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HomeMy WebLinkAbout10-31-11IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE ESTATE OF ORPHANS' COURT IA~VISION == ROBERT M. MUMMA, ~ -- = 0 ~7 ~-, -r J ~ ~ -~?~ ~ ri i 7 r - Deceased. N0.21-86-398 z=• ~'~ c,a _ry~~ ~ ~, -_; p o ~ POST-HEARING RESPONSE OF BARBARA MCK. MUMI~~,' c , _ , .4, (DECEASED) AND LISA M. MORGAN TO OBJECTIONS~F . _ ~~ ; ,-, .-~ BARBARA M. MUMMA TO ACCOUNTS FOR MARITAL AND ~' RESIDUARY TRUSTS UNDER WILL OF ROBERT M. MUMMA DECEASED On behalf of Barbara McK. Mumma ("Mrs. Mumma"), now deceased,l and herself as executors of and trustees under the will of Robert M. Mumma ("Mr. Mumma, Sr."), Lisa M. Morgan ("Mrs. Morgan") respectfully submits this response to the objections filed on November 22, 2010, by Barbara M. Mumma ("Babs Mumma") to accounts filed by Mrs. Morgan for the period from January 1, 2004, through July 17, 2011.2 The following responses reference the portions of Mrs. Mumma and Mrs. Morgan's original Post-Hearing Brief ("First Post-Hearing Brief') and their Supplemental Post-Hearing Brief that address the subject matter of each objection. Mrs. Mumma died on July 17, 2010. z Despite having been directed by the Auditor to do so, Robert M. Mumma, II ("Mr. Mumma, II") failed to file specific objections to the accounts for the Trusts for the period from January 1, 2004, through July 17, 2010. To the extent discernable from his statements during the hearings, his "objections" are addressed in Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief. Babs Mumma's Objections to the Account for the Marital Trust3 Accounting Expenses 8. The Trustee seeks credit for accounting fees in the amount of $73,935.00. 9. Many of these charges are personal to the Trustee and/or represent charges relative to the Prior Objections. 10. It has not been determined by this Honorable Court as to whether the Trustees are entitled to credit for expenditures made from Trust assets to defend their actions relative to the Prior Objections. 11. The Trust Estate should not bear the expense of personal accounting expenses nor those relative to the litigation for the Prior Objections unless approved by this Honorable Court. Response to 8, 9, 10 and 11: While it is true that some of the accounting fees listed in the accounts for the period from January 1, 2004, through July 17, 2011, were for services provided by Hadley & Company relating to proceedings on the objections filed by Mr. Mumma, II and Babs Mumma to accounts for prior period, payment of such fees was fully proper. Mrs. Mumma and Mrs. Morgan were entitled to expend funds from the Trusts to respond to the objections. As set forth in Section IX.E of Mrs. Mumma and Mrs. Morgan's First Post-Hearing Brief and Section IX.B of their Supplemental Post-Hearing Brief, the accounting fees were reasonable in light of the work performed and under the s Headings and paragraph numbering are from Babs Mumma's objections. 2 circumstances. Moreover, the accounting fees also related to matters other than litigation in the Orphans' Court, and Babs Mumma has offered no evidence suggesting that any of the non-litigation-related work, or any of the fees for that work, were inappropriate. Babs Mumma did not introduce evidence at the hearing to support the allegation that accounting fees related to work that was "personal to the Trustee." Indeed, the only items paid by the Trusts that she suggested were "personal" items were certain charges by Coastal Services. As discussed in Section IV.A of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief, the services provided by Coastal Services related to an asset owned by the Marital Trust. Legal Fees 12. The Trustee seeks credit for legal fees in an amount of approximately $749,235.72. 13. The legal fees are excessive and unreasonable. 14. Many of these legal fees are personal to the Trustees and/or represent charges relative to the Prior Objections. 15. It has not been determined by this Honorable Court as to whether the Trustees are entitled to credit for expenditures made from Trust assets to defend those actions relative to the Prior Objections. Response to 12, 13, 14 and 15: While it is true that some of the legal fees listed in the accounts for the period from January 1, 2004, through July 17, 2011, were for services provided by various law 3 firms relating to proceedings on objections filed by Mr. Mumma, II and Babs Mumma to accounts for prior periods, payment of such fees was fully proper. Mrs. Mumma and Mrs. Morgan were entitled to expend funds from the Trusts to respond to the objections. As set forth in Section IX.A of Mrs. Mumma and Mrs. Morgan's First Post-Hearing Brief and Section IX.A of their Supplemental Post-Hearing Brief, the legal fees were reasonable in light of the work performed and under the circumstances. Moreover, the legal fees paid by the Marital Trust also related to matters other than litigation in the Orphans' Court. Babs Mumma did not introduce evidence at the hearing to support the allegation that legal fees paid for by the Marital Trust related to work that was "personal to the Trustee." Allocations Between Income and Principal 16. The Trustees have improperly calculated the income of the Trust. 