HomeMy WebLinkAbout05-18-12 (2)
No V. Otto, III, Esquire
I.D. No. 27763 ~~ ~ rn C
George B. Faller, Jr., Esquire
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LD. No. 49813 ~ ~
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Jennifer L. Spears, Esquire _
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LD. No.87445 per' ~ ~ ~=
MARTSON LAW OFFICES ~~ N ~-- n=~
10 East High Street '~ ~ `'" ~
Carlisle, PA 17013 - `
(717) 243-3341
Attorneys for Lisa M. Morgan
1N THE COURT OF COMMON PLEAS OF
IN RE: :CUMBERLAND COUNTY, PENNSYLVANIA
Estate of Robert M. Mumma, Deceased.
N0.21-86-398
ORPHANS' COURT DIVISION
REPLY TO NEW MATTER OF BARBARA M. MUMMA
41. Denied. The will of decedent speaks for itself. To the extent the emphasis added
to the will provision quoted indicates how Babs Mumma feels the Trusts should be distributed,
this issue is precluded by the doctrines of res judicata and collateral estoppel because it has been
addressed by the Superior Court in its opinion dated February 22, 2012, docketed at 481 MDA
2011, a copy of which is attached hereto as Exhibit "A." See also response to Pazagraph 51
herein.
42. Denied. See response to Pazagraph 41.
43. Admitted.
44. Petitioner admits that Objections have been filed to the Accounts and that the
Auditor's Report has not yet been filed. However, the hearings on the Objections have been
completed.
45. Petitioner admits that the Objections have not yet been adjudicated, however all
assets in the Estate were distributed to the Trusts in 2003. Therefore, the Estate is closed but for
the disposition of the Objections.
46. Denied. See response to Paragraph 45 above. There has been no Estate activity
for Ms. Morgan to communicate to Babs Mumma. Moreover, no information has been requested
by Babs Mumma.
47. Denied. See response to 46 above.
48. Admitted.
49. Denied. See response to 46 above. Moreover, information regarding the assets
and liquidity of the Trusts was provided to the beneficiaries when Ms. Morgan filed a Petition to
Authorize Distributions in August, 2011. No further requests for information were made until
May 9, 2012 through counsel during a conference with the Auditor. The requested information
will be provided when available.
50. Denied. Petitioner admits that appraisals have not been updated since 2010;
however, she believes that the values shown in the appraisals continue to fairly reflect that
market value of the real estate. None of the beneficiaries have provided information to the
contrary.
51. Denied. The will of decedent speaks for itself. Furthermore, Article NINTH of
the will provides:
I give and grant unto my trustees, and the survivor thereof, and their successor or
successors, the following powers, which shall be construed broadly and which may be
exercised by them in either or both capacities, as in their discretion they deem advisable,
in addition to and not in limitation of their common law and statutory powers:
(1) To allot, assign, care for ,collect, contract with respect to, convey,
convert, deal with, dispose of, enter into, exchange, hold, improve, invest, lease, manage,
mortgage, grant and exercise options with respect to, take possession of, pledge, receive,
release, sell, sue for, and in general do any and every act and thing and to enter into and
carry out any and every agreement with respect to the property included in any trust
created in this Will which they could if they were the absolute owners thereof, without
being limited in any way by the specific grants of power hereinafter made.
(2) To retain for such time as in their judgment may seem advisable all
or any part of my property or assets which at any time shall constitute a part of the trusts
herein provided for.
(3) To sell or exchange, either privately or at public sale and without
prior approval of any court, at such time or times and at such price or prices and on such
terms and conditions as the trustees may consider advisable, all or any part of the trust
property, real, personal or mixed, and to execute, verify, acknowledge and deliver all
deeds, bills of sale, or other documents which may be necessary or proper in the exercise
of such powers without liability on the purchaser or purchasers to look to the application
of the purchase price.
(10) To receive or make distribution of any trust herein created, either
in money or in kind, or partly in money and partly in kind. The judgment of the trustees
as to what shall constitute an equitable distribution or apportionment shall be binding and
conclusive upon the beneficiaries hereof. Nothing herein contained, however, shall
empower the trustees to make distribution before the time or times specified herein.
(18) As to each Trust created herein, to exercise all the powers granted
and all the duties imposed herein until such time after the termination of that Trust as the
property included in that Trust has been fully distributed, and to do all other acts which,
in their judgment, may be necessary or appropriate for the proper or advantageous
management, investment or disposition of any property included in any Trust created
herein.
Article TENTH provides:
The rights, titles, benefits, interests and estates of any beneficiary hereunder, including
beneficiaries under the Trusts herein created shall not be subject to the rights or claims of
his or her creditors nor subject nor liable to any process of law or court, nor subject to an
assignment or transfer, voluntary or involuntary, by a beneficiary hereof to another, and
all of the income, principal or other benefits from or under any Trust herein created, or
this Estate, shall be payable, and deliverable only, wholly exclusively and personally to
the designated beneficiaries hereunder at the time the designated beneficiaries are entitled
to take the same under the terms of this instrument.
52. Denied. To the contrary, although not required to, Petitioner asked the
beneficiaries for their preferences, if any, as to distributions in kind. She scheduled a meeting
with them on the subject. Though the beneficiaries attended, none of them expressed any
preferences on this issue.
