HomeMy WebLinkAbout10-16-09
1 THE COURT: Good afternoon. I guess the
2 question is preventing the two properties from being sold at
3 tax sale. A Rule was issued upon the Executrices. So, the
4 response?
5 MR. FALLER: Do
you have a copy of the
6 response we filed, Your Honor?
~ THE COURT: I do.
8 MR. FALLER: Our response is that the
9 property is not owned by the Estate or the Residuary Trust.
10 The property is owned by Bobali Corporation.
11 THE COURT: Right. But the trust owns stock
12 of Bobali, is that right?
13 MR. FALLER: I'm sorry. What was the
14 question?
15 THE COURT: The trust and the Estate own
16 stock of --
17 MR. FALLER: Fourteen percent, Your Honor. I
18 think attached to our answer was a capital call letter that
19 went out, I think the date the motion was filed, asking all
20 of the shareholders to contribute, including the moving
21 party, to contribute their share of the taxes, and asked for
22 a response by close of business today.
23 THE COURT: Ms. Mumma.
24 MS. MUMMA: I brought two packets of
25 information, and one is the taxes due. The other is --
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1 THE COURT: I don't think that's in dispute.
2 The fact that the taxes are due is not in dispute, is that
3 correct?
4 MR. FALLER: Correct.
5 MS. MUMMA: However, in this instance, the
6 amount that has to be paid -- what's due is three years of
7 taxes. I want to be really clear that we only need to pay
8 2007 to keep from losing the properties.
9 THE COURT: Right, and that's all I would
10 order.
11 MS. MUMMA: So, I brought the breakdown of
12 pro rata shares, and that's what I was offering to give
13 everybody for 2007, because the capital call letter
14 referenced, I believe, all three years, so there's a
15 difference there.
16 THE COURT: Okay.
17 MS. MUMMA: I also brought what I call an
18 events calendar, because I filed -- I sent Mr. Otto a
19 letter. Then I filed a motion, I think it was nine days
20 later, because I had no response to that letter. The
21 capital call letter I received in my e-mail between 5:00 and
22 6:00 a.m. on Saturday morning. I filed my motion Friday
23 afternoon.
24 THE COURT: Okay. So, do I understand that
25 the Executrices and the Trustees are prepared to contribute
3
1 their share?
2 MR. FALLER: Yes, Your Honor.
3 MS. MUMMA: I have one point I would like
4 to make about this, a suggestion. Yes, it's true that
5 the Estate owns 14.8 percent. But according to their
6 calculations, the amount of money represented by that
~ 14 percent is $262,145.29, is the value of the assets,
8 according to the assessed values.
9 I have a su
ggestion that I would like to put
10 before the Court that might be helpful, which would be a
11 loan to Bobali by the Residual Trust that within whatever
12 the Court prefers or 90 days everybody that's agreed to pay
13 their share would then a
p y that money, and then Bobali
14 Corporation would a
P Y back the Residual Trust.
15 I have a siblin
g, a sister named Linda Mumma,
16 who is not in a financial position to even pay her share,
17 and there seems to be a little discrepancy about the exact
18 amount of who owns what. I want to prevent losing the
19 property, because people are quibbling over, you know, 100th
20 of a percent of something, so I'm thinking that --
21 THE COURT: Well, if the shareholders are
22 pigheaded enough to lose the propert
y, then so be it. My
23 guess is that there is some type of internal agreement in
24 the corporation that deals with a capital call, is there
25 not?
4
1 MS. MUMMA: I don't know, but my sister Linda
2 is not in a financial posit ion to pay this. It wouldn't be
3 pigheadedness. It would be an inability.
4 THE COURT: Well, but what I'm saying is I
5 can't force one shareholder to loan somethin
g to another
6 shareholder.
~ MS. MUMMA;
But I think it would be not in
8 the Estate or the Residuary Trust's best interests for the
9 Executrices or the Trustees to have an asset worth a quarter
10 of a million dollars that for $13,000.00 they're unwilling
11 to protect. My brother, myself, m
y mother, and my sister
12 Lisa have agreed to pay this. My sister Linda can't
13 PaY it.
THE COURT: How much is her share?
