HomeMy WebLinkAbout10-20-11IN RE:
ESTATE OF LOTTIE IVY DIXON
Deceased
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
: PENNSYLVANIA
ORPHANS' COURT DIVISION
NO. 21-07-0686
IN RE:
ESTATE OF GEORGE F. DIXON, JR
Deceased
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
ORPHANS' COURT DIVISION
NO.21-1994-0754
~ ~ -_,-,
-~ - --
--, _ ;
OBJECTIONS TO AUDITOR'S REPORT OF _ '_'. _
GEORGE F DIXON, III AND RICHARD E. DIXON ` ' ~ _
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___
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I. General Objections
1. It is error as a matter of law to conclude that Marshall Dixon has proven by "clear,
convincing and independent evidence" that Lottie Dixon intended that Marshall Dixon have
unrestricted access to the joint checking account during Lottie's lifetime when the only evidence
upon which to base that conclusion was the incompetent testimony of Marshall himself.
2. It was error as a matter of law for the Auditor to accept Marshall Dixon as a
competent witness without the alleged donee having first established prima,facie evidence of
inter vivos gifts by independent testimony.
3. Marshall Dixon failed to meet his burden to prove a prima facie case of inter
vivos gifts by clear, precise, direct, convincing and independent evidence for each and every
transaction involving Lottie Dixon's funds being paid to or for his benefit.
4. It is error as a matter of law to conclude that access to a decedent's joint checking
account during decedent's lifetime was proof of the requisite donative intent and established
valid inter vivos gifting of an unlimited nature.
5. The Auditor made improper inferences and erred as a matter of law in concluding
that there was a "pattern" of gifts while failing to make specific findings of donative intent and
delivery for each transfer of funds to or for Marshall's benefit. Similarly, the Auditor
impermissibly concluded that one check established a "general donative intent."
Even if the Auditor finds that Marshall Dixon has proven a prima, facie case of
inter vivos gifts by independent, clear, precise, direct, and convincing evidence, a presumptive
gift can be rebutted by finding that the donor and donee had a confidential relationship at the
time the alleged gift was made. Estate of Clark, 467 Pa. 628, 636, 359 A.2d 777, 781 (1976);
Estate of Petro, 694 A.2d 627 (Pa. Super. 1997), appeal denied, 706 A.2d 1213 (Pa. 1997); Hera
v. McCormick, 625 A.2d 682 (Pa. Super. 1993).
7. With the Auditor having found a confidential relationship, the burden was on
Marshall Dixon to affirmatively show that the alleged gifts were procured without taint of undue
influence or deception. In order to carry that burden, Marshall Dixon is required to affirmatively
show that the gifts were the free, voluntary and intelligent acts of Lottie Dixon. Marshall is "also
required to show that he acted with scrupulous fairness and good faith and that he did not abuse
the confidence placed in him by [Lottie]." Estate of Clark; See Estate of Buriak, 492 A.2d 1166
(Pa. Super. 1985).
8. Although finding that a confidential relationship did exist, the Auditor completely
failed to analyze or make findings as to whether Marshall Dixon met his burden to prove that the
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alleged inter vivos gifts were the decedent's free, voluntary and intelligent acts, that he acted with
fairness and in good faith and that he did not abuse the confidence placed in him.
9. The Brothers at no time knowingly conceded or authorized a concession that
Lottie was not subject to undue influence and/or incapacity. There is no transcript or written
(and/or verified) pleading or other statement in the record by the Brothers in this case to establish
that the Brothers conceded or made a "counseled concession" that Lottie was not subject to
undue influence and/or incapacity, an issue central to the Brothers' claim that estate assets were
misappropriated. Many of the findings and conclusions in the Auditor's Report are entirely
premised upon this purported concession.
10. Even so, there need not be proof of undue influence to show breach of a
confidential relationship. Even if there was a "counseled concession" that Lottie was not subject
to undue influence it does not establish as a matter of law that Marshall did not breach the
confidential relationship with his mother.
11. Any testimony of Marshall Dixon suggesting that the countless number of
payments and transfers to or for his benefit were gifts from the decedent should have been
excluded under the Dead Man's Rule and/or the rules of evidence and/or should have been
rejected outright as inherently biased, self-serving, uncorroborated, untrustworthy and not
credible.
