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HomeMy WebLinkAbout07-16-12r No V. Otto, III, Esquire I.D. No. 27763 George B. Faller, Jr., Esquire I.D. No. 49813 Jennifer L. Spears, Esquire I.D. No.87445 MARTSON LAW OFFICES 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Lisa M. Morgan N N c~ ,_.. r. ~ c~ ~- ~' a _ , ;; v ~ `~' r IN 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 FILED ON JUNE 22 2012 10. Mrs. Morgan hereby incorporates by reference her Reply, filed on May 18, 2012, to the New Matter in the Response of Bazbaza M. Mumma in Opposition to Petition to Authorize Plan of Liquidation, filed in this matter on Apri126, 2012. 1.1. Denied. On the contrary, extensive information regarding the assets and liquidity of the Trusts was provided to the beneficiaries when Mrs. Morgan filed a Petition to Authorize Distributions in August, 2011 and the ordered distributions were made. No further requests for information were made until May 9, 2012, when a request was made through counsel during a conference with the Auditor. To the extent available, the information requested at that time has been provided. This has covered the bulk of the requested information. The remainder will be provided when available. However, Mrs. Morgan has periodically updated the accounts and provided information each time, as well as whenever information has been requested. 12. Denied. Petitioner admits that appraisals have not been updated since 2010; however, she believes that the same continue to accurate and reliable, having no information to the contrary. f 1 13. Admitted. 14. Denied. The MRA I Agreement speaks for itself and must be reviewed in its entirety. 15. Denied. The MRA I Agreement speaks for itself and must be reviewed in its entirety. The consent requirement of Section 3 of the Agreement is not applicable to the sale of the subject property and has been decided as more fully stated below. Moreover, to the extent a right of first refusal is implied, Babs Mumma's contention that she holds a first refusal right as to individual MRA I properties is flatly inconsistent with Judge Sheely's Order and Opinion of March 24, 1992, and adopted as a final decree by Judge Sheely's Order of November 5, 1992, both in Barbara McK Mumma et al. v Robert M. Mumma, 11 et al., No. 66 Equity 1988 (C.P. Cumberland), attached hereto as Exhibits "A" and "B," respectively. Judge Sheely found that "the MRA agreements were never drafted with the intention of providing any tenant-in-common with a right of first refusal as to the individual pazcels of property owned by the tenants-in- common." (Exh. A, at 26). Rather, "Section 3(b) [the section cited by Babs Mumma in support of her claimed first refusal right] only granted a very narrow right of first refusal to the MRA tenants-in-common and pertained to a single tenant-in-common selling his or her undivided interest in the premises." (Exh. A at 26-27 (citation omitted)). "[B]y contrast, Section 4 applies when the majority in interest of the tenants-in-common (i.e., the Estate and the executrices) vote to dispose of one or more pieces of property owned by the tenants-in-common. Under Section 4, the decision to sell is made by majority rule." (Exh. A at 26). Judge Sheely further held that "under Section 4 of the [MRA Agreements, consent of the owners `shall be by a majority (in interest) vote, ... As a result, the provisions of Section 3 are not triggered at all in the event of a sale consented to by a majority in interest of the tenants-in-common." (Exh. B at 13). Judge Sheely's decisions were affirmed by the Superior Court, and the Supreme Court denied a petition for allocatur. Because Mrs. Morgan, individually and as trustee, represents a ~ ~ majority in interest of the tenants, the position advanced by Babs Mumma is, in light of the final order in the prior litigation, foreclosed by collateral estoppel and/or res judicata. Any attempt by her to assert those positions in this matter merely subjects MRA I, and therefore the Residual Trust, to unnecessary delay, burden and expense. 16. Denied. The MRA I Agreement speaks for itself and must be reviewed in its entirety. It is denied that Section 3 of the Agreement is applicable to the situation at hand with respect to the majority in interest's decision to sell a specific parcel of real estate. In contrast, the notice under Section 3 is required only if an interest holder wishes to sell all or part of their undivided interest in the tenancy in common. See also paragraph 15 above. The position advanced by Babs Mumma is, in light of the final order in the prior litigation, foreclosed by collateral estoppel and/or res judicata. Any attempt by her to assert those positions in this matter merely subjects MRA I, and therefore the Residual Trust, to unnecessary delay, burden and expense. 17. Denied. In fact, Babs Mumma had no right of first refusal with respect to the proposed transaction. See also paragraph 15 above. 18. Denied. In fact, Babs Mumma had no right of first refusal with respect to the proposed transaction, nor did the notice provision of Section 3 apply. However, despite the fact that Babs Mumma did not have a right of first refusal, Mrs. Morgan did, in fact, contact each of the beneficiaries in writing to determine if any of them had an interest in purchasing the property, before she entered into negotiations with UPS. Mr. Mumma, II, indicated he was not interested in purchasing the property. Linda Mumma did not respond. Babs Mumma suggested in May of 2011 that she might have an interest in purchasing; however, she has since failed to state her position, which failure continues to this day, notwithstanding a request from Auditor Buckley during a conference on June 20, 2012, to do so. See also paragraphs 15 and 16 above. 