14
MS. MUMMA: That was another suggestion, that
15 we split it among the four of us. ,
I think it s
around
16 $1,200.00. How much she owns is in dispute
so
,
..,
17 THE COURT: Do you see what I'm saying?
18 MS. MUMMA:
I do see what you're saying.
19 THE COURT: I'm not
getting in the middle of
20 a family dispute over $1,200.00.
21
MS. MUMMA: I don't think it is a family
22 dispute over $1,200.00. I think it i
s a direct
23 responsibilit y for these Trustees to
protect m
y beneficiary
24 interests in a quarter-of-a-million-dollar
asset that could
25 be lost.
5
1 THE COURT: How do the Trustees have any
2 greater responsibilit to
Y protect this property than do the
3 other shareholders?
4 MS. MUMMA: I think they have a huge
5 fiduciary responsibility to the Estate. Not to me, to the
6 Estate.
~ THE COURT: If they violate that, that's a
8 matter for another day.
9 MS. MUMMA: It is, but it wouldn't be in
10 their best interests.
11 THE COURT: If they violate that -- and
12 they're getting good legal advice -
- but if they violate
13 that duty and it causes the loss of a major asset they could
14 be surcharged personally for that.
15 MS. MUMMA: Something I would love to prevent
16 by coming up with a solution for the Residuary Trust to loan
17 to Bobali for 90 days while we figure out --
18 THE COURT: I don't have the
power to order
19 that.
20 MS. MUMMA: You don't?
21 THE COURT: I do not. I'm sure that Mr.
22 Faller would be quick to point that out to me.
23 MR. FALLER: Yes, Your Honor. I think, if
24 you look at the Call Letter, the bottom of Page 3 --
25 THE COURT: I'm sorry. I don't have that
6
1 Call Letter.
2 MS. MUMMA: I have it right here.
3 THE COURT: Is that marked as an exhibit?
4 MS• MUMMA: It's the second page, along with
5 the responses.
6 MR. FALLER: It was attached to our answer.
7 The movant is referred to as Babs in the family and her
$ mother is Kim. On Page 3, Kim has indicated that she has
9 reserved the right to pay the taxes individually, not as
10 Residuary Trustee, but loan the money to Bobali, get the
11 taxes paid, and simply record the mortgage. I don't think
12 good business, good legal advice or anything would dictate
13 letting an asset or assets go to tax sale.
14 THE COURT: It wouldn't seem that way to me.
15 So, what you're relating to me is that neither the Estate
16 nor the individual Executrices are going to let the property
17 go?
18 MS. MUMMA: Not in that capacity.
19 MR. FALLER: Not in that capacity, Your
20 Honor, because, as you said, it's not an Estate matter. The
21 Estate would owe 14 percent of the taxes or roughly
22 thereabouts. But if the
y pay that, that would do no good.
23 Therefore, in the past, since the Bobali Corporation owns
24 three pieces of undevelo ed
p property that has no income,
25 Mrs. Mumma, Kim, has loaned money to the corporation to pay
7
1 the taxes. That history is in the --
2 THE COURT: Is Kim a party to this? I'm
3 confused.
4 MR. FALLER: Kim is Mrs. Mumma, who is the
5 Co-executrix.
6 THE COURT: So
you certainly -- you
7 represent the Estate?
8 MR. FALLER: Correct.
9 THE COURT: And the Executrices?
10 MR. FALLER: Correct.
11 THE COURT: As personal representatives of
12 the Estate?
13 MR. FALLER: Correct.
14 THE COURT: So, are
you relating to this
15 Court that one of the personal representatives is going to
16 prevent the property from going to tax sale?
17 MR. FALLER: I can represent that, but it's
18 not in her capacity as Executrix or Trustee. It's in her
19 individual capacity. Do you understand?
20 THE COURT: I understand what ~
you re saying.
21 But the only thing that I can do today would be to issue an
22 Order preventing the tax sale. If you are relating to me
23 that that is going to be done --
24 MS. MUMMA: What guarantee? Your Honor, my
25 mother didn't even know about this tax sale. Several days,
8
1 almost a week after my letter to Mr. Otto, I decided I'd
2 better pick up the phone and find out why I haven't heard
3 from anybody. She knew nothing about it.
