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HomeMy WebLinkAbout10-14-04IN RE: ESTATE OF LOY T. HEMPT : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA TRUST CREATED UNDER ITEM :ORPHANS' COURT DIVISION FIFTH OF THE WILL : N0.21-77-231 APPEARANCES: Howell C. Mette, Esquire Daniel L. Sullivan, Esquire Vicky Ann Trimmer, Esquire for Objectors Kalbach Joel R. Zullinger, Esquire forObjectors Mark No V. Otto, III, Esquire for Accountant ~" William A. Duncan, Esquire, Auditor ` -~~ AUDITOR'S REPORT ~° _, ~; William A. Duncan, Esquire, Auditor in the above-captioned matter, files his report as follows: Procedural History 1. A Petition for Adjudication and a First and Final Account for the Estate of Loy T. Hempt, Deceased and the Residuary Trust Under Will of Loy T. Hempt (the "Account") was filed with this Court on or about July 23, 2002. 2. Objections to the Account were timely filed on behalf of Robert Hempt Kalbach, Robert H. Kalbach, Jr. and Richazd C. Kalbach (the "Kalbach Family") 3. Objections to the Account were timely filed on behalf of W. Robert Mark, Forrest H. Mazk and Steven E. Mark (the "Mark Family") 4. Counsel for the Estate of Loy T. Hempt, the Kalbach Family and the Mark Family stipulated and agreed that appointment of an Auditor. and Master was necessary and proper. 5. On or about January 31, 2003, William A. Duncan, Esquire was appointed Auditor in the above-captioned action pursuant to Orphan's Court Rule 8.1 et. seq. The Auditor was directed to investigate all issues of fact raised in and related to (1) the Kalbach Family Objections, (2) the Mark Family Objections, and (3) the Petition for Adjudication, and to report findings of fact, conclusions of law and recommendations to the Court with respect to the two sets of Objections and the Petition for Adjudication. The Auditor was further directed to examine and audit the First and Final Account for the Estate of Loy T. Hemp and Residuary Trust Under Will of Loy T. Hempt and to make recommendations to the Court with respect thereto. William A. Duncan, Esquire accepted the appointment and received the file on or about January 31, 2003. A copy of the Appointment of Auditor and Order of Court is attached hereto as Exhibit "A ". 6.On or about Apri121, 2003, the Auditor was granted a continuance of the Audit until Apri130, 2004. A copy of the Continuance is attached hereto as Exhibit "B". 7. After receiving Pre-trial briefs and upon notice, which is attached hereto as Exhibit "C", on February 17 through 19, 2004, a hearing was held to take testimony with respect to the Objections . A copy of the official transcript is filed herewith. 8. At the hearing, the parties submitted Stipulations which were entered of Record. The Auditor received proposed evidence and ruled upon the admissibility of same. The Kalbach Objectors moved to preclude the testimony of C. Thomas Work, Esquire, as an expert witness in the matter. After due consideration the Auditor ruled in favor of the Kalbach motion in limine. 9. Following the hearing, upon motion of the Accountant, the Auditor issued an Order stating that the record in the matter was temporarily sealed. 10. On or about February 10, 2003, the Auditor was granted a continuance of the Audit until July 30, 2004. A copy of the Continuance is attached hereto as Exhibit "D". 11. Oral Argument was received by the Auditor on June 10, 2004. 12. On or about July 8, the Auditor was granted a continuance of the Audit until October 15, 2004. A copy of the Continuance is attached hereto as Exhibit " E ". 13. The Auditor received requested Briefs, Proposed Findings of Fact and Conclusions of Law post-hearing as to all issues raised by the Objectors and the Accountant in this matter. 14. The Auditor files this report with the Orphans Court on this day of October, 2004 together with Notice of Filing attached hereto as Exhibit "F ". 15. The Auditors costs are specified in a Bill of Costs submitted to the Accountant in accord with the Court's Order of Appointment of Auditor. Findings of Fact 16. The Parties hereto agreed to Stipulations of Fact, including copies of theWill and Codicil of Loy T. Hempt and Petition for Appointment of Successor Co-Trustee and Successor Co-Guardian of Estate of Person" which are incorporated herein by reference and found in the Notes of Transcript, Kalbach Exhibit 1. 17. In July, 1996, Max C. Hempt and Gerald L. Hempt filed a "Petition for Appointment of Successor Trustee and Successor Guardian of Estate and of Person" in the Court of Common Pleas, Cumberland County, Pennsylvania, a copy of which has been introduced into evidence as Kalbach Exhibit I . In response to that petition, the Honorable Harold E. Sheeley signed a decree which appointed Gerald L. Hempt as a co-trustee with Max C. Hempt of the Trust and which appointed Gerald L. Hempt as co-guardian with Max C. Hempt of the estate of the person of Jean Doris Hempt. A copy of that Decree is attached hereto as Exhibit "G". 18. Since Max Hempt's death on May 23, 1999, Gerald L. Hempt has been sole Trustee of the Loy T. Hempt Residuary Trust and sole guazdian of the estate and of the person of Jean Hempt. N.T.pages 52 and 62. 19. Robert H. Kalbach, Sr. was aware that originally there were only two trustees of the Trust: Max C. Hempt and Mazgazet Hempt. Robert Kalbach, Sr. knew that Dorothy Mark was the successor trustee to Margaret Hempt. Robert Kalbach, Sr. was awaze of the deaths of Mazgazet Hempt, Dorothy Mazk and Max C. Hempt at the time of such deaths; but after the last of their deaths (Max C. Hempt's death in 1999), he made no inquiries as to who was the trustee of the Trust. N.T., pages 31-34. 20. Robert Mark was aware that at one time Max C. Hempt was the sole trustee of the Trust. Robert Mazk was also aware of the death of Max C. Hempt but after Max's death made no inquiries as to who was the trustee of the Trust. N.T.page 148. 