53. Denied. See response to 52 above.
54. Denied. This pazagraph constitutes a conclusion of law to which no response is
required.
55. Denied. This pazagraph constitutes a conclusion of law to which no response is
required.
WHEREFORE, for the foregoing reasons, Mrs. Morgan respectfully requests that this
Court dismiss Bazbaza M. Mumma's New Matter.
By:
No V. tto, III, Esquire
I.D. No. 27763
George B. Faller, Jr., Esquire
I.D. No. 49813
Jennifer L. Speazs, Esquire
I.D. No.87445
MARTSON LAW OFFICES
10 East High Street
Carlisle, PA 17013
(717)243-3341
Brady L. Green, Esquire
MORGAN, LEWIS & BOCKIUS LLP
1701 Market Street
Philadelphia, PA 19103-2921
(215)963-5079
Attorneys for Lisa M. Morgan
Date: May 18, 2012
J. A33009/11
2012 PA Super 41
IN RE: ESTATE OF: ROBERT M. MUMMA, IN THE SUPERIOR COURT OF
DECEASED, PENNSYLVANIA
APPEAL OF: ROBERT M. MUMMA, II No. 481 MDA 2011
Appeal from the Order entered March 4, 2011,
Court of Common Pleas, CumbeHand County,
Orphans' Court at No. 21-86-398
BEFORE: DONOHUE, OLSON and STRASSBURGER*, JJ.
OPINION BY DONOHUE, ].:
FILED FEBRUARY 22, 2012
Appellant, Robert M. Mumma, II ("Mumma II'~, appeals the order of
the Orphan's Court dated March 4, 2011, denying his Motion for
Disqualification and Removal of Lisa M. Morgan ("Morgan") as Executrix and
Trustee Due to Conflict of Interest (hereinafter, the "Motion for
Disqualification").1 For the reasons that follow, we affirm the Mal court's
order.
Robert M. Mumma, Sr. ("Mumma Sr.") died on April 12, 1986. In his
will, he established two trusts, a marital trust and a residual trust. He
named his wife, Barbara McK. Mumma ("Mrs. Mumma") and Morgan, one of
1 The trial court's order is appealable under the collateral order doctrine.
Pa.R.A.P. 313; see, e.y., In Estate of GeorE/ana, 458 A.2d 989, 991 (Pa.
Super. 1983) ("We find that an order denying a petition for removal of an
executor is a final order proper for appellate review."), affirmed, 504 Pa.
510, 475 A.2d 744 (1984); Master of Estate of Velott, 529 A.2d 525, 527
(Pa. Super. 1987) (order denying petition for removal of executrlx "is
appealable under the collateral order doctrine").
*Retired Senior Judge assigned to the Superior Court.
EXHIBIT "A"
]. A33009/11
his daughters, as the two trustees of both trusts and co-executrixes of his
estate. On ]uly 10, 2010, Mrs. Mumma died, and Morgan then became the
sole trustee of the two Mumma, Sr. trusts. Mrs. Mumma named Morgan as
the executrix of her estate and principal beneficiary of her will, and Morgan
also serves as the sole trustee of a trust Mrs. Mumma established during her
lifetime, of which Morgan is the sole beneficiary.
In 2004, Mrs. Mumma and Morgan filed a ftnal accounting for Mumma,
Sr.'s estate, including a fourth interim account for the marital trust and a
third interim account for the residual trust. In response, Mumma II and his
sister, Barbara M. Mumma ("B.M. Mumma"), filed numerous objections to
the accounts, and Mumma II also filed numerous motions. Beginning in
April of 2009 and continuing through ]une 16, 2010, acourt-appointed
auditor presided over thirty-three days of hearings in an effort to resolve
these objections and motions. Following Mrs. Mumma's death in ]uly 2010,
Morgan filed final accounts for the Mumma, Sr. trusts and petitioned the trial
court for conftrmation. Mumma II and B.M. Mumma again flied numerous
objections, which were in turn referred to the court-appointed auditor, who
conducted more heaMngs. On September 17, 2010, pursuant to the Flrst
Codicil to Mumma, Sr.'s will, B.M. Mumma became the successor co-
executrix of his estate to replace Mrs. Mumma.
On September 9, 2010, Mumma II filed his Motion for Disquallftcation.
Therein, he acknowledges that this constitutes the fourth motion/petition he
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has filed since 1989 seeking the removal of Morgan as the executrix of
Mumma, Sr.'s estate and trustee of the marital and residual trusts.2 On
January 28, 2011, the trial court conducted an evidentiary hearing on the
Motion for Disqualification. In its written opinion pursuant to Pa.R.A.P.
1925(a), the trial court provided the following review of that hearing:
As was evident at the January 28, 2011 hearing, and from his
[Motion for Disqualification], hearing brief, and post-hearing
brief, [Mumma II] contended that [Morgan's] dual roles as
executrix and primary beneficiary of the Estate of Mrs. Mumma
and Co-Executrix and trustee in the Estate of [Mumma, Sr.],
established a conflict of interest, resulting in a breach of
[Morgan's] fiduciary duties through her failure "to avoid placing
herself in a position where her own ,interests .enter into
conflict - or may possibly conflict -with the interests of the
Estate and Residuary Trust and/or the said beneficiaries
thereof."
