of M&T's
actions on June 12, 2002.
109. Petitioners admit that M&T discussed selling Tyco stock held in the
Children's Trusts and the Grandchildren's Trust on more than one occasion, including an
occasion in November 2000. Except as expressly admitted, Petitioners deny the allegations
contained in paragraph 109.
110. Petitioners admit that M&T discussed selling Tyco stock held in the
Children's Trusts and the Grandchildren's Trust on more than one occasion prior to June 12,
2002. Otherwise, the allegations contained in paragraph 110 are ambiguous, and Petitioners deny
the allegations contained in paragraph 110 except as expressly admitted.
111. Petitioners admit that M&T discussed selling Tyco stock from the trusts
and provided certain written materials relating thereto prior to June 12, 2002. Otherwise, the
allegations contained in paragraph 111 are ambiguous, and Petitioners deny the allegations
contained in paragraph 111 except as expressly admitted.
112. Petitioners admit that Brenner Sr. did not agree to sell any shares of Tyco
stock from the trusts for which he was co-trustee "prior to the events of June 12, 2002."
Otherwise, Petitioners deny the allegations contained in paragraph 112.
113. Denied. Prior to the events of June 12, Brenner Sr. considered and
rejected (for the time being) diversifying the assets in the Children's Trusts.
114. The statements in paragraph 114 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, it is not "manifestly
unreasonable" to hold all trust assets in one security in all circumstances, so Petitioners deny the
allegations contained in this paragraph.
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115. The statements in paragraph 115 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Brenner Sr.'s decision
not to diversify (yet) was made in the best interests of the Children's Trusts and was not a breach
of fiduciary duty, so Petitioners deny the allegations contained in this paragraph.
116. The statements in paragraph 116 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Brenner Sr. did not
"willfully disregard" any communications from M&T or breach his fiduciary duty, so Petitioners
deny the allegations contained in this paragraph.
117. Denied. Petitioners' view of the events of June 12, 2002, is already alleged
in the Petition, which is incorporated herein. Brenner Sr. did not instruct M&T to sell one-third
of the Tyco shares in the Children's Trusts and put astop-loss order at $9.00 on the remaining
shares. It was M&T, particularly Curt Stauffer, who insisted on that course of action. Brenner
Sr. did not understand what M&T was proposing and therefore could not and did not agree to it.
118. Denied. Petitioners "blame" M&T for breaching its fiduciary duties,
including through its conduct with Brenner Sr.
119. Petitioners admit that Brenner Jr. and Bushey attended some meetings at
which M&T expressed its view that the assets in the Children's Trusts and the Grandchildren's
Trust be diversified. Otherwise, Petitioners deny the allegations contained in paragraph 119.
120. Petitioners admit that Brenner Jr. and Bushey received some
correspondence from M&T and attended meetings with M&T. Otherwise, Petitioners deny the
allegations contained in paragraph 120.
121. Petitioners admit that prior to June 12, 2002, they had heard M&T discuss
selling Tyco stock from the Children's Trusts and the Grandchildren's Trust. Except as expressly
admitted, Petitioners deny the allegations contained in paragraph 121.
122. Denied. Whether or not it was "sufficient" in M&T's view (Brenner Jr.
and Bushey having no obligation to bow to M&T's wishes), Brenner Jr. and Bushey did agree to
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a diversification plan for the Grandchildren's Trust prior to June 12, 2002.
123. Denied. Brenner Jr. and Bushey did consider diversification prior to
June 12, 2002, and in fact agreed to a reasoned plan to diversify the Grandchildren's Trust over
time.
124. The statements in paragraph 124 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Brenner Jr. did not
breach his fiduciary duty, and Petitioners deny the allegations contained in this paragraph.
125. The statements in paragraph 125 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Bushey did not breach
her fiduciary duty, and Petitioners deny the allegations contained in this paragraph.
126. Denied. Brenner Jr. and Bushey did not "affirmatively agree" to M&T's
conduct on June 12, as already described in the Petition and in preceding paragraphs incorporated
herein.
127. Denied. Petitioners "blame" M&T for breaching its fiduciary duties,
including through its conduct with Bushey and Brenner Jr.
128. The statements in paragraph 128 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations contained in this paragraph.
129. The statements in paragraph 129 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations contained in this paragraph.
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130. The statements in paragraph 130 constitute legal arguments or conclusions
to which no response is necessary. To the extent a response is necessary, Petitioners deny the
allegations contained in this paragraph.
DATED this 23rd day of July, 2004.
LLP
William F. Martson, "Jr., O No. 72163
Robyn E. Ridler, OSB No. 0016
Attorneys for Petitioner
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VERIFICATION
I, Margaret B. Bushey, verify that the statements made in the foregoing
Petitioners' Reply to New Matters are true and correct. I understand that false statements herein
are made subject to the penalties of 18 Pa.C.S. Section 4904 relating to unsworn falsification to
authorities.
VERIFICATION
I, Joseph D. Brenner, Jr.; verify that the statements made in the foregoing
Petitioners' Reply to New Matters are true and correct. I understand that false statements herein
are made subject to the penalties of 18 Pa.C.S. Section 4904 relating to unsworn falsification to
authorities.
VERIFICATION
I, Joseph D. Brenner, Sr., verify that the statements made in the foregoing
Petitioners' Reply to New Matters are true and correct. I understand that false statements herein
are made subject to the penalties of 18 Pa.C.S. Section 4904 relating to unsworn falsification to
authorities.
~/ ~ `i ~
~~~~oseph .Brenner,
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031590\00001581651 V001
CERTIFICATE OF SERVICE
I hereby certify that I served the foregoing PETITIONERS' REPLY TO NEW
MATTERS on:
Mark D. Bradshaw
Stevens & Lee
P. O. Box 11670
Harrisburg, PA 17108-1670
Of Attorneys for Respondents
L~ by mailing a copy thereof in a sealed, first-class postage prepaid envelope, ms's
!~l ~G~•+.~~u
addressed to each attorney's last-known address and depositing in the U.S. mail at
/~,~rway/wt~~e
4~ege~f on the date set forth below;
^ by causing a copy thereof to be hand-delivered to said attorneys at each
attorney's last-known office address on the date set forth below;
^ by sending a copy thereof via overnight courier in a sealed, prepaid envelope,
addressed to each attorney's last-known address on the date set forth below; or
^ by faxing a copy thereof to each attorney at each attorney's last-known
facsimile number on the date set forth below.
DATED this 28 d day of July, 2004.
By
031590\00001\581862 v00]
William 1~.1Vlartson, ~., OS No. 72163
Robyn E. Ridler, OSB No. 0016
Attorneys for Petitioners
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