21. Gerald L. Hempt has been an officer and director of Hempt Brothers, Inc. since the mid 1970's. N.T., page 48. 22. Loy T. Hempt's Will contained specific provisions regarding the trustee's ability to deal with Hempt Brothers, Inc. stock. These provisions provided that the trustee could: "vote the stock...elect or employ as directors, officers, employees or agents of said company and persons, including a trustee hereunder... to sell or buy from a trustee hereunder stocks, bond, or debentures of said company... In general, to deal with such company with the same freedom of action, I now have." Kalbach Exhibit 1. 23. By instrument dated April 25, 2002, Gerald L. Hempt, trustee of the Trust, divided the Trust into three (3) sepazate trusts, one for the benefit of the issue of Max C. Hempt, one for the benefit of the issue of Dorothy Mark, and one for the benefit of Robert Kalbach, Sr. Each divided trust was to receive a proportionate share (40% to the Hempt family, 40% to the Mark Family and 20% to the Kalbach family} of the fair market value and income tax basis of the Trust. Kalbach Exhibit 16, N.T., pages 279-281. 24. If it were necessary or desirable for the Loy T. Hempt Residuary Trust, (now three separate trusts) to distribute money to Jean Doris Hempt, that money could come disproportionately and disparately from the separate Kalbach Trust and the separate Mark Trust because the separate Hempt Trust is entirely illiquid. Kalbach Ex. 17, N.T., pages 291-293. 25. Jean Doris Hempt's cash and marketable securities as of May 30, 2003 were valued at $1,937,469.02. Kalbach Exhibit 7. 26. The accounting filed by Gerald L. Hempt as trustee of the Trust shows income of $65,083.76 paid to Margaret Hempt, income of $870,040.01 applied for the benefit of Jean Doris Hempt, and income of $522,631.74 accumulated and added to principal. Accounting, pages 166- 169 and summary of account; N.T.,pages 254-255. 27. The distributions made to Jean Doris Hempt were all for her health, support and welfare. Jean Doris Hempt's primary source of support was the Trust but some of her own assets were also used for her support. Transcript, pages 252-254; Kalbach Exhibit 6. Questions to be adjudicated The questions presented for the Auditor's consideration are: Objection No. 1: The document purporting to be the First and Final Account of the Estate of Loy T. Hempt, deceased, is a nullity and all expenditures for which credit is claimed therein and the division purported to be made by the Estate of Loy T. Hempt into three (3) separate trusts as shown on pages 42 and 44 of said account are invalid and without authorization because no personal representative of the Estate has been appointed following the death of Max Hempt. Objection No. 2• Because Gerald L. Hempt was never properly appointed Trustee of the Residuary Trust Under the Will of Loy T. Hempt, there exists a vacancy in that position, and all of his actions purporting to be on behalf of the Residuary Trust are null and void. Objection No. 3• The Trustees of the Loy T. Hempt Residuary Trust have breached their fiduciary duty to the remainder beneficiaries of the Trust in making distributions of income and principal to Jean Hempt or her estate. Objection No. 4• The decision of the Purported Trustee to divide the residue of the Loy T. Hempt estate (the Loy T. Hempt Residuary Trust) into three separate trusts contrary to the provisions of the Loy T. Hempt Will and to allocate the estate assets in anon-fractional share basis is contrary to law and is a breach of his fiduciary duty Conclusions of Law After due consideration of all of the filings of the parties, including the Account, Objections, Proposed Distribution, Objections to same, Stipulations, Briefs of the parties, oral argument, testimony, evidence entered of record, and cited and relevant legal authorities, the Auditor finds as follows: 1. Under 20 Pa. C.S. section 3324, the account of a deceased executor of an estate may be filed by the executor of that deceased executor's estate. Section 3324 provides, "[t]he account of the deceased...fiduciary may be filed by the fiduciary of his estate..." As a matter of law an accounting can be filed for an estate where the executor of that estate has died. Accordingly, as co-executor of Max Hempt's estate, Gerald Hempt has statutory authority to file an accounting on behalf of Max Hempt, the deceased executor of Loy Hempt's Estate. 2. Gerald L. Hempt should be confirmed as Trustee of the residuary Trust created under article FIFTH of the will of Loy T. Hempt. The statute, 20 Pa.C.S. section 7101 provides as follows: "The court, after such notice to parties in interest as it shall direct, may appoint a trustee to fill a vacancy in the office of trustee, subject to the provisions, if any, of the trust instrument." In his 1996 Petition, Max C. Hempt stated that no one's interests would be adversely affected by the filing of the petition. He further stated that notice had not been given to Jean because such notice would be futile, due to her disability. The Court did not, at that time, order Max C. Hempt to give notice of the filing. It is important to note none of the remaindermen raised an objection to the Trusteeship of Gerald Hempt unti12001, even though Max Hempt died on May 23, 1999. With regard to the issue of an inherent conflict of interest in Gerald L. Hempt serving as Trustee while managing the businesses comprising assets of the trust, there exists an exception to the conflicts of interest rule. Where the person creating a trust sets up a situation of conflicting interests, the person creating the Trust is deemed to waive any conflict of interest.. "... [T]he