4 MR. FALLER: I don't believe that's the case,
5 Your Honor.
6 MS. MUMMA: It's the case of what she told
~ me. Whether she told me the truth or not, I can't speak to,
8 but I can tell you what she told me.
9 THE COURT:
When is this going to be done?
10 MR. FALLER: The letter indicates that if the
11 money wasn't issued by today -- and my understanding is that
12 the checks have been sent. Lisa Morgan is prepared to
13 testify under oath that her mother caused that to ha
14 Peen.
THE COURT: Okay. Then we'll hear from her.
15 MS. MUMMA: your Honor, all of us, with the
16 exception of my sister Linda, who is not in a
position to
17 pay these taxes, have offered to respond to the capital
18 call. But what they were asking for was three years of
19 taxes, and I submit that that's a huge burden of money to
20 come up with.
21 THE COURT: I'm not
going to order anybody to
22 pay three years worth of taxes today.
23 MS. MUMMA:
Okay. Thank you,
24 THE COURT: I'm not sure whether anybody has
25 the authority, because that's not before me today. I don't
9
1 know what the Bobali corporate requirements are, if Bobali
2 has the authority to make the capital call.
3 MS• MUMMA: Neither do I. I
just want to
4 make sure we don't lose the property.
5 MR. FALLER: Well, my understanding was the
6 only thing we were here today about was should the Estate be
7 ordered to pay all of the taxes.
8 THE COURT: Well, we're also here today --
9 that's the Rule to Show Cause.
10 MR. FALLER: The Estate would stand willing
11 to pay its contribution from the Estate funds, but it just
12 didn't seem appropriate for an Order to issue ordering the
13 Estate to pay all of the funds.
14 MS. MUMMA: Your Honor, my mother and
15 sisters, meaning sisters Linda and Lisa, are the officers of
16 this corporation.
17 THE COURT: Is Barbara McK. Mumma --
18 MS• MUMMA: My mother.
19 MR. FALLER: That's Kim, who is the mother.
20 THE COURT: So she
goes by Kim. I can't
21 keep the players straight. Linda, Barbara and Kim are the
22 officers of Bobali?
23 MS. MUNIINA: Linda, Lisa and Kim. I'm
24 Barbara, Babs.
25 THE COURT: Who are the Executrices?
10
1 MS. MUMMA: Lisa and Kim. So, they both are
2 directors, officers and Executrices. In the interest of
3 time, this tax sale has to be done Monday by 4:00. It also
4 seems that the Estate should move to protect half a million
5 dollars worth of assets, and I'm suggesting through a loan,
6 only because it gives us time to marshal, or whatever the
7 word is, the moneys and get them where they need to go. If
8 there's some glitch in a check not getting somewhere so that
9 they can do a capital call, this whole thing could collapse.
10 The only thing I want to do toda is
Y prevent the sale of
11 these assets. I really think, in the fiduciary
12 responsibility, it would save them from a lot of grief in
13 the future if these are lost.
14 MR. FALLER: Your Honor, the two
properties
15 that we're talking about, one in Perry County --
16 MS. MUMMA: No.
17 MR. FALLER: I'm sor
ry, two in Dauphin
18 County.
19 MS. MUNIINA: There's another in Perry County
20 that we haven't even talked about.
21 MR. FALLER: There's two
properties in
22 Dauphin County. That capital call was based on what the
23 client believes -- or in their individual capacities were
24 advised needed to be paid to keep it off of the tax sale.
25 MS. MUMMA: My numbers are different from the
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capital call numbers. My numbers are about half of what
theirs are. They figured two years of taxes. It's only one
year of taxes that needs to be paid.
THE COURT: Who are the officers of the
Bobali Corporation?
MR. FALLER: I do not know, Your Honor.
MS. MUMMA: I know, and I have it in that
packet I gave you from the Department of State.
THE COURT: How much cash is in the Estate?
MS. MUMMA: I have no idea.
MR. FALLER: That would be for the
accountant, Your Honor.
THE COURT: Well, you represent the Estate.
MR. FALLER: Correct.
THE COURT: You have no idea? There's not a
bank account, there's not --
MR. FALLER: The Estate's accounting is
handled through the same accounting firm that the decedent
used. It's in Buffalo, New York. I mean, we have provided
accountings.
THE COURT: Well, the last accounting you
provided, how much was there?