At the hearing, [Morgan] confirmed that she was the sole
executrix and phmary beneficiary of the Estate of Mrs. Mumma
in Florida, and that she first became aware of a certain trust that
Z Mumma II's litigiousness with respect to his father's estate is not limited
to motions/petitions to disqualify Morgan, as he has filed multiple lawsuits
(both in Cumberland County and in Florida) seeking to obtain ownership of
various assets. Since the late 1980s, he has also filed numerous motions,
applications, and petitions in the trial court In opposition to Morgans efforts
to resolve estate Issues. To this end, he has frequently appealed the orders
of the trial court to this Court. See, e.~., .Notices of Appeal filed September
15, 2005 (1546 MDA 2005) and January 14, 2009 (270 MDA 2009) -- both
of which were subsequently quashed by Orders of this Court. In fact, the
present appeal was docketed consecutively with two additional appeals by
Mumma II involving estate matters - (i) an appeal of the trial court's denial
of a praecipe for compulsory substitution of successor (305 MDA 2011); and
(2) an appeal of the trial court's denial of his petition to re-open a summary
judgment in a related case entered against him in December 2006 (354 MDA
2011). This panel denied relief to Mumma II in both of these cases via short
memorandum decisions.
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Mrs. Mumma had established prior to her death, and which
apparently ultimately inured to [Morgan's] beneftt, shortly before
Mrs. Mumma's death. She testified that, pursuant to the marital
trust, "[Mrs. Mumma] had an absolute right to alive-percent
draw" to income, whether derived from the residuary or marital
trust. In response to [Mumma II's] inquiry which related to an
alleged overfunding of the marital trust, [Morgan] testified that
"[she] believed any overfunded money would go] back into the
residuary trust," which had "the same beneficiaries as the
marital trust."
[Morgan] further testifted that certain shares of a corporation
listed in an ihventory of the Estate of Mrs. Mumma were
purchased by Mrs. Mumma prior to her death. On cross-
examination, [Morgan] testifted regarding the right to income
Mrs. Mumma was entitled to receive from the residual and
marital trusts under the will of [Mumma, Sr.], as follows:
Q: Did that payment of income [from the residual
and marital trusts] to [Mrs. Mumma] cease as
of [Mrs. Mumma's] death?
A: Yes.
Q: So no Income on trust assets has been paid to
her estate since her death?
A: Correct
Q: And you have not purported as an executor of
her estate to try to pull down any assets from
the trust, correct?
A: Correct. My understanding is that that beneftt
that [Mumma, Sr.] provided [to] her ceased
upon her death as well.
With respect to her administration of the estates since Mrs.
Mumma's death, [Morgan] testified that she had not engaged in
any transaction that would transfer assets from her father's
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estate to her mother's estate, of which she was the primary
beneficiary:
Q: Have you engaged In any transaction in which
an asset of the residual trust or the marital
trust under [Mumma, Sr's] will was transfen-ed
to your mother's estate?
A: No.
Q: Do you have any contemplated transactions to
take any assets from the trusts under
[Mumma, Sr's] will that are [i]n adjudication
here in CaHisle and transfer them to your
mother's estate?
A: No.
[Morgan's] actions and intentions to which she testified at the
hearing were further supported by an August 27, 2010
communication sent by her to [Mumma II] and to Co- Executrix
[B.M. Mumma], which was in response to a request for
information about certain assets:
Ms. Morgan does not intend as trustee to sell or
otherwise dispose of real estate, stock or other
noncash assets in the trusts ...without seeking and
obtaining prior approval of the Orphans' Court.
As to the progress being made toward dissolving the trusts,
[Morgan] testified that, "[w]e have already obtained the real
estate appraisals. We hired an appraisal agency, and they
concluded the appraisals, and time flies, but within the last
month or so, we forwarded [the appraisals] to the other
beneflclaries.p Additionally, [Morgan] testified to her intentions
and plans to propeNy dissolve the trusts as follows:
Q. What is your ultimate plan as to how to bring
an end to the administration of the two trusts
under your father's will?
A: Once we have all of the values, it is my intent
to seek from the beneficiaries, if they have any
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7. A33009/11
specific interests in any particular asset that
they would like to have, and I believe ... [in]
that October meeting ... I asked them tf they
had any particular asset they were interested
in for cash or whatever, to give me some
Indication.
So my plan is to seek that and then to -
based on that to prepare a plan of dissolution
for presentation to the Court for Court
approval that it is okay, and then if the Court
says it is okay, or the Court makes an
adjustment to it, to dissolve the trust on that
basis.
Q: And to dfstHbute the assets to the
beneficiaries?
A: Correct.
At the hearing and as evident in his Post-Hearing Brief, [Mumma
II] contended that Items Seventh, Eighth, and Tenth in the will
of [Mumma, Sr.], entitled him to distribution of certain assets,
and required [Morgan] to make prompt distribution at the time
of Mrs. Mumma's death. Item Seventh which, Inter alla,
established the Marital Trust, stated:
Upon the death of [Mrs. Mumma], the principal of
this Trust, as it is then constituted, shall be paid over
by my surviving trustee unto my children, [MUMMA
II], [B.M. MUMMA], LINDA M. ROTH and LISA M.
MUMMA, free of this Trust, share and share alike, per
stirpes and not per capita.