12. The Auditor erred by failing to recognize the inherent conflict of interest present
when the executor, who has a fiduciary obligation and duty to investigate and recover estate
assets, is faced with allegations that he in his personal capacity misappropriated assets during
decedent's lifetime. The conflict of interest lies in the inability of Marshall Dixon as executor to
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fully and fairly investigate himself and the innumerable transactions in which he received assets
of Lottie Dixon during her lifetime.
13. The Auditor misapprehends, misconstrues and errs as a matter of law in his
interpretation and application of joint bank account law in Pennsylvania, especially 20 Pa.C.S. §
6303(a) and In re Novosielski, 992 A,2d 89 (Pa. 2010). See Brother's Proposed Conclusions of
Law ~§ 9-19 and Reply Conclusions of Law §§ 1-15. Under the Multiple Party Accounts Act at
20 Pa.C.S. § 6303 (a), the funds in the joint checking account in this case, having been
contributed solely by Lottie Dixon, belonged to Lottie Dixon durin her lifetime. In re
Novosielski; In re Estate of Cella, 12 A.3d 374 (Pa. Super. 2010) (The statutory presumption is
that funds in a joint account belong to the depositor during her lifetime); Wilhelm v. Wilhelm,
657 A.2d 34 (Pa. Super. 1995). UNLESS PROVEN TO BE VALID INTER VIVOS GIFTS (BY
CLEAR, PRECISE, DIRECT, CONVINCING AND INDEPENDENT EVIDENCE), FUNDS
PAID TO OR FOR THE BENEFIT OF MARSHALL DIXON DURING LOTTIE DIXON'S
LIEFTIME OUT OF THE JOINT CHECKING ACCOUNT REMAIN THE PROPERTY OF
LOTTIE DIXON AND HER ESTATE, AND MUST BE RETURNED TO THE ESTATE. Id.
It was prejudicial error for the Auditor to preclude the Brothers from introducing
any evidence regarding checks and transactions involving the joint account and Marshall Dixon.
Nevertheless, it was Marshall Dixon's burden of proof to establish that each and every check,
withdrawal, payment or other transaction where Lottie's funds were paid directly to him and/or
for his benefit was a legitimate inter vivos gift. He failed, as a matter of law, to make that
showing.
The one check that the Auditor singles out -see Finding 108 - as somehow
dispositive of the whole case is just that -one check -one check out of thousands of checks,
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withdrawals, payments and electronic transactions involving the joint account and other accounts
to and or for the benefit of Marshall Dixon -estate assets that the Auditor simply assumes
Marshall Dixon had the right and authority to remove.
Contrary to Auditor's Finding 110, Marshall wrote many checks from the joint
account and not just during the last year of Lottie Dixon's life. Even a cursory review of
Marshall's testimony at the hearing and the Exhibits reveals that he was drafting and signing a
significant number of checks, for example, in 2005, N.T. 96-100 -almost all of which were
payments for his credit cards.
14. The Auditor's numerous errors of law in conducting the hearing -precluding
evidence of undue influence, holding that funds placed in a joint account are an immediate gift,
ruling that the joint checking account checks were irrelevant, ruling that evidence of a
confidential relationship was irrelevant -were prejudicial to the Brothers' ability to pursue their
objections. The Auditor's failure to understand either the applicable law or the Brothers' hearing
strategy caused hiin to make evidentiary rulings that prevented the Brothers from addressing
pivotal issues and resulted in prejudicial error.
15. It was an abuse of discretion and clear error for the Auditor and Orphans' Court to
deny the Brothers' Petition for Appointment of Administrator Pro Tem Pursuant to 20 Pa.C.S.
4301, including: (1) failing to recognize Marshall's position of conflicting interest; (2) failing to
acknowledge the need for additional records and documents, including Marshall's credit card
statements and all brokerage account statements and those for his business; (3) without
conducting an evidentiary hearing; and (4) on the basis of delay and expense when the full nature
and extent of the need for a fiduciary pro tem was not known at the time the account objection
was filed.