MR. FALLER: I don't know without looking,
Your Honor.
THE COURT: A ballpark
Was it more than
12
1 Slo.oo?
2 MR. FALLER: Yes.
3 THE COURT: Was it less than 100 million?
4 MR. FALLER: Yes.
5 THE COURT: Was it more than 1 million?
6 MR. OTTO: I doubt it, but I couldn't --
~ MS. MUMMA: The total is about 43,000 that we
$ need to keep these from going. I'm willing to pay my pro
9 rata share, and I'm offering to pay Linda's, if need be, but
10 I can't speak for anybody else
11 THE COURT: You're telling me that mom, Mrs.
12 Mumma, was paying this?
13 MR. FALLER: She has individuall
y, in her
14 individual capacity, in the past, paid the taxes.
15 MS. MUMMA:
As have I.
16 MR. FALLER: What?
17 MS. MUMMA: As have I.
18 MR. FALLER: I think our response to the
19 pleading indicates that Babs one time, at least one time,
20 paid the taxes.
21 MS. MUMMA: I paid three years worth of
22 taxes. My mother has paid six years worth of taxes.
23 THE COURT: I thou ht
g you related to me that
24 she's paying it this year, before Monday.
25 MR. FALLER: Yes, Your Honor, it is my
13
1 understanding that that is to occur.
2 MS. MUMMA:
Your Honor I have not seen the
3 mortgage. I don't know the
percentage they're charging. I
4 don't know anything about what they're doing.
5 MR. FALLER: Again, that's a corporate
6 matter, not an Estate matter.
~ THE COURT: I'm not sure that they're not
8 interrelated.
9
MS. MUMMA: Maybe it's a little bit of a
10 conflict of interest.
11 THE COURT; Get her on the phone.
12 MS. MUMMA:
Your Honor, I just need to say
13 that I have to leave in five minutes.
14 THE COURT: I understand that.
15
(Lisa Mumma Morgan was called as a witness
16 via telephone.)
17 MS. MORGAN: Hello?
18 MR. FALLER: Lisa?
19 MS. MORGAN: yes.
20 MR. FALLER: Hi. This is George Faller.
21 We're in Judge Guido's courtroom.
22 MS. MORGAN: Okay.
23 MR. FALLER: 2 think the judge would like to
24 hear testimony from ou.
Y Is that correct, Your Honor?
25 THE COURT: Yes, who said they're going to
14
1 pay the taxes, whoever is going to be a
p ying the taxes.
2
LISA MUMMA MORGAN
3 having been duly sworn, testified as follows:
4
DIRECT EXAMINATION
5 BY MR. FALLER:
6
4 Lisa, good afternoon. We're in Judge Guido's
~ courtroom. Could you state your full name for the record,
8 please.
9 A Lisa Mumma Morgan.
10 Q And you're one of the Executrices of your
11 father's Estate?
12 A Yes.
13 Q Your mother, Barbara McK. Mumma, is known as
14 Kim?
15 A Yes.
16 Q Were you the one that reviewed and signed the
17 answer to the petition to prevent the tax sale of the Bobali
18 properties?
19 A Yes.
20 4 Was that answer based on information that you
21 supplied?
22 A Yes.
23 Q The two properties that we're talking about
24 .are in Dauphin County?
25 A Correct.
15
1 4 They are both owned by Bobali Corporation?
2 A Correct.
3 4 What is your understanding of the percentage
4 of stock that the Residuary Trust owns?
5 A My understanding is that the Residuary Trust
6 owns approximately 14.28 percent of the corporation, which
7 amounts to 1.4 shares out of a total of 10 total issued
8 shares.
9 4 We are going to mark as Exhibit 1 a letter
10 dated September 11
2009. Do you have that there?
11 A Yes. The letter I have is dated September
12 10th, but yes,
13 Q Okay. Was that a capital call letter that
14 went to Bob, Linda and Babs?
15 A Correct.
16 Q The amount of taxes that you were able to
17 determine that were due to keep the property from tax sale,
18 is that reflected on there?
19 A Yes, it is.
20 4 Were you advised that in order to keep the
21 property from going to tax sale per Dauphin County it for
22 some reason involved 2007 and 2008?