Item Eighth which, Jnter alla, established the Residuary Trust,
provided:
Upon the death of [Mrs. Mumma], the principal of
this Trust, as it is then constituted, or, if [Mrs.
Mumma] does not survive me, upon my death, my
residuary estate, shall be paid over by my surviving
trustee or by my successor Executor, as the case
may be, unto my children, [MUMMA II], [B.M.
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MOMMA], LINDA M. ROTH and LISA M. MOMMA, free
of this Trust, share and share alike, per stirpes and
not per capita.
The Trustees shall be vested with reasonable
discretionary powers and in ail matters not otherwise
herein specifically provided, they shall exercise their
sound judgment and discretion in the performance of
their duties hereunder. They shall not be liable for
any error of judgment provided that such error is
honestly made.
Item Ninth, which, Inter al1a, defined the powers granted under
the will to the Trustees, indicated the decedent's intent to
provide the estate's trustees with broad discretion in distributing
the estate's assets:
I give and grant unto my trustees ...the following
powers, which shall be construed broadly and which
may be exercised by them in either or both
capacities, as in their discretion they deem
advisable, in addition to and not in limitation of their
common law and statutory powers:
(10) To receive or make distribution of any trust
herein created, either to money or fn kind, or partly
in money and partly in kind. The judgment of the
trustees as to what shall constitute an equitable
distribution or apportionment shall be binding and
conclusive upon the beneficiaries hereof. Nothing
herein contained, however, shall empower the
trustees to make distribution before the time or
times specified herein.
(li) To pay, collect, compromise, sue for or contract
any claim or other matter, directly or indirectly,
affecting the trusts.
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(18) As to each Trust created herein, to exercise all
the powers granted and all the duties imposed herein
until such time after the termination of that Trust as
the property induded in that Trust has been fully
disMbuted, and to do all other acts which, in their
judgment, may be necessary or appropriate for the
proper or advantageous management, investment,
or disposition of any properly included in any Trust
created herein.
Item Tenth, stated in i~ entirety, provided as follows:
The rights, titles, benefits, interests and estates of
any beneficiary hereunder, including beneficiaries
under the Trusts herein created shall not be subject
to the rights or claims of his or her creditors not
subject nor liable to any process of law or court, nor
subject to an assignment or transfer, voluntary or
involuntary, by a beneficiary hereof to another, and
ail of the income, principal or other benefits from or
under any Trust herein created, or this Estate, shall
be payable, and dellverabie only, wholly exclusively
and personally to the designated beneficiaries
hereunder at the time the designated benefldaries
are entitled to take the same under the terms of this
instrument.
[Mumma II] testified as to his opinion that [Morgan's] dual roles
as Executrices of two estates resulted in a disqualifying conflict
of Interest. At the hearing, [Mumma II] testified as to certain
inactions of [Morgan] which had occun-ed prior to the death of
Mrs. Mumma, and, therefore, prior to [Morgan's] appointment as
executrix of the Estate of Mrs. Mumma. [Mumma II] testified
that it was his belief that "...[Mrs. Mumma and Morgan] ...
conspired with their attorneys to divert those assets from my
father's estate and to sell them," and that certain stock in closely
held corporations had been improperly diverted to corporations
controlled by Mrs. Mumma. [Mumma II] conceded that the
bases for these allegations against [Morgan] had been referred
to the court-appointed auditor. In an attempt to guide [Mumma
II's] monologue for purposes of providing him an opportunity to
fully state the bases for his positions, the undersigned judge
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questioned [Mumma II] as t~ what actions or Inactions of
[Morgan] he was complaining about:
Court: And what else did they do that you
think was wrong, and specifically
what did [Morgan] do?
[Mumma II]: [Morgan] stood by and participated in
all of this knowing that they were -
that they were setting up another
trust, a third trust for her benefit,
and solely her benefit.
Court: Okay. What other conflict do you
see?
[Appellant]: The conflict is we have raised claims
in Florida about - and we have
litigation up here about this. I don't
think [the court-appointed auditor]
ever dreamed that they had diverted
these assets from the trusts my
father set up to a new trust solely for
the benefit of [Morgan] and her
family, but that is what they have
done, and they kept it a secret, and
Morgan, Lewis & Bockius did it for
them.
And I have an objection to Morgan,
Lewis & Bocktus representing her in
this issue because they were my
attorneys at the time they did this,
they put this deal together, and they
should have told me about it and
they should have told me about the
conflict.
Court: What other conflict do you see that
[Morgan] has in serving in these dual
capacities?
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[Appellant]: Well, because the capacity she is in
glues her the ability to decide what
assets she is going to get, and as
part of this plan she is going to
distribute assets to everybody, and
she is the only one that knows
anything about them. And that Is not
what my father's intention was. It is
not what his will calls for. It is not
equal shares, It is share and share
alike. Everybody's share is supposed
to be the same, not a rnmbinatton of
some people get more cash, some
people get more real estate.
Everybody gets a quarter of what is
in those trusts, and that was the
intention when they formed the
tenancy In common.
On cross-examination conducted by Co-Executrix [B.M.
Mumma], who was similarly acting pro se at the hearing,
[Mumma IIj admitted that [Morgan] had recently completed
conducting certain appraisals, that copies of those appraisals
were in [Mumma iI's] possession, and that he did review those
appraisals, albeit shortly before the January 28, 2011 hearing.