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16. It was an abuse of discretion and clear error to deny the Petition for sixty (60) day
Continuance of Auditor's Hearing (a) when on December 11, 2009 the hearing was scheduled for
February 24, 2010 knowing that then counsel for Brothers would be withdrawing; (b) when by
Court Order of December 11, 2009 (filed December 29, 2009), then counsel for Brothers were
iininediately authorized to withdraw and the Brothers given just thirty (30) days to find and
retain new counsel for a complicated and contentious multi-million dollar estate litigation; (c)
when present counsel for Brothers entered the case on January 25, 2010, just days before the Pre-
Hearing Conference and the Hearing, while needing to secure, review and prepare the extensive
file comprised of multiple boxes.
II. Specific Objections - Findings of Fact
17. Findings 18-21
These findings relating to the production of financial records of Lottie Dixon are
based on hearsay and speculation. Informal correspondence is not evidence. There is no record,
for example, to establish that Marshall Dixon did fully respond to various requests for financial
records and documents. Practical experience suggests otherwise, since then counsel for the
Brothers was still seeking documents in November 2009. The Brothers object to findings that
they have received full and complete copies of all monthly account statements and cancelled
checks. Further, there is no record to establish that the Brothers had received by September of
2008 complete copies or sets of account statements and cancelled checks referenced. In fact,
there were significant gaps in those records -certainly they were not complete in September
2008.
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18. Findings 31-32
The deposition of Marshall Dixon is not part of the record. The Auditor
specifically precluded introduction of the deposition transcript at the Hearing.
19. Finding 36
The report of November 20, 2009 failed to address and/or resolve additional items
of discovery that had been identified by Brother's counsel, including credit card statements for
Marshall and his businesses and information concerning the credit card accounts of Marshall and
Lottie.
20. Finding 38
It is improper to infer that a disbursement was agift - a valid inter vivos gift must
be proven by clear, convincing and independent evidence, including the elements of donative
intent and delivery.
21. Finding 39
Denied. The Brothers' position all along has been and continues to be, that
substantial assets were misappropriated from various of decedent's accounts, including the joint
checking account, to or for the benefit of Marshall. And see, Auditor's Findings 96-97.
22. Findings 43-50
See "Objector's Pre-Hearing Memorandum" dated 11/22/09, which includes
discussion of assets in question, including checks and electronic transfers from the joint account
and transfers from brokerage accounts, that should have been included in the Estate.
The Auditor takes issue with Brothers' then counsel failing to comply with a
directive while knowing that said counsel intended to withdraw and was authorized to withdraw
without question just two days after the Pre-Hearing Conference.
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The Brothers were prejudiced by (a) the Court ordering them to secure new
counsel within 30 days while at the same tune scheduling the Hearing dates for February 2010,
and (b) the Court's refusal to grant a continuance of the Hearing dates when counsel entered their
appearance on 1/25/10 in these complex multi-million dollar estates.
23. Finding 52
The Auditor mischaracterizes the Petition and the nature of its basis: the Petition
is based on the conflict of interest between Marshall Dixon as executor and Marshall Dixon as
individual beneficiary. More specifically, the executor is in a position of conflicting interest to
investigate himself as the alleged donee of substantial inter vivos gifts of decedent's assets. And
see, General Objection 12.
24. Finding 57
Denied as stated. The Brothers had questioned the propriety of a voluminous
number of transactions by which Marshall Dixon received benefit.
25. Finding 59
The Brothers deny that there was any genuine argument of the Petition. It was
only just filed the same day as the pre-hearing conference 2/12/10. Further, it was error not to
conduct an evidentiary hearing on the merits of the Petition.
26. Finding 61
The Auditor knew at the time the hearing was scheduled that then counsel for the
Brothers would be withdrawing - a petition to withdraw that was immediately approved without
question -and proceeded to set hearing dates that would be unfair, causing undue pressure on
the Brothers' ability to secure representation.
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27. Findings 62-63
See General Objections 12 and 15, and "Exceptions to Order of Court Denying
Petition for Appointment of Administrator PYO Tem," incorporated by reference.
28. Finding 95
There is no evidence in the record of what Lottie Dixon knew or did not know at
any point in time and the Auditor is making an improper inference.