doctrine of self-dealing does not apply where the testator knowingly places his trustee or a trust beneficiary in a position which he knew might conflict with the interest of the Trust or beneficiaries thereto, and gave her power to act in a dual capacity."Steele Estate, 103 A.2d 409, 413, 377 Pa. 250, 258 (1954) ); [T]he testator, having the power to do so, created the conflict which became a fact or condition in the administration and devolution of his property. Flea g Estate , 73 A.2d 411, 414, 365 Pa. 82, 88 (1950) With regard to removal of the Trustee, Pennsylvania statutes give the Orphans' Court exclusive power to remove a trustee when he: "(1) is wasting or mismanaging the estate, is or is likely to become insolvent, or has failed to perform any duty imposed by the law... (3) has become incapacitated to discharge the duties of his office because of sickness or physical or mental incapacity and his incapacity is likely to continue to the injury of the estate; or (4) has removed from the Commonwealth or has ceased to have a known place of residence therein, without furnishing such security or additional security as the court shall direct; or (5) when, for any reason, the interests of the estate are likely to be jeopardized by his continuance in office." 20 Pa.C.S. section 3182 (made applicable to trustees by 20 Pa.C.S. section 7121). The actions of the Trustee in attempting to divide the Trust and in making distributions of income to the life tenant do not rise to the level of grounds for removal. 3. The Trustees properly exercised the discretion granted to them by the terms of the Trust in making principal and income distributions to Jean Hempt and Mazgazet Hempt. The basic legal rule is that "[w]here discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion. Restatement (Second) of Trusts section 187 (1959) quoted with approval in Geron v. Kennedy, 381 Pa. 97 101 (1955); see also Trexler Trust, 11 Fidu. Rep. 2d 195, 202 (Lehigh Co. Orphans' Ct. 1991). 4. The division of the Residuary Trust under the will of Loy T. Hempt into three sepazate trusts on a non-prorata basis should not be confirmed and should be set aside. The assets comprising the Trust aze not subject to easily ascertainable fair mazket values, can carry widely disparate values depending on various assumptions and at different valuation dates, and cannot meet the rigorous valuation allocations required by the statute. Further, the Trust division under the circumstances of this case served no purpose for Trust administration and did not benefit the Trust itself. Finally, the Trust division and allocation of assets into the three trusts under the circumstances of this case may hinder trust administration because of the illiquidity of the assets allocated to the Hempt Family separate trust. The division of the Loy T. Hempt Residuary Trust into the three proposed separate trusts cannot be justified on the basis of the 1992 and 1999 amendments to Section 7191 of the Probate, Estates and Fiduciary Code unless the division had been made into the three trusts on a pro-rata basis reflecting the percentage interest of the remaindermen. Very little relevant case law was presented to the Auditor by either party relating to specific instances of proposed trust divisions that were not prorata. Comments After reviewing the testimony in this case and examining the evidence presented, we find that Gerald Hempt and his predecessor Trustees did nothing contrary to the interests of Jean Hempt, and has, in fact, performed effectively in that position. However, to accept the proposed distribution of assets into the three trusts may not only be contrary to the interests of Jean but may also be contrary to the interests of the remainderman if it were not pro-rata, according to their respective interest. The remainder beneficiaries of the Loy T. Hempt trust objecting to the trustee's distribution of trust assets into three separate trusts represent the interests entitled to 60 % of the total trust assets upon the death of Jean Hempt. Extensive testimony and evidence offered was as to the nature and value of the assets. As a practical matter, the undisputed difficulties inherent in valuing the stock of closely held businesses make it impossible to determine fair market value to the degree of certainty required by Section 7191. The safeguarding of the parties' interests in such a situation does not and cannot exist. When the assets of a trust to be divided aze comprised of the stock of closely held businesses inherently incapable of precise valuation, Section 7191 cannot be utilized by a Trustee to allocate those assets among separate trusts. It is clear that any deviation from apro-rata division could prejudice the remaindermen insofar as the Will provides that the trust terminate upon Jean's death. Absent an agreement among the remaindermen prior to Jean's death, the assets should be divided after her death and the trust should terminate at that time. A premature division could be fundamentally unfair to some or all of the parties. In addition, the trust division and allocation of assets into the three trusts under the circumstances of this case could serve to hinder trust administration because of the illiquidity of the assets allocated to the Hempt Family separate trust. Objectors claim that the proposed division of assets into three trusts benefits Gerald Hempt, Trustee. Inasmuch as the trusts do not terminate until the death of Jean Hempt, the proposed allocations may, in the end, actually operate to inordinately benefit the Kalbach and Mark heirs. The expression "Be careful what you wish for, it may happen" should be noted. The values at the time of Sean's death may vary as to all assets. In determining whether or not the accountant should pay the counsel fees of the Objectors, our Superior Court in Estate of Wanamaker, 314 Pa. Super. 