On cross-examination conducted by [Morgan's] counsel,
[Mumma II] further testified that he objected to his mother's
alleged misappropriation of certain assets that [Mumma II]
believed she was not entitled to under his father's will:
Q: You understood that [Mrs. Mumma] said she
had a right [to scoop out certain corporate
assets]?
A: Well, first of all, [Mrs. Mumma] violated the
shareholder's agreements.
Q: You understood that [Mrs. Mumma] had
purported to take that stock out and transfer it
to the marital trust, and then to scoop it out
and transfer it to herself in her own name...?
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A: Yes, but I didn't know what percentage or
which share [Mrs. Mumma] took.
Q: But you knew then also that [Mrs. Mumma]
regarded that as her personal property?
A: I know [Mrs. Mumma] sold a lot of It to CRH
for a lot of money like tens of mililons of
dollars, and I don't know where that ended up,
but it wasn't [Mrs. Mumma's] stock. That was
stock that my grandfather gave to me and my
sisters, and I can prove that.
Trial Court Opinion, 6/1/11, at 12-21.
By order dated March 4, 2011, the trial court dented the Motion for
Dlsqualiflcatton. This timely appeal followed, in which Mumma II raises the
following six issues for our consideration:
1. Whether [Morgan] is subject to removal as Co-
Executrix and Trustee of [Mumma, Sr.'s] Estate and
Trusts due to a conflict of Interest under 20
Pa.C.S.A. § 3182(i)t3~ because she has failed to
perform a "duty imposed by law," i.e., her fiduciary
s § 3182. Grounds for removal
The court shall have exclusive power to remove a
personal representative 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 law; or
(5) when, for any other reason, the interests of
the estate are likely to be jeopardized by his
continuance in office.
20 Pa.C.S.A. § 3182.
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"duty of loyalty" to the other three sibling
beneficiaries.
2. Whether [Morgan] is subject to removal as Co-
Executrtx and Trustee due to a conflict of interest
under the "fnr any other reason" provision of 20
Pa.C.S.A. § 3182(5) because she is serving in the
simultaneous and dual roles of Executrix and Trustee
in both parents' estates and trusts, with pending
litigation Involving both parents' estates and trusts In
Pennsylvania and Florida probate courts.
3. Whether the Orphan's Court committed an error of
law or an abuse of discretion for not summarily
removing [Morgan] as Co-Executrix of [Mumma,
Sr.'s] estate under 20 Pa.C.S.A. § 3183~4~ insofar as
removal was "necessary to protect the rights of the
a § 3183. Procedure for and effect of removal
The court on its own motion may, and on the petition
of any party in interest alleging adequate grounds for
removal shall, order the personal representative to
appear and show cause why he should not be
removed, or, when necessary to protect the rights of
creditors or parties in interest, may sumrnarlly
remove him. Upon removal, the court may direct the
grant of new letters testamentary or of
administration by the register to the person entitled
and may, by summary attachment of the person or
other appropriate orders, provide for the security
and delivery of the assets of the estate, together
with all books, accounts and papers relating thereto.
Any personal representative summarily removed
under the provisions of this section may apply, by
petition, to have the decree of removal vacated and
to be reinstated, and, if the court shall vacate the
decree of removal and reinstate him, it shall
thereupon make any orders which may be
appropriate to accomplish the reinstatement.
20 Pa.C.S.A. § 3183.
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parties in interest" -same being the rights of the
other three sibling beneficiaries.
4. Whether the Orphans' Court committed an error of
law or an abuse of discretion for not removing
[Morgan] as Trustee of [Mumma, Sr.'s] trusts under
20 Pa.C.S.A. § 7766(1) 5~ insofar as removal "best
serves the interests of the beneficiaries of the trust"
because she committed a serious breach of trust by
adamantly refusing to make any distributions of
[Mumma's] trusts as provided in Items Seventh and
Eighth of [Mumma, Sr.'s] will.
5. Whether the Orphans' Court committed an error of
law or an abuse of discretion for not removing
[Morgan] as Trustee of [Mumma, Sr.'s] trusts under
20 Pa.C.S.A. § 7766(4) insofar as removal "best
serves the interests of the beneficiaries of the trust"
s § 7766. titamoval of trustee - UTC 706
(b) When court may remove trustee.--The court may
remove a trustee if (t finds that removal of the
trustee best serves the interests of the beneficiaries
of the trust and is not inconsistent with a material
purpose of the trust, a suitable cotrustee or
successor trustee is available and:
(1) the trustee has committed a serious
breach of trust;
* ~
(4) there has been a substantial change of
circumstances. A corporate reorganization of an
Institutional trustee, Including a plan of merger or
consolidation, is not itself a substantial change of
circumstances.
20 Pa.C.S.A. § 7766(b).
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due to the substantial change of circumstances and
dual capacities as Executrix and Trustee of both
parents' estates and trusts with pending litigation in
both Pennsylvania and Florida probate courts.
6. Under Pennsylvania decisional law, whether sufficient
cause for removal exists because the Executrix's
personal Interests are in conflict with the interests of
[Mumma, Sr.'s] estate as well as the other three
sibling beneficiaries of the Estate and Trusts.
Mumma II's Brief at 4-5.