29. Findings 98-99
These findings are irrelevant, inflammatory and prejudicial. There is no
requirement that the Brothers have alleged and/or proven that they took action to "address their
concerns." The Brothers did, in fact, take actions to address concerns that may not be in the
record here. These two statements, and many others made by the Auditor, especially at the
hearing of 2/24/10, further demonstrate the Auditor's bias and prejudice against the Brothers.
The Brothers did not realize or appreciate the full scope and extent of Marshall's
actions and the depletion of Lottie's accounts until the information developed in this litigation.
30. Findings 100-102
The Brothers did not realize or appreciate the full scope and extent of Marshall's
actions and the depletion of Lottie's accounts until the information developed in this litigation.
The nature and extent of allegations of wrongdoing against Marshall Dixon was not fully known
to the Brothers at the time they filed account objections -and so the evidence would not have
been available to them. See, Exceptions. Nevertheless, the Auditor persistently chastizes the
Brothers for an alleged failure to "advance" any allegations of misconduct until after the death of
Lottie Dixon -and in so doing displays his personal bias and prejudice toward the Brothers. See
also, the Brothers' Proposed Conclusions of Law at §§ 55-57. [Bias and Prejudice].
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31. Finding 103-125
See General Objections, especially ¶¶ 13-14. The Auditor erred as a matter of law
in his interpretation and application of the law regarding joint accounts at both the hearing and in
the Auditor's Report. The fact that the Brothers were required to establish the relevance of joint
checking account checks reflects that misunderstanding of the law and the Brothers' case. The
Brothers did confine the relevance of the checks (see N.T. 50-54) and it was prejudicial error to
preclude them from introducing evidence relating to the checks. With regard to the check for
$4,629.76 noted in Finding 108, there is no evidence to support an inference that Lottie knew
what the check was for or intended it as a gift. Aside from that one check, all of the other checks
in Executor's Exhibit # 6 in pa}~nent of Marshall's credit cards or payable to Marshall were
drafted and signed by Marshall, Finding 110 is therefore not credible. Findings 112-113 make
improper inferences as to a "pattern of gifts." For many of the other Findings 114-125, the
Brothers were prejudicially prevented from pursuing their theory of the case that Marshall could
not show clear, convincing and independent testimony or evidence of bona fide inter vivos gifts.
32. Findings 124-126
The Auditor has made a number of improper inferences. See General Objections.
The Brothers contest that they conceded that they would not be able to show that Lottie Dixon
was subject to incapacity or undue influence. Even so, there is no sufficient clear, convincing and
independent evidence that the transfers of assets to, for or on behalf of Marshall Dixon were
valid inter vivos gifts. Furthermore, the burden of proof is not on the Brothers to show undue
influence -rather, the burden is on Marshall Dixon to affirmatively show that decedent was not
being unduly influenced.
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III. Specific Obiections -Conclusions of Law
33. Conclusions 4-7
There is no basis or sufficient evidence in the record to assess Lottie Dixon's
intent regarding the joint checking account and/or to conclude that she "did not intend to place
any restrictions upon Marshall's access to the funds." However, even if this conclusion was
warranted, it does not alter the fact that the funds in the account belonged to Lottie Dixon during
her lifetime. Funds that were transferred out of the joint account to and/or for the benefit of
Marshall Dixon without independent compelling evidence of inter vivos gifts must be returned to
the estate.
In the alternative, if a prima facie case of a valid inter vivos gift is made for a
particular transfer, Marshall Dixon still failed to affirmatively demonstrate that such transaction
was a free, voluntary and intelligent act of Lottie Dixon and without taint of suspicion. In either
event, the monies belong to the estate of Lottie Dixon.
There is no evidence of record, and certainly no independent evidence, to sustain
a finding of "an ongoing pattern of gifts." There is no proof of decedent "consenting" to Marshall
Dixon's "unrestricted access" to the joint account. The Auditor errs by failing to make specific
findings of valid inter vivos gifts, including specific donative intent and delivery, for each
transaction in dispute. It is unacceptable to conclude that hundreds of thousands of dollars in
transferred funds were legitimate lifetime gifts based on a "pattern."