19. Denied. The proposed sale of the real estate will terminate Babs Mumma's and the other tenants' interest in the subject real estate. Babs Mumma will retain her interest in the proceeds from the sale of the real estate attributable to her percentage interest in MRA. 20. Denied as a conclusion of law. While Babs Mumma, Linda Mumma and Robert M. Mumma, II, have undivided interests in MRA I, a tenancy in common which owns the real estate that is the subject matter of the instant petition, the operation of MRA I is governed by the MRA referred to above. 21. Denied. This paragraph is a legal conclusion to which no response is required. 22. Denied. This paragraph is a legal conclusion to which no response is required. See paragraphs 15 and 16 above. 23. Denied. This paragraph is a legal conclusion to which no response is required. By way of further response, the MRA I Agreement speaks for itself and must be reviewed in its entirety. Moreover, see paragraphs 15 and 16 above. There is no "dispute" requiring arbitration, and the minority interest holders' permission is not required for the sale of the property in question. Judge Sheely's Order and Opinion of March 24, 1992, and adopted as a final decree by Judge Sheely's Order of November 5, 1992, both in Barbara McK Mumma et al. v Robert M. Mumma, II et al., No. 66 Equity 1988 (C.P. Cumberland), make it clear that Section 3 of the MRA I Agreement is not applicable because the majority interest holder may transfer individual parcels of real estate without any requirement of notice, consent or a right of first refusal. Again, these issues have been decided are precluded by res judicata and/or collateral estoppel, and there is no dispute requiring arbitration. 24. Denied. See paragraph 23 above. 25. Admitted. 26. Admitted that the subject property is contiguous to a property owned by Bobali identified as No. 4 on the Summary of Appraisals for the Trusts. 27. Denied. Mrs. Morgan lacks information as to what information or beliefs Babs Mumma has regazding the sale of the property in question. Moreover, it is denied that the sale of the real estate will have a substantial deleterious impact on the value of any surrounding property. Moreover, the Trust's interest in this adjacent property is a small minority interest. Furthermore, the owning entity (Bobali) is involved in litigation to determine its ownership interests, and therefore, the value of this property to the Trust is uncertain. 28. Denied. Mrs. Morgan lacks information as to what information or beliefs Babs Mumma has regarding the sale of the property in question. Moreover, it is denied that the sale of the real estate will eliminate means of access to surrounding properties. 29. Admitted in part, denied in part. It is admitted that Mrs. Morgan, Babs Mumma, Linda Mumma and Robert M .Mumma, II, are shareholders of Bobali Corporation, and that they also are parties to the cited lawsuit in Dauphin County. The positions of the parties in that litigation are in writing and speak for themselves, and all chazacterizations thereof aze denied. 30. Denied. This pazagraph is a legal conclusion to which no response is required. 31. Denied. Mrs. Morgan lacks information as to what information or beliefs Babs Mumma has regazding, nor that a beneficial opportunity exists to lease the property. On the contrary, the Purchaser expressed to Mrs. Morgan a desire to purchase the property. As the offered price was substantially in excess of the appraised amount for the property, Mrs. Morgan determined that a sale of the property at the negotiated price and on the negotiated terms was in the best interest of the Residual Trust. Mrs. Morgan further denies the allegations of this pazagraph to the extent they purport to suggest that the Purchaser of the property ever expressed a willingness to lease the real estate in question. Mrs. Morgan has no knowledge of the Purchaser's long term use for the parcel. Mrs. Morgan admits their stated, present intent is to use it as a parking lot; however they are not bound to use it in that manner. 32. Denied. This pazagraph is a legal conclusion to which no response is required. Moreover, Mrs. Morgan is permitted, subject to her fiduciary duties as trustee, to dispose of trust assets when and as she deems appropriate. As the offered price is substantially in excess of the appraised value of the property, Mrs. Morgan properly determined that a sale of the property at the negotiated price and on the negotiated terms was in the best interest of the Residual Trust. 33. Denied. See pazagraph 32. WHEREFORE, for the foregoing reasons, Mrs. Morgan respectfully requests that this Court dismiss Barbara M. Mumma's New Matter filed on June 22, 2012. Dated: July 16, 2012 Respectfully submi By ~~ l ~~1 d.L~.~ No V. Otto, III, Esquue I.D. No. 27763 George B. Faller, Jr., Esquire I.D. No. 49813 Jennifer L. Spears, 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 BARBARA McR. MOMMA and LISA M. MORGAN, individually and as Executrixes of the Estate of ROBBRT M. MOMMA, deceased, and LINDA M. BOTH, Plaintiffs V IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY : ROBERT M. MOMMA, II and BARBARA M. McCLURE, Defendants N0. 66 EQUITY 1988 s IP RE: DECLAR7-TORY JDD61~8T BEE'ORE SSEELY. P.J. ORDER O~ COURT / ~ AND NOW, this ~ y ~~ day of `a~U'~'~'" I/ , 1992, in accordance with the foregoing findings of fact and conclusions of law, it is hereby ordered that the declaratory judgment shall be entered as follows: 1) The two tenancy-in-common agreements MRA I and MRA II signed by Robert M. Mumma, II on December 19, 1986, are binding upon him and grant him no right of first refusal as to any transfers by the executrices, Barbara McR. Mumma and Lisa M. Morgan, of the real estate held by the MRA tenants-in-common when there is approval by a majority in interest; 2) The MRA general power of attorney which Robert M. Mumma, II executed on December 19, 1986, is valid and irrevocable, and pursuant to Section 14 