177, 179 (1983) states: "The general rule is that each party to adversary litigation is required to pay his or her own counsel fees... In the absence of a statute allowing counsel fees, recovery of such fees will be permitted only in exceptional circumstances...." While the Orphans' Court has to power to surcharge a party for counsel fees in exceptional circumstances, in this instance, they will be denied. Pennsylvania law allows a division of Trust assets among remaindermen. The Trustee has statutory authority to do so. Extensive testimony established that the Trustee relied upon third parties to allocate the Trust assets. The allocations should set aside and voided but there has been no convincing proof that the allocations would personally benefit the Trustee. The values of the allocated assets will not finally be determinable until the death of Jean Hempt. All of the attorney's fees in this matter were occasioned by the in the normal course of the Objectors' and Accountant exercising their legal rights. Pennsylvania law does not authorize an award of attorneys fees in this situation. We have declined to recommend the sealing of the record because the Accountant has failed to identify any clearly defined and serious injury which would result from failure to seal the record. In fact the Account filed of Record contains much of the alleged injurious content. Recommendations 1. Gerald L. Hempt should be confirmed as Trustee of the Residuary Trust under the will of Loy T. Hempt. 2. The First and Final Account for the Estate of Loy T. Hempt and Residuary Trust Under Will of Loy T. Hempt filed on July 23, 2002 should be confirmed in all respects with the exception of the Proposed Trust Division. 3. The three separate trusts should be reformed into one trust for the benefit of Jean Doris Hempt and any division of assets upon her death shall bepro-rata in accord with the respective interests of the remaindermen unless all parties consent to alternate allocations. 4. The distributions to Jean Doris Hempt from the Residuary Trust should be confirmed. S. Kalbaeh Objections 5,6,7,10,11,12,13,14,15,16 and 17 and the unnumbered Mark objections regarding the same subject matter are presumed waived and therefore should be denied. 6. Objectors request for attorneys' fees should be denied. 7. Accountant's request to seal the record should be denied. Respectfully submitted ~,~~~; n~ cow William A. Duncan, Esquire Auditor EXKIBIT A IN RE: ESTATE OF LOY T. HEMPT, Deceased IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA ORPHANS' COURT DIVISION N 0.21-77-231 DECREE The background of this Decree is as follows: (1) A Petition for Adjudication and a First and Final Account for the Estate of Loy T. Hempt, Deceased and the Residuary Trust Under Will of Loy T. Hempt (the "Account") was filed with this Court on or about July 23, 2002; and (2) Objections to the Account were timely filed on behalf of Robert Hempt Kalbach, Robert H. Kalbach, Jr. and Richard C. Kalbach (the "Kalbach Family"); and (3) Objections to the Account were timely filed on behalf of W. Robert Mark, Forrest H. Mark and Steven E. Mark (the "Mark Family"); and (4) Counsel for the Estate of Loy T. Hempt, the Kalbach Family and the Mark Family have stipulated and agreed that appointment of an auditor and master is necessary and proper; and (5) Counsel have previously identified to the Court those persons whom they believe cannot serve as an auditor/master because of actual or potential conflicts of interest; and (6) Counsel have consulted with each other and have agreed upon the form and substance of this Decree (other than the identity of the auditorlmaster, who is appointed solely by the Court, and the hourly compensation rate for the auditor/master, which is set solely by the Court). NOW, THEREFORE, this ~ ~ day of 2003, it is hereby ORDERED and DECREED that ~~ ~ is appointed as auditor and master (collectively "Auditor"} in the above-captioned proceeding. The Auditor is specifically directed pursuant to 20 Pa. C.S.A. §751(1), to investigate all issues of fact raised in and related to: (1) the Kalbach Family Objections, (2) the Mark Family Objections, and (3) the Petition for Adjudication, and to report findings of fact, conclusions of law and recommendations to the Court with respect to the two sets of Objections and the Petition for Adjudication. The Auditor is further directed, pursuant to 20 Pa. C.S.A. §751(2), to examine and audit the First and Final Account for the Estate of Loy T. Hempt and Residuary Trust Under Will of Loy T. Hempt and to make recommendations to the Court with respect thereto. The Auditor is empowered to take such actions and shall follow such procedures as provided for: (1) in the Probate, Estate and Fiduciaries Code,(2) irl the Orphans Court Rules adopted by the Supreme Court of Pennsylvania, and (3) in the Local Rules of this Court. However, the Auditor shall file his report within one hundred eighty (180) days after appointment (rather than within ninety (90) days) unless, upon application, the time is extended by the Court. The Auditor shall be entitled to reasonable compensation for his time~n~ expenses. Compensation for the Auditor shall be set at the rate of ,~--~~- per hour. Invoices shall be rendered monthly and paid, initially, by the Residuary Trust Under Wil{ of Loy T. Hempt. Responsibility for payment of the Auditor's compensation shall be subject to possible subsequent modification by the Court. Attached hereto is a list of Interested Persons identified by counsel. The Auditor is directed to review promptly this list and advise the Court and counsel of any known actual or potential conflict of interest and of any