While listed as six distinct issues, Mumma II essentially presents a
single issue for our consideration, namely whether Morgan's dual roles to
connection with the estates of Mumma, Sr. and Mrs. Mumma constitute a
conflict of interest requiring her disqualification and removal. If such a
conflict of Interest exists, some or all of the statutory provisions cited by
Mumma II (including 20 Pa.C.S.A. §§ 3182(1), 3182(5), 3183, 7766(1), and
7766(4)), as well as Pennsylvania decisional law would require Morgan's
disqualification and removal. The removal of an executrix is a matter vested
in the sound discretion of the trial court, and thus we will disturb such a
determination only upon a finding of an abuse of that discretion. Matter of
Estate of Froy, 693 A.2d 1349, 1352 (Pa. Super.), appeal dented, 549 Pa.
717, 701 A.2d 578 (1997).
Section 3182 of Pennsylvania's Probate, Estates and Fiduciaries Code
provides that Orphans' Courts have the "exclusive power to remove a
personal representative" when he/she "mismanage[s] the estate ... or has
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7. A33009/11
failed to perform any duty Imposed by law" or "when, for any other reasons,
the interests of the estate are likely to be jeopardized by his continuance in
office." 20 Pa.C.S.A. § 3182(1), (5). Our Supreme Court has recognized,
however, that "the removal of a trustee is a drastic remedy, and the need
for such action must be clear." In ro White, 506 Pa. 218, 223, 484 A.2d
763, 765 (1984). As stated in Whli~e, consideration of removal under
section 3182 "must be viewed in conjunction with the settlor's expressed
conftdence in the trustee, evinced by the trustee's appointment" and "where
a settlor appoints a particular trustee, removal should only occur when
required to protect the trust properly." Id. Flnally, ordinarily removal
cannot occur unless some ftduciary duty has been violated, and the "mere
displeasure of a beneftctary" is not a sufficient reason for removal." Id.
In this case, Mumma, Sr. and Mrs. Mumma both selected Morgan to
serve as executrix/trustee of their estates and trusts. A testator's selection
of a particular person to serve as their personal representative "represents
an expression of trust and conftdence," and removal of a personally chosen
individual is thus considered to be a "drastic remedy" that requires clear and
convinGng evidence of a substantial reason for removal. In ro Estafie of
P/tone, 489 Pa. 60, 68, 413 A.2d 1012, 1016 (1980); In ro Estate of Lux,
480 Pa. 256, 269-71, 389 A.2d 1053, 1059-60 (1978); White, 506 Pa. at
223, 484 A.2d at 765.
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9. A33009/11
Mumma II essentially contends that Morgan has violated fiduciary
duties and endangered the assets of Mumma, Sr.'s estate and trusts in two
ways.6 Flrst, Mumma II contends that the trust documents provide that
upon the death of Mrs. Mumma, the principal of the trusts is to be divided
equally and distHbuted to the four siblings, but that Morgan has refused to
make any such distribution. Mumma II's Brief at 21. Second, Mumma II
claims that rather than distributing his father's estate and trust assets to the
four siblings, Morgan has transferred them to the estate of Mrs. Mumma,
including to a trust establtshed by Mrs. Mumma during her lifetime. Id. at
26 ("However, Instead of share and share alike amongst the four sibling
beneficiaries, their interest in the assets have been transferred to the Florida
Estate and Trust where only one sibling, [Morgan], is named as
beneficiary.").
The trial court determined, however, and based upon our review of the
record on appeal we agree, that insufficient evidence exists to support either
of these accusations. With respect to the distribution of assets to the four
sibling beneficiaries, the trial court determined that Morgan's testimony
established that she is completing the process of obtaining valuations of the
e Mumma II also mentions pending litigation between himself and the estate
as a basis for a conflict of Interest. Mumma II's Brief at 25. He falls,
however, to mention any specific litigation or otherwise develop an
argument on thls basis for Morgan's removal. Accordingly, this argument is
waived for purposes of appeal. Commonwealth v. Spotz, -- Pa. --, --, 18
A.3d 244, 281 n.21 (2011).
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7. A33009/11
estate and trust asset and has asked the beneftciaries if they have any
preferences regarding the receipt of particular assets or cash., and that she
intends to make an equitable distribution of the assets to the beneficiaries
after collecting this information. We agree with the trial court that this
approach' does not constitute any breach of fiduciary duty. Mumma, Sr.
specifically provided Morgan, in her role as his personal representative when
making an equal distribution among the four sibling beneftciaries, with the
power to decide how to "make distribution of any trust herein created, either
in money or in kind, or partly in money and partly in kind." item Ninth (10),
quoted supra. Mumma, Sr. further Indicated that the "judgment of the
trustees as to what shall constitute an equitable distribution or
apportionment shall be binding and conclusive upon the beneficiaries
hereof." Id.
With respell to the accusation that Morgan has transferred assets
from her father's estate and trusts Into the estate and trust of Mrs. Mumma
(for the purpose of misappropriating them for herself as primary beneftciary
thereof), the trial court concluded, and we agree, that no substantial
evidence of record supports this contention. Mumma, Sr. directed that Mrs.