As previously stated, the Brothers object to and contest any finding of a
"concession" that they would not be able to prove decedent was subject to undue influence or
incapacity. However, the Brothers further object in that, under the circumstances of this case and
in view of the confidential relationship between Marshall and Lottie, the Brothers had no burden
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to show undue influence. Rather, the burden was on Marshall Dixon to establish the lack of
undue influence and that the alleged gifts were not an abuse of the confidence placed in him.
Estate of Clark, supra.
The Brothers have also previously objected to the Auditor's repeated unfounded
assertion that they took no action to address concerns regarding Marshall's involvement with the
joint account. Although such a "finding" is irrelevant, it has no basis or support in the record.
The underpinnings to the complex conclusion stated at No. 5 have no merit and
the conclusion cannot stand. Furthermore, the Auditor improperly projects and improperly infers
that one check in the amount of $4,629.76 established a " eg_neral donative intent." It begs the
question to state that the referenced check was a single gift that evidenced a general donative
intent. There must be proof of specific donative intent and complete surrender of control on the
part of Lottie to establish valid inter vivos gifts for each transfer of decedent's funds.
34. Conclusions 9-10
Estate of Meyers does not stand for the proposition for which it is cited in
paragraphs 9 and 10 and, secondly, it is not relevant or controlling in this case because it deals
with application of a different section of the MPAA and under different circumstances. Estate of
Meyers applies the statutory presumption set forth in 20 Pa.C.S. § 6304 that survivorship rights
are intended when a joint account is created. That is not in dispute here -the Brothers agree that
Marshall Dixon is entitled to the balance remaining in the joint account upon Lottie's death.
However, he was not the owner of the funds in the joint account during Lottie's lifetime and is
not entitled to retain funds paid to and/or for his benefit during Lottie's lifetime unless those
transfers are proven to be valid inter vivos gifts. (That is the presumption in § 6303.)
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Estate of Meyers has no discussion whatsoever of a "counseled concession"
establishing "the absence of evidence that Marshall was taking advantage of a confidential
relationship with Lottie." (Auditor's Conclusion of Law I0). Further, the burdens of proof
applied in an analysis under § 6304 are very different than an application of § 6303.
Nevertheless, just as the statutory presumption of § 6304 was not overcome in Mew, the
presumption in § 6303 is not overcome in this case.
See General Objections. There is no evidence to establish donative intent for this
check. Assuming that the check was signed by Lottie, we have no idea what Lottie knew or
intended with regard to it. One check cannot "completely negate" any suggestion that Marshall
Dixon was taking advantage of a confidential relationship. The Auditor overlooks hundreds or
thousands of transactions from which Marshall Dixon received benefit. Moreover, it is Marshall
Dixon who has the burden to prove he was not taking advantage of the confidential relationship -
that is, that these innumerable transfers of funds were without taint of undue influence or
suspicion.
35. Conclusion 12
See ¶¶ 33 and 34 of these Objections.
36. Conclusion 13
Hosfeld Estate, 414 Pa. 602, 202 A.2d 69 (1964) does not stand for the
proposition as stated by the Auditor's Report at ¶ 13. Hosfeld actually supports the Brothers'
position in this case. In Hosfeld, a savings account was opened in the joint naives of a deceased
mother and her two children, Clyde and Effie. Mother had made two deposits - an original
deposit of $5,246.55 and an additional deposit of $1,318.04. Upon mother's death, Clyde
withdrew the entire balance from the account. Clyde, as personal representative of the estate,
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failed to list this account as an asset of the estate in his first and final account. Clyde testified that
decedent had made a gift to him in the amount of the additional deposit. Even assuming Clyde's
testimony was accepted (over the Dead Man's Rule), however, "the evidence clearly fails to
show that decedent made a gift of the money in this account." 414 Pa. at 605. There was no
discussion whatsoever of Clyde having unrestricted access to the account and/or that such access
established decedent's intention to invest so much dominion and control over the account.