17. The Trustees have failed to properly allocate expenses between income and principal. 18. The Trustees have improperly allocated expenses between this Trust and the Residuary Trust. Response to 16, 17 and 18: Neither in her objections nor at the hearing did Babs Mumma articulate any specific claim with respect to any "improper calculation" of income. As discussed in Section V of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief, neither 4 Babs Mumma nor Mr. Mumma, II offered evidence demonstrating any impropriety in the allocation of expenses between principal and income or between the Trusts. 19. The Trustee seeks credit for principal distributions from the Marital Trust to Barbara McK. Mumma in the amount of $2,274,000 as representing five percent (5%) withdrawals from the Trust. The Trustees improperly calculated the withdrawal right. Response to 19: Babs Mumma did not present any evidence that the amounts paid to Mrs. Mumma in respect of her annual 5% withdrawal right were "improperly calculated" - i. e., that the amounts distributed represented more than 5% of the assets in the Marital Trust at the time of the withdrawal. The calculation of the amounts withdrawn by Mrs. Mumma was discussed in Section V of Mrs. Mumma and Mrs. Morgan's First Post- Hearing Brief and Section IV.B.1 of their Supplemental Post-Hearing Brief. 20. The Trustees have improperly allocated income distributions as principal distributions. Response to 20: Babs Mumma did not at the hearing cite to any specific transaction listed in the accounts for the Marital Trust that she claimed constituted, nor did she otherwise offer any specifics with regard to any allegedly "improper allocation of income distributions as principal distributions." 5 21. The balance of the Trust assets is properly distributable to the remainder beneficiaries as opposed to the estate of the Decedent's widow. Response to 21: The appropriate distribution of assets from the Trusts is distinct from the matters at issue during the hearings, and this objection is, therefore, inappropriate. To the extent that this objection relates to income from the Trusts that was not distributed to Mrs. Mumma prior to her death, the relevant facts and circumstances are discussed in Section IV.B.2 of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief. Babs Mumma's Obiections to the Account for the Marital Trust Accounting Fees 8. The Trustee seeks credit for accounting fees in the amount of $117,128.48. 9. Many of these charges are personal to the Trustee and/or represent charges relative to the Prior Objections. 10. It has not been determined by this Honorable Court as to whether the Trustees are entitled to credit for expenditures made from Trust assets to defend their actions relative to the Prior Objections. 11. The Trust Estate should not bear the expense of personal accounting expenses nor those relative to the litigation for the Prior Objections unless approved by this Honorable Court. 6 Response to 8 9 10 and 11: While it is true that some of the accounting fees listed in the accounts for the period from January 1, 2004, through July 17, 2011, were for services provided by Hadley & Company relating to proceedings on the objections filed by Mr. Mumma, II and Babs Mumma to accounts for prior period, payment of such fees was fully proper. Mrs. Mumma and Mrs. Morgan were entitled to expend funds from the Trusts to respond to the objections. As set forth in Section IX.E of Mrs. Mumma and Mrs. Morgan's First Post-Hearing Brief and Section IX.B of their Supplemental Post-Heazing Brief, the accounting fees were reasonable in light of the work performed and under the circumstances. Moreover, the accounting fees also related to matters other than litigation in the Orphans' Court, and Babs Mumma has offered no evidence suggesting that any of the non-litigation-related work, or any of the fees for that work, were inappropriate. Babs Mumma did not introduce evidence at the hearing to support the allegation that accounting fees charged to the Residual Trust related to work that was "personal to the Trustee." Legal Fees and Litigation Expenses 12. The Trustee seeks credit for legal fees in an amount of approximately $2,436,964.10 to the law firms of Crary, Buchanan et al.; Martson Deardoff Williams & Otto; and Morgan Lewis & Bockius. 13. The legal fees are excessive and unreasonable. 14. Many of these legal fees are personal to the Trustees and/or represent chazges relative to the Prior Objections. 7 15. It has not been determined by this Honorable Court as to whether the Trustees aze entitled to credit for expenditures made from Trust assets to defend those actions relative to the Prior Objections. 16. The Trustee claims credit for Trust expenditures for copy expenses for litigation and deposition expenses. 