Mumma was entitled to request and receive an annual distribution of the
income of the two trusts, and up to $5,000 (or up to 5% of the then
principal) from the principal of his marital trust. At the evidentiary hearing,
Morgan testifted that these distributions ceased at the time of her mother's
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death, and that if there were any discrepancies in the amounts that had
been transferred to Mrs. Mumma during her lifetime, appropriate
adjustments and correcting transfers could be made. In testimony that the
trial court clearly found credible, Morgan testified that Mumma II's
accusations were simply not true, as since the time of her death there have
been no transfers of principal from Mumma, Sr.'s estate and trusts to Mrs.
Mumma's estate and trust.
As discussed hereinabove, our Supreme Court has made clear that the
drastic remedy of removal of an appointed personal representative generally
requires actual proof of a breach of a fiduciary duty. Whlte, 506 Pa. at 223,
484 A.2d at 765. The trial court found, based upon the evidence presented
at the hearing on January 28, 2011, that Mumma II failed to present
sufficient evidence to support his accusations of wrongdoing by his sister.
Mumma II's displeasure with Morgan's performance, without more, does not
suffice to necessitate the removal of the individual specifically chosen by
both father and mother to serve as executrix of their estates and trustee of
their trusts. Accordingly, no relief is due.
Alternatively, Mumma II argues that Morgan's dual roles in connecttan
with the estates and trusts of Mumma, Sr. and Mrs. Mumma constitute an
inherent conflict of interest requiring her removal without the need for proof
of bad faith or frauduient intent. Mumma II's Brief at 26. Mumma II cites
several appellate court decisions that support this general principle,
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Including In re Ra}t'etty's Estate, 377 Pa. 304, 105 A.2d 147 (1954); In
re: F.stste of Gad/parthl, 632 A.2d 942 (Pa. Commw. 1993); and in re
Estate of We~stln, 874 A.2d 139 (Pa. Super. 2005). These cases present a
prima facie conflict with cases cited hereinabove, including for example
White, in that they hold that a personal representative may be removed in
the absence of any proof of actual wrongdoing. To the contrary, in these
cases, our courts have held that the conflict of Interest itself justifies the
removal, without the need for proof of wrongdoing by the personal
representative. See, e.g., rn re Dobson's Estate, 490 Pa. 476, 483 n.6,
417 A.2d 138, 142 n.6 (1980).
Careful review of these cases, however, reveals that they have no
application in this case, as they all involve intractable conflicts of interests
between the representatives' personal financial interests and those of the
~ Mumma II cites an additional decision of our Supreme Court, In r+e
Dobson Estate, 490 Pa. 476, 417 A.2d 138 (1980). in Dobson's Estate,
an executor sold estate property without any Independent appraisal or other
valuation process (and without prior court approval) to a corporation In
which his wife was an officer, director, and significant shareholder. The
issue addressed in Dobson's Estate, however, was whether or not the
executor should have been assessed a surcharge for his negligence in
connection with his treatment of the tax consequences of the sale. td. at
484, 417 A.2d at 142. The Supreme Court's decision expressed no opinion
regarding whether or not the executor should have been removed from his
position as a result of a conflict of Interest. Id. ("Therefore, because the
executor erred in calculating the value of decedent's shares and thereby
obtained a price below the value of the shares, we must reverse the decree
of the court en bent, vacate the decree of the auditing judge and remand for
determtnatlon of the proper surcharge to be imposed on the executor.'7.
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estate and _its beneficiaries. In RalYlerty's Estate, the administrator of his
father's estate claimed that potential assets of the estate (including the
proceeds from a retirement disability fund) belonged not to the estate (and
its flue sibling beneftdaries), but rather to himself personally. Rafilferty's
Estate, 377 Pa. at 304-06, 105 A.2d at 148. Similarly to Gadlparthl, a
husband administrator of his wife's estate challenged her ownership of
property titled in her name, claiming that she owned the property as hts
agent. Gadl~srthl, fi32 A.2d at 944. And In West/n, the executor's law
flan had embeuled more than X370,000 in estate funds, thus putting the
executor in the position of representing the estate In a lawsuit against
himself (and his law partners) for recovery of the estate funds. Westin,
874 A.2d at 143.
The present case does not present a similar conflict of Interest, namely
one in which Morgan's personal financial interests directly conflict with the
interests of her father's estates and trusts. While Morgan is the executrix
and trustee in connection with both her father's and mother's estates and
trusts and is also a beneficiary of both, this does not, of itself and without
another more specific conflict, present the sort of intractable conflict of
Interest that would necessahly prevent her from carrying out her fiduciary
duties in all of her vahous roles. Based upon the record on appeal, she has
performed all of the required funct(ons as executrix and trustee of Mumma,
Sr.'s estate and trusts, Including the filing of appropriate interim and final
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J. A33009/11
accountings. Mumma II's objections in those matters have been referred to
a court-appointed auditor for resolution. Moreover, as discussed
hereinabove, we agree with the trial court's conclusion that Morgan has not
engaged in any obvious wrongdoing or improper transfers of assets
(including indirectly to her mother's estate and/or trust).
For these reasons, we will not disturb the trial court's decision to deny
Mumma II's Motion for Disqualification.
Order affirmed.
Strassburger, J. files a Concurring Opinion.
Judgment Entered.