relationship or circumstances that would give rise to any appearance of impropriety. The Auditor is further directed to consult with counsel as soon as practicable and thereafter establish a case management schedule setting forth discovery deadlines, hearing dates, and other case management directives as he deems appropriate. The case management schedule may be changed by the Auditor on his own, or, in his discretion, upon application by any party, Any confidential or proprietary information disclosed in any proceeding pursuant hereto regarding any closely held business shall be held in strict confidence and shall not be disclosed to a third party, and no party to the proceeding shat{ make any business use of any such information. BY THE COURT: 1N RE: IN THE COURT OF COMMON PLEAS ESTATE OF LOY T. HEMPT, CUMBERLAND COUNTY, PA Deceased ORPHANS' COURT DIVISION NO.21-77-231 INTERESTED PARTIES Direct Interest George F. Hempt Gerald L. Hempt Marion H. Semoff Jean Doris Hempt, Incapacitated Person Martha D. Bair W. Robert Mark Forrest H. Mark Steven E. Mark Robert Hempt Kalbach, Sr. Robert H. Kalbach, Jr. Richard C. Kalbach Others for Conflict Review Estate of Jean Doris Hempt, Incapacitated Person Hempt Brothers, Inc. Valley Land Company, Inc. C. A. Hempt Estate, Inc. Pavex, Inc. Liberty Excavators, Inc. Attorneys/Firms Who Are Representing or Have Represented Interested Parties Mette, Evans & Woodside McNees, Wallace & Nurick Martson, DeardorFf, Williams & Otto Zullinger & Davis Johnson, Duffie, Stewart & Weidner Marshall, Smith & Haddick Michael Bangs William Kollas Tara Kollas Ed Myers Richard Snelbaker :305264 1 EXHIBIT B IN RE: ESTATE OF LOY T. HEMPT, Deceased IN THE COURT OF COMMON PLEAS OF :CUMBERLAND COUNTY, PENNSYLVANIA :ORPHAN'S COURT DIVISION NO: 21-77-231 ORDER 3 ~F_ AND NOW, this ~ ~ day of ~ , 2003, upon consideration of the attached Petition for Continuance of Auditor, it is hereby ORDERED that the time for William A. Duncan, Esquire, Auditor in the above-captioned action, to file a report for said action is continued until April 30, 2004. BY THE COURT, . ;. _ _ UEORGE HOFF R, P.J. A TRUE COPY FROM RECORD In Testimony wherof, !hereunto set my hand and the seal of said Court t Garllsle, PA This , ~ day of / : °B ~' s 20 t ° ~. , , r ,~ Clerk of the Orphans ~4 h r ~ ;` Cumberland CouM~r ~, .~ . _% ~~. IN RE: ESTATE OF LOY T. HEMPT, : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA ORPHAN' S COURT DIVISION NO: 21-77-231 PETITION FOR CONTINUANCE OF A UDITOR AND NOW, comes the Petitioner, William A. Duncan, Esquire, Auditor in the above-captioned matter, and files this petition for continuance of appointment of auditor, making the following statement: 1. On or about January 31, 2003, the Petitioner, William A. Duncan, Esquire, was appointed Auditor in the above-captioned action pursuant to Orphan's Court Rule 8.1 et seq. and the Auditor accepted the appointment and received the file on or about January 31, 2003. A copy of the Appointment of Auditor and Order of Court is attached hereto as Exhibit "A". 2. According to the Order related to Filing of Report, the auditor shall file a report within (180) days from the date of the auditor's appointment. 3. Due to anticipated extensive discovery requested by the parties and the anticipated expected testimony and reports, the auditor will be unable to file a report within the one hundred eighty (180) day time frame set forth in the Order of January 31, 2003 . 4 All Counsel and the Auditor have agreed as to a schedule for proceeding in this matter and all Counsel have consented to the proposed extension of time for filing a Report. 5. Orphan's Court Rule 8.2 allows this Honorable Court to extend the time to file said report upon application of the Auditor WHEREFORE, Petitioner, William A. Duncan, Esquire, respectfully requests that the time for filing a report in this matter be extended until April 30, 2004. Respectfully submitted, DUNCAN & HARTMAN, P.C. ,.~ ~ ,~ William A. Duncan, Esquire 1 Irvine Row Carlisle, PA 17013 }} Date: ~,, „ ~~~~~ ~ L-~~-~.,! APPOINTMENT OF AUDITOR IN RE: FRED E. GERBER TRUST UNDER AGREEMENT, DATED JULY 29, 1994 ORDER IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY COMMONWEALTH OF PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-1998-0195 AND NOW, DECEMBER 4, 2002, WILLIAM A. DUNCAN, ESQUIRE, IS HEREBY APPOINTED AUDITOR TO PASS UPON THE OBJECTIONS FILED TO THE FIRST AND PARTIAL ACCOUNT OF FREDERICK E. GERBER, II, TRUSTEE FOR THE PERIOD FEBRUARY 28, 1998 THROUGH DECEMBER 31, 2001, IN THE ABOVE-CAPTIONED MATTER. BY THE COURT: ~-,, ( ; ~ ~' ' `f /s/ GEORGE; . HOFFER, P.a~ ~~ STATE OF PENNSYLVANIA COUNTY OF CUMBERLAND WILLIAM A. DUNCAN ESQUIRE, BEING DULY SWORN ACCORDING TO LAW, DEPOSES AND SAYS THAT HE WILL PERFORM THE DUTIES OF AUDITOR IN THE ABOVE ESTATE WITH FIDELITY: AUDITOR SWORN AND SUBSCRIBED TO BEFORE ME THIS 12'" I~,~1Y OF DECEMBER 2002 ,t~.D. -~ ~ r t~ 1 f+ _ CLERK OF ORPHANS' COURT CUMBERLAND COUN'II' PEN}~y~'LVANIA. ~ ~, EXHIBIT ~~ ,.