37. Conclusion 15
For the reasons previously set forth in these objections, this conclusion is a clear
error of law. The money in the joint account was Lottie Dixon's during her lifetime. The burden
was on Marshall to establish that "any charges Marshall may have made against the account for
his benefit" were each and every one a valid inter vivos gift. Marshall failed to meet that burden
of proof and/or failed to affirmatively show that he did not abuse the confidence placed in him
with regard to the hundreds of charges made for his benefit.
3 8. Conclusions 16-17
See Reply Conclusions of Law. ¶¶ 18-22, 25-27. The Brothers did not waive
application of the Dead Man's Rule simply by calling Marshall Dixon as a witness.
First of all, Marshall Dixon, as executor, is not "incompetent under Section 5930"
in order to trigger the exception for the Rule in 42 Pa.C.S. § 5932. Secondly, he was not called to
testify against his own interest. 42 Pa.C.S. § 5932, cited by the Auditor, is not controlling here.
Marshall Dixon was called to testify as executor of the estate of Lottie Dixon. His interest should
have been in protecting assets of the estate and recovering any of Lottie's assets that may have
been improperly removed. This interest should not be adverse to decedent's estate.
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Nor did the Brothers waive the Dead Man's Rule by not raising the issue at the
hearing -the issue was raised by an objection to questioning of Marshall Dixon by his counsel
concerning what Lottie Dixon knew or what she may have been aware of with regard to certain
joint account transactions. His testimony along these lines should have been excluded either by
application of the Dead Man's Rule or simple rules of evidence.
Furthermore, the Auditor erred in admitting statements of the decedent regarding
inter vivos transfers through the testimony of Marshall Dixon when there is no independent
testimony establishing prima facie evidence of donative intent and delivery. Again, there was no
independent testimony here. Again, there was no independent evidence for a prima_facie case.
The lone check singled out by the Auditor is not "independent evidence" - it was only introduced
by way of Marshall Dixon's testimony. This is a classic bootstrap position.
"If the alleged donee fails to establish prima facie evidence of a gift or transfer by
independent testimony before he takes the stand, he is not competent to testify." Hera v.
McCormick, 625 A.2d at 688, citin Friedeman v. Kinnen, 452 Pa. 365 (1973). As in Hera and
Friedeman, since Marshall made no independent showing of a gift by the decedent, his testimony
was incompetent.
39. Conclusions 18-19
As set forth in these Objections, it is Marshall Dixon who has failed to meet his
burdens of proof in all respects.
For all of the above reasons, the objections of the Brothers to the First Intermediate
Accounting and Proposed Schedule of Distribution should be sustained and a hearing should be
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conducted to determine the amount of money that Marshall Dixon must pay back to the Estate of
Lottie Dixon.
Respectfully submitted,
OBERMAYER REBMANN MAXWELL
& HIPPEL LLP
Date: October 20, 2011 BY: ~~-
Walter W. ohen, Esquire
Attorney ID # 12097
Kevin J. Kehner, Esquire
Attorney ID # 33539
200 Locust Street, Suite 400
Harrisburg, PA 17101
717-234-9730
717-234-9734 (fax)
Counsel_for George F. Dixon, III
and Richard E. Dixon
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CERTIFICATE OF SERVICE
I, KEVIN J. KEHNER, certify that on this date, I have served a true and correct copy of
the foregoing Objections to Auditor's Report on behalf of George F. Dixon, III and Richard E.
Dixon upon the following, by first-class mail, addressed as follows:
Elizabeth P. Mullaugh, Esquire
Kimberly M. Colonna, Esquire
McNEES, WALLACE & NURICK
100 Pine Street
P.O. Box 1166
Harrisburg, Pennsylvania 17108-1166
Daniel L. Sullivan, Esquire
SAIDIS, SULLIVAN & ROGERS
26 West High Street
Carlisle, Pennsylvania 17013
Mark D. Bradshaw, Esquire
STEVENS & LEE
Harrisburg Market Square
17 North Second Street, 16`'' Floor
Harrisburg, Pennsylvania 17101
Wayne F. Shade, Esquire
53 West Pomfret Street
Carlisle, Pennsylvania 17013
Charlotte Dixon
323 Bayview Street
Camden, ME 04843
Date: October 20, 2011
Kevin J. Kehner, Esquire
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