23 A No. I was told that in order to prevent the
24 tax sale it involved only the 2007 taxes.
25
4 Okay. They were also being requested to pay
16
1 the 2008, even though that's not necessary to keep it from
2 the tax sale?
3 A Correct. The 2008 taxes have not been paid,
4 and they are due and owin
g, but I believe that that will not
5 create a tax sale until next year at this time.
6 4 Did you sign the letter that we have here as
7 Exhibit 1?
8 A Yes.
9 Q To your knowledge, has anyone met that
10 capital call or have you received any checks?
11 A I have not.
I checked with my mother as late
12 as an hour ago, and she has not.
I checked with George
13 Hadley, and he has not.
14 Q Did you and/or your mother take steps to see
15 that the taxes were paid in the event that the capital call
16 was not met?
17
A Yes. My mother instructed me that she would
18 advance the funds to Bobali once again if the taxes weren't
19 paid, and she instructed me to escrow the fund, which I have
20 done, their escrow with Saul Ewin
g• In the event the
21 capital call is not met by toda
y, which was the date set in
22 the letter, then Saul Ewing has been instructed to a
23 P Y the
taxes before the close of business today, the 2007 taxes. I
24 might just clarify that.
25 4 For the record,
you are an attorney?
17
1 A Yes.
2 4 You were admitted what year?
3 A In 1985.
4 4 You are giving the judge this information as
5 an officer of the court?
6 A Yes.
~ THE COURT: Ms. Mor an
9 you re prepared to
8 assure me, as an officer of the court, that the tax sale for
9 the property will be knocked off the tax sale close of
10 business today?
11 MS. MORGAN: Judge, I think I heard what you
12 said, but I cannot hear you as clearl
Y• I think you asked
13 me -- and correct me if I'm wron ~
g -- that I m prepared to
14 assure you that the taxes will be paid even if the capital
15 call is not met, and yes, I am.
16 THE COURT: Oka
Y• So, then, we'll enter the
17 following Order:
18 And now, this 18th day of September, 2009, it
19 having been related to the Court that the sufficient sums
20 have been advanced to Bobali Corporation from Barbara McK.
21 Mumma, in her individual capacity as a shareholder, to
22 remove the property from the tax sale scheduled for
23 September 21, 2009, this matter is moot. Provided, however,
24 that the Respondent is directed to file with the Court a
25 receipt showing that the taxes have been paid and to provide
18
1 copies to Petitioner.
2 MS. MORGAN: Excuse me?
3 THE COURT: Yes, ma'am.
4 MS. MORGAN: Might I ask my attorney if it
5 would be appropriate to also request of you to add to your
6 Order that the other shareholders been required to remit
~ their pro rata share for the taxes?
8 THE COURT: Actuall
y, if that matter were
9 brought before me, I would handle that. It seems to me,
10 from having reviewed your response, like everything else in
11 this Estate, that we're lookin at
9 years of litigation. If
12 I had the jurisdiction over the corporation, and if somebody
13 brought the matter before me, it would seem that that could
14 be something that could be done.
15 MR. FALLER: I think her sister offered to
16 pay her share before we got Lisa on the phone.
17 THE COURT: That's correct.
18 MS. MORGAN: I was not there, so I didn't
19 hear that. So, it would just be, then, my brother.
20 MR. FALLER: Correct.
21 THE COURT: And the sister in North Carolina
22 that can't afford to pay?
23 MS. MORGAN: I believe my mother sent her a
24 note saying that she would pay her share.
25 THE COURT: Okay. So, then, it's down to
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your brother.
MS. MORGAN: Correct.
THE COURT: And I'm not sure I've got the
authority. The corporation isn't before me. What I have
done is basically just brokered a settlement here and made
no further order then to get everybody a receipt. But yes,
your sister said she was going to kick in her share.
MS. MORGAN: Okay. Thank you.
MR. FALLER: All right. That's it, Lisa.
Thanks.
(The proceeding was concluded.)
20
CERTIFICATION
I hereby certify that the proceedings are
contained fully and accurately in the notes taken by me on
the above cause and that this is a correct transcript of
same.
Susan Rice Stoner \
Official Stenographer
The foregoing record of the proceedings on
the hearing of the within matter is hereby approved and
directed to be filed.
o Asa ~
Date
21