~ - --- ----------------- G~ti EXHIBIT C IN RE: ESTATE OF LOY T. HEMPT, : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA :ORPHAN'S COURT DIVISION NO: 21-77-231 NOTICE OF HEARING BY AUDITOR THE HEARING before the Auditor, William A. Duncan, Esquire, in the above matter is scheduled for February 17, 18 and 19th, 2004 at 9:00 a.m. in the 2nd Floor Hearing Room of the Old Courthouse, Carlisle, Pennsylvania. At this hearing, you and your witnesses may appear and be heard. B . ~~ ~~~. Y William A. Duncan, squire Auditor TO: No Otto, III, Esquire Martson Deardorf Williams & Otto 10 East High Street Carlisle, PA 17013 Joel R. Zullinger, Esquire Zullinger & Davis 14 North Main Street, Suite 200 Chambersburg, PA 17201 Richard Stevenson, Esquire McNees, Wallace & Nurick, LLC 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108 Howell C. Mette, Esquire Daniel L. Sullivan, Esquire Vicky Ann Trimmer, Esquire 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 DATE: January 14, 2004 EXHIBIT D IN RE: ESTATE OF LOY T. HEMPT, : IN THE COURT QF COli'IMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVAN)<A :ORPHAN'5 COURT DIVISION NO: 21-77-231 ORDER /~.: y AND NOW, this ~ [,~ day of ~~~ ~ , 2004, upon consideration of the attached Petition for Continuance of Auditor, it is hereby ORDERED that the time for William A. Duncan, Esquire, Auditor in the above-captioned action, to file a report for said action is continued until July 30, 2004. BY THE COURT, ~~ , GEO,, GE HOFF R, .J. IN RE: ESTATE OF LOY T. HEMPT, : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA :ORPHAN'S COURT DIVISION NO: 81-77-831 PETITI0IV FOR CONTINUANCE OF A UDITOR AND NOW, comes the Petitioner, William A. Duncan, Esquire, Auditor in the above-captioned matter, and files this petition for continuance of appointment of auditor, making the following statement: 1. On or about 3anuary 31, 2003, the Petitioner, William A. Duncan, Esquire, was appointed Auditor in the above-captioned action pursuant to Orphan's Court Rule 8.1 et seq. and the Auditor accepted the appointment and received the file on or about January 31, 2003. A copy of the Appointment of Auditor and Order of Court is attached hereto as Exhibit "A". 2. On or about April 21, 2003, the Petitioner, William A. Duncan, Esquire, was granted a Continuance of the Audit until April 30, 2004. A copy of the Continuance attached hereto as Exhibit "~". 3. Due to extensive discovery requested by the parties and scheduling conflicts the auditor is unable to file a report on or before Apri130, 2004. 4 Orphan's Court Rule 8.2 allows this Honorable Court to extend the time to file said report upon application of the auditor. WHEREFORE, Petitioner, William A. Duncan, Esquire, respectfully requests that the time for filing a report in this matter be extended until July 31, 2004. Respectfully submitted, DUNCAN & HARTMAN, P.C. `~ ,, ~. ~~,~ By. ~. William A. Duncan, Esquire 1 Irvine Row Carlisle, PA 17013 Date: -~~, ~s~ ~ ~"..,~' 4 AT AN ORPHANS' COURT, Began on Friday the 315` day of January A.D. 2003, and holden at Carlisle, in and for Cumberland County, before the Honorable George E. Hoffer, President and Sole Judge the following proceedings were held to wit: THE PETITION IN RE: ESTATE OF LOY T. HEMPT, DECREE The background of this Decree is as follows: (1) A Petition for Adjudication and a First and Final Account for the Estate of Loy T. Hempt, Deceased and the Residuary Trust Under Will of Loy T. Hempt(the "Account") was filed with this Court on or about July 23, 2002; and (2) Objections to the Account were timely filed on behalf of Robert Hempt Kalbach, Robert H. Kalbach, Jr. and Richard C. Kalbach (the "Kalbach Family"); and (3) Objections to the Account were timely filed on behalf of W. Robert Mark, Forest H. Mark and Steven E. Mark (the"Mark Family"); and (4) Counsel for the Estate of Loy T. Hempt, the Kalbach Family and the Mark Family have stipulated and agreed that appointment of an auditor and master is necessary and proper; and (5) Counsel have previously identified to the Court those person whom they believe cannot serve as an auditor/master because of actual or potential conflicts of interest; and (6) Counsel have consulted with each other and have agreed. upon the form and substance of this Decree(other than the identity of the auditor/master, who is appointed solely by the Court, and the hourly compensation rate for the auditor/master, which is set solely by the Court). NOW, THEREFORE, this 315` day of January, 2003, it is hereby ORDERED and DECREED that William A. Duncan, is appointed as auditor and master (collectively "Auditor") in the above captioned- proceeding. The Auditor is specifically directed pursuant to 20 Pa. C.S.A. 751(1), to investigate all issues of fact raised in and related to: (1), the Kalbach Family Objections, (2) the Mark Family Objections, and (3) the Petition for Adjudication, and to report findings of fact, conclusions of law and recommendations to the Court with respect to two sets of Objections and the Petition for Adjudication. The Auditor is further directed, pursuant to 20 Pa. C.S.A. 751(2), to exanune and audit the First and Final Account for the Estate of Loy T. Hempt and Residuary Trust Under Will of Loy T. Hempt and to make recommendations to the Court with respect thereto. ~~HIBIY ~~ ~. The Auditor is empowered to take such actions and shall follow such procedures as provided for: (1) in the Probate, Estate and Fiduciaries Code, (2) in the Orphans Court Rules adopted by the Supreme Court of Pemisylvania, and (3) in the Local Rules of this Court. However, the Auditor shall file his report within One hundred eighty (180) days after appointment (rather than within ninety (90) days) unless, upon application, the time is extended by the Court. The Auditor shall be entitled to reasonable compensation for his time and expenses. Compensation for the Auditor shall be set at the rate of $150.00 per hour. Invoices shall be rendered monthly and paid, initially, by the Residuary Trust Under Will of Loy T. Hempt. Responsibility for payment of the Auditor's compensation shall be subject to possible subsequent modification by the Court. Attached hereto is a list of Interested Persons identified by counsel. The Auditor is directed to review promptly this list and advise the Court and comisel of any known actual or potential conflict of interest and of any relationship or circumstances that would give rise to any appearance of impropriety. The Auditor is further directed to consult with counsel as soon as practicable and