17. The Trust Estate should not bear the expenses of litigation for this Prior Objections unless approved by this Honorable Court. Response to 12. 13 14 15 16 and 17: While it is true that some of the legal fees listed in the accounts for the period from January 1, 2004 through July 17, 2011 were for services provided by various law firms relating to proceedings on objections filed by Mr. Mumma, II and Babs Mumma to accounts for prior periods, payment of such fees was fully proper. Mrs. Mumma and Mrs. Morgan are entitled to expend funds from the Estate and the Trusts to respond to the objections. As set forth in Section IX.A of Mrs. Mumma and Mrs. Morgan's First Post- Hearing Brief and Section IX.A of their Supplemental Post-Hearing Brief, the legal fees were reasonable in light of the work performed and under the circumstances. Payment of expenses associated with litigation or other legal matters likewise was appropriate. Moreover, the legal fees paid by the Residual Trust also related to matters other than litigation in the Orphans' Court. 8 Babs Mumma did not introduce evidence at the hearing to support the allegation that legal fees paid for by the Residual Trust related to work that was "personal to the Trustee."4 Tractor 18. The Trustee improperly identifies the purchase of a $26,772 tractor as an administrative expense and does not identify the tractor as an asset of the Trust nor identify the tractor as being sold. Response to 18: The tractor was not purchased for the Residual Trust, but rather for the Amity Hall Horse Farm. The Residual Trust loaned funds to Mumma Realty Associates, the owner of the farm. As set forth in Section V.B of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief, the loan was reflected in the account filed by Mrs. Mumma and Mrs. Morgan for the Residual Trust. Calculation of Income 19. The Trustees have improperly calculated the income of the Trust. 20. The Trustees have improperly considered taxable income of entities owned by the Trust as accounting income. a As discussed in Section XII of Mrs. Mumma and Mrs. Morgan's Supplemental Post- Hearing Brief, Mrs. Morgan identified and filed a Supplement to Account of the Residual Trust with respect to a small amount of legal fees for work performed for Mrs. Mumma that had been mistakenly charged to the Residual Trust. 9 Response to 19 and 20: Neither in her objections nor at the hearing did Babs Mumma articulate any specific claim with respect to any "improper calculation" of income, nor has she cited any income of entities owned by the Trust that was "improperly considered as accounting income." 21. The Trustees have failed to properly allocate expenses between income and principal. 22. The Trustees have improperly allocated expenses between this Trust and the Residuary Trust. Response to 21 and 22: As discussed in Section V of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief, neither Babs Mumma nor Mr. Mumma, II offered evidence demonstrating any impropriety in the allocation of expenses between principal and income or between the Trusts. 23. The balance of the Trust assets is properly distributable to the remainder beneficiaries as opposed to the estate of the Decedent's widow. Response to 23: The appropriate distribution of assets from the Trusts is distinct from the matters at issue during the hearings, and this objection is, therefore, inappropriate. To the extent 10 that this objection relates to income from the Trusts that was not distributed to Mrs. Mumma prior to her death, the relevant facts and circumstances are discussed in Section IV.B.2 of Mrs. Mumma and Mrs. Morgan's Supplemental Post-Hearing Brief. ,, No V. o, III George B. Faller, Jr. Jennifer L. Spears Martson Law Offices 10 East High Street Carlisle, PA 17013 717.243.3341 Brady L. Green Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103-2921 215.963.5079 Attorneys for Barbara McK. Mumma and Lisa M. Morgan as Executrices of and Trustees Under the Will of Robert M. Mumma Dated: October 31, 2011 11 CERTIFICATE OF SERVICE I, Tricia D. Eckenroad, an authorized agent for Martson Deazdorff Williams Otto Gilroy & Faller, hereby certify that a copy of the Post-Hearing Response of Bazbaza McK. Mumma (Deceased) and Lisa M. Morgan to Objections of Barbara M. Mumma to Objections of Bazbaza M. Mumma to Accounts for Marital and Residuary Trusts Under Will of Robert M. Mumma, Deceased was served this date via a-mail as follows: Mr. Robert M. Mumma, II 6880 S.E. Harbor Circle Stuart, FL 34996-1968 (rmmtwo@mac.com) Robert M. Mumma, II 840 Mazket Street Suite 33333 Lemoyne, PA 17043 (rmmtwo@mac.com) Ms. Bazbaza M. Mumma 541 Bridgeview Drive Lemoyne, PA 17043 (bmumma@me.com) Ms. Linda M. Mumma P.O. Box 370 Grantham, PA 17027 (lmann333 @gmail.com) Joseph D. Buckley, Esquire 1237 Holly Pike Carlisle, PA 17013 (JoeBLaw@aol.com) MARTSON LAW OFFICES nci . Eckenroad Ten East 'gh Street Carlisle, PA 17013 Dated: October 31, 2011 (717) 243-3341 12