,,
Deputy Prothonotary
Date: February 22, 2012
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]. A33009/11
NON-PRECEDENTIAL DECISION -SEE SUPERIOR COURT I.O.P 65.37
IN RE: ESTATE OF: ROBERT M. MUMMA,
DECEASED,
IN THE SUPERIOR COURT OF
PENNSYLVANIA
APPEAL OF: ROBERT M. MUMMA, II
No. 481 MDA 2011
Appeal from the Order entered March 4, 2011,
Court of Common Pleas, Cumberland County,
Orphans' Court at No. 21-86-398
BEFORE: DONOHUE, OLSON and STRASSBURGER*, J7.
CONCURRING OPINION BY STRASSBURGER, 7.: FILED FEBRUARY 22, 2012
I join the Majority opinion. I agree with the Majority's conclusion that
the tHal court properly denied Mumma II's Motion for Disqualification and
Removal of the executrix. I also agree that, pursuant to Matter of Estate
of Ve/ott, 529 A.2d 525, 527 (Pa. Super. 1987), this Court is constrained to
consider this order a collateral order subject to immediate appeal.
However, I feel compelled to express my disagreement with the case
law on the issue that an order denying the removal of an executor is a
collateral order subject to immediate review.l In this case, Mumma II
i "A collateral order is an order separable from and collateral to the main
cause of action where the right involved is too important to be denied review
and the question presented is such that if review is postponed until final
judgment in the case, the claim will be irreparably lost." Pa.R.A.P. 313(b).
This Court has offered the following analysis as to why the elements for a
collateral order are met for an order denying the removal of an executor:
*Rettred Senior Judge assigned to the Superior Court.
J. A33009/11
concedes that this petition is the fourth time since 1989 he has asked the
Flrst, it is an order which finally determines a claimed
right; i.e. the right of a beneficiary or beneficiaries to a
competent and trustworthy executor who will carefully and
faithfully carry out the intentions of the testator and also use its
best efforts to maximize and fairly distribute the estate to the
devisees and legatees. By denying the petition the lower court
has made a determination that this right has not been infringed,
just as an order granting the petition would, of course, indicate
an opposite conclusion. Such a determination is not the end of
the litigation since it is part of the administration, accounting
and distribution of the decedent's estate. It is, however, a
separate and collateral order in that the executor, while
performing an important administrative and fiduciary function,
can be replaced by another party. The administration of the
estate, while delayed, would continue.
Second, the right is one which is too Important to be
denied review. Neither party contends anything to the contrary.
When the assets of an estate are subject to possible harm or
diminution because of acts or omissions of an executor the
courts are the appropriate forum to decide what action is
necessary to remedy that harm. While the trial courts, because
of the experience acquired in handling estate cases, are
eminently capable of deciding questions of removal, such
questions involve serious issues bearing upon the property in
question, the reputation of the executor and also the interest of
the state in assuring orderly administration and in properly
ascertaining and collecting revenues. We find these issues
important enough to merit appellate review.
Third, in many, if not all, cases the right will be Irreparably
lost if review is deferred. [Where the executor is an individual,]
deferral of review may mean that the assets of the estate will be
dissipated or destroyed in the Interim. Thus, the right would be
lost because surcharge would be nothing more than a hollow
remedy.
in re Georglana's Estate, 458 A.2d 989, 991 (Pa. Super. 1983), affirmed
475 A.2d 744 (Pa. 1984) (per curiam).
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~. A33009/11
trial court to remove Morgan as executrix. Furthermore, acourt-appointed
auditor has conducted over 33 days of hearings on the accounting of this
estate. Allowing this order to be appealable wastes judicial resources and
promotes the type of piecemeal litigation recently frowned upon by our
Supreme Court. See Yaccone v. Syken, 899 A.2d 1103, 1107 (Pa. 2006)
("[W]e believe that it has become necessary to remember the purpose of the
finality rule, which is to avoid piecemeal litigation, and not to become
swallowed up in Its exceptions."). AfteraH, "[i]t is more important to prevent
the chaos inherent in bifurcated, trifurcated, and multifurcated appeals than
it is to correct each mistake of a trial court the moment it occurs."
Calabrese v. ColNer Tbvp. Mun. Auth., 248 A.2d 236, 238 (Pa. 1968)
(O'Brien, J. dissenting).
In my view, the development of the case law in this area betrays a
serious lack of trust in our trial bench.
-3-
CERTIFICATE OF SERVICE
I, Tricia D. Eckenroad, an authorized agent for Martson Deazdorff Williams Otto Gilroy &
Faller, hereby certify that a copy of the Reply to New Matter of Bazbaza M. Mumma was served this
date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed
as follows
John M. Kerr, Esquire
John Kerr Law, P.C.
5020 Ritter Road, Suite 104
Mechanicsburg, PA 17055
Jeffrey G. Brooks, Esquire
Minto Law Group, LLC
Two Gateway Center
603 Stanwix Street
Suite 2025
Pittsburgh, PA 15222
Richazd F. Rinaldo, Esquire
Williams Coulson Johnson Lloyd Pazker & Tedesco
One Gateway Center, 16~' Floor
Pittsburgh, PA 15222
Ms. Linda M. Mumma
P.O. Box 30436
Bethesda, MD 20824
Joseph D. Buckley, Esquire
1237 Holly Pike
Carlisle, PA 17013
MARTSON LAW OFFICES
y
~Tricia D. Ecken~road
Ten East High street
Cazlisle, PA 17013
Dated: May 18, 2012 (717) 243-3341