thereafter establish a case management schedule setting forth discovery deadlines, hearing dates, and other case management directives as he deems appropriate. The case management schedule maybe changed by the Auditor on his own, or, in his discretion, upon application by any party. Any confidential or proprietary information disclosed in any proceeding pursuant hereto regarding any closely held business shall be held in strict confidence and shall not be disclosed to a third party, and no party to the proceeding shall make any business use of any such information. By the Court, George E. Hoffer, P.J. Conunonwealth of Pemisylvania County of Cumberland William A. Duncan, Esq. being duly sworn according to law, deposes and says that he will perform the t, duties of auditor in the above estate with fidelity: Auditor Sworn and Subscribed to before me this day of , 2003 A.D. Clerk of Orphans' Court Cumberland County, Pemisylvania IN RE: ESTATE OF LOY T. IIEMPT, : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA :ORPHAN'S COURT DIVISION NO: 21-77-231 0~2DER AND NOW, this ? l ~ day of ~~~~~'~ ', 2003, upon consideration of the attached Petition for Continuance of Auditor, it is hereby ORDERED that the time for William A. Duncan, Esquire, Auditor in the above-captioned action, to file a report for said action is continued until April 30, 2004. BY THE COURT, i. ~ ~_ t j f G$O1~GE HOFF'BR, P.J. IN RE: ESTATE OF LOY T. HEMPT, : IN THE COURT OF COMMON PLEAS OF Deevased :'CiTM;E3ERLAND COUNTY, PENNSYLVANIA :ORPHAN'S COURT DIVISION NO: B1-77-231 PETITdON FOF CON, ?'INUANCE OF A UDITOR AND NOW, comes the Petitioner, William A. Duncan, Esquire, Auditor in the above-captioned matter, and files this petition for continuance of appointment of auditor, making the following statement: 1. On or about January 31, 2003, the Petitioner, William A. Duncan, Esquire, was appointed Auditor in the above-captioned action pursuant to Orphan's Court Rule 8.1 et seq. and the Auditor accepted the appointment and received the file on or about January 31, 2003. A copy of the Appointment of Auditor and Order of Court is attached hereto as Exhibit "A". 2. According to the Order related to Filing of Report, the auditor shall file a report within (180) days from the data of the auditor's appointmer~t. 3. Due to anticipated extensive discovery requested by the parties and the anticipated expected testimony and reports, the auditor will be unable to file a report within the one hundred eighty {180) day time frame set forth in the Order of January 31, 2003. 4. All Counsel and the Auditor have agreed as to a schedule for proceeding in this matter and all Counsel have consented to the proposed extension of time for filing a Report. 5. Orphan's Court Rule 8.2 allows this Honorable Court to extend the time to file said report upon application of the Auditor WHEREFORE, Petitioner, William A. Duncan, Esquire, respectfully requests that the time for filing a report in this matter be extended until April ?0, 2004. Respectfully submitted, DUNCAN & HARTMAN, P.C. "11 I f,.. sy: ;; ~; William A. Duncan, Esquire 1 Irvine Row Carlisle, PA 17013 Date: { J_ ,i ~ "; l~l,'~,~, ;~ ~ ~~ ~ ~~ ` ~, EXHIBIT E IN RE: : IN THE COURT OF COMMON PLEAS OF THE ESTATE of LOY T. HEMPT, :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHAN'S COURT DIVISION N0.21-77-231 ORDER .. AND NOW, this ay of , 2004, upon consideration of the attached Petition for Continu ce o Auditor, it is hereby ORDERED that the time for William A. Duncan, Esquire, Auditor in the above-captioned action, to file a report for said action is continued until October 15, 2004. BY THE COURT, ~. ,;- A IN RE: IN THE COURT OF COMMON PLEAS OF THE ESTATE of LOY T. HEMPT, :CUMBERLAND COUNTY, PENNSYLVANIA Deceased :ORPHAN'S COURT DIVISION N0.21-77-231 PETITION FOR CONTINUANCE OF A UDITOR AND NOW, comes the Petitioner, William A. Duncan, Esquire, Auditor in the above- captioned matter, and files this petition for continuance of appointment of auditor, making the following statement: 1. On or about January 31, 2003, the Petitioner, William A. Duncan, Esquire, was appointed Auditor in the above-captioned action pursuant to Orphan's Court Rule 8.1 et seq., and the Auditor accepted the appointment and received the file on or about January 31, 2003. A copy of the Appointment of Auditor and Order of Court is attached hereto as Exhibit "A:. 2. On February 10, 2004, the appointment was extended by Order of Court until July 30, 2004. 3. Due to delays occasioned by discovery matters between the parties, Auditor is unable to file a report by the July 30, 2004, date set forth in the Order of Court.. 4. Orphan's Court Rule 8.2 allows this Honorable Court to extend the time to file said report upon application of the Auditor. WHEREFORE, Petitioner, William A. Duncan, Esquire, respectfully requests that the time for filing a report in this matter be extended until January 31, 2005. Respectfully submitted, DUNCAN, HARTMAN & DOUGLAS, P.C. By. ~~ illiam c ,Esquire One Irvine Row Carlisle, PA 17013 Date: ,~~x..~.' l f i.. AT AN ORPHANS' COURT, Began on Friday the 315` day of January A.D. 2003, and holden at Carlisle, in and for Cumberland County, before the Honorable George E. Hoffer, President and Sole Judge the following proceedings were held to wit: THE PETITION IN RE: ESTATE OF LOY T. HEMPT, DECREE The background of this Decree is as follows: (1) A Petition for Adjudication and a First and Final Account for the Estate of Loy T. Hempt, Deceased and the Residuary Trust Under Will of Loy T. Hempt(the "Account") was filed with this Court on or about July 23, 2002; and (2) Objections to the Account were timely filed on behalf of Robert Hempt Kalbach, Ro'oert H. Kalbach, Jr. and Richard C. Kalbach (the "Kalbach Family"); and (3) Objections to the Account were timely filed on behalf of W. Robert Mark, Fon•est H. Mark and Steven E. Mark (the"Mark Family"); and (4) Counsel for the Estate of Loy T. Hempt, the Kalbach Family and the Mark Family have stipulated and agreed that appointment of an auditor and master is necessary and proper; and (5) Counsel have previously identified to the Court those person whom they believe cannot serve as an auditor/master because of actual or potential conflicts of interest; and (6) Counsel have consulted with each other and have agreed upon the form and substance of this Decree(other than the identity of the auditor/master, who is appointed solely by the Court, and the hourly compensation rate for the auditor/master, which is set solely by the Court). NOW, THEREFORE, this 315` day of January, 2003, it is hereby ORDERED and DECREED that William A. Duncan, is appointed as auditor and r~rraster (collectively "Auditor") in the above captioned- proceeding. The Auditor is specifically directed pursuant to 20 Pa. C.S.A. 7~ 1(1), to investigate all issues of fact raised in and related to: (1), the Kalbach Family Objections, (2) the Mark Family Objections, and (3) the Petition for Adjudication, and to report findings of fact, conclusions of law and recorrunendations to the Court with respect to two sets of Objections and the Petition for Adjudication. The Auditor is further directed, pursuant to 20 Pa. C.S.A. 751(2), to exanune and audit the First and Final Account for the Estate of Loy T. Hempt and Residuary Trust Under Will of Loy T. Hempt and to make reconunendations to the Court with respect thereto. ~~~I~'T ~~ ,, k' T'he Auditor is empowered to take such actions and shall follow such procedures as provided for: (1) in the Probate, Estate and Fiduciaries Code, (2) in the Orphans Court Rules adopted by the Supreme Court of Pemisylvania, and (3) in the Local Rules of this Court. However, the Auditor shall file his report within One hundred eighty (180) days after appointment (rather than within ninety (90) days) unless, upon application, the time is extended by the Court. The Auditor shall be entitled to reasonable compensation for his time and expenses. Compensation for the Auditor shall be set at the rate of $150.QQ per hour. Invoices shall be rendered monthly and paid, initially, by the Residuary Trust Under Will of Loy T. Hernpt. Responsibility for payment of the Auditor's compensation shall be subject to possible subsequent modification by the Court. Attached hereto is a list of Interested Persons identified by counsel. The Auditor is directed to review promptly this list and advise the Court and counsel of any known actual or potential conflict of interest and of any relationship or circumstances that would give rise to any appearance of impropriety. The Auditor- is further directed to consult with counsel as soon as practicable and thereafter establish a case management schedule setting forth discovery deadlines, hearing dates, and other case management directives as he deems appropriate. The case management schedule maybe changed by the Auditor on his own, or, in his discretion, upon application by any party. Any confidential or .proprietary information disclosed in any proceeding pursuant hereto regarding any closely held business shall be held in strict confidence and shall not be disclosed to a third party, and no party to the proceeding shall make any business use of any such information. By the Court, George E. Hoffer, P.J. Conrrnonwealth of Peruisylvania County of Cumberland William A. Duncan, Esq. being duly sworn according to law, deposes and says that he will perform the duties of auditor in the above estate with fidelity: ~~_ ~ _ ~ ~ :, ~ l Auditor Sworn and Subscribed to before me this day of , 2003- A.D. Clerk of Orphans' Court Cumberland County, Pennsylvania EXHIBIT F 1N RE: ESTATE OF LOY T. HEMPT : IN THE COURT OF COMMON PLEAS OF Deceased :CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION N0.21-77-231 NOTICE OF AUDITOR' S REPORT AND RECOMMENDATION AND NOW, this day of October, 2004, Notice is hereby given that the Auditor, William A. Duncan, Esquire, hereby files the attached Auditor's written report and recommendation regarding the Objections to the First and Final Account filed in the above- captioned matter. Further Notice is given that the Auditor, William A. Duncan, Esquire, has submitted his Bill of Costs and Fees to the Accountant in accord with the Court's Order. To: No Otto, IIi, Esquire Martson Deardorf Williams & Otto 10 East High Street Carlisle, PA 17013 Richard Stevenson, Esquire McNees, Wallace & Nurick, LLC 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108 ' ~ ~ f J /` ,~n ,~ William A. Duncan, Esquire Auditor Jvel R. Zullinger, Esquire Zullinger & Davis 14 North Main Street, Suite 200 Chambersburg, PA 17201 Howell C. Mette, Esquire Daniel L. Sullivan, Esquire Vicky Ann Trimmer, Esquire Mette, Evans & Woodside 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 EXHIBIT G IN THE MATTER OF COURT OF COMMON PLEAS JEAN DORIS HEMPT, CUMBERLAND COUNTY, PENNSYLVANIA AN INCOMPETENT ORPHANS' COURT DIVISION ' : Nos. 2008 of 1942, 253 of 1977, and 117 of 1985 FINAL. DECREE -~,h~~ AND NOW, this day of S~'~-~''n'~'r`L; 1996, upon consideration of the annexed Petition, IT IS ORDERED AND DECREED that Gerald L. Hempt is hereby appointed: (1) a co-trustee (with Max C. Hempt) of the Testamentary Trust for the benefit of Jean Doris Hempt under the Will of George L. Hempt; (2) a co-trustee (with Max C. Hempt) of the Testamentary Trust for the benefit of Jean Doris Hempt under the Will of Loy T. Hempt; and, (3) a co-guardian (with Max C. Hempt) of the estate, and of the person, of Jean Doris Hempt. BY THE COURT, By ~ L ~.~ ~~ _, J. ,- ~; '. 'x x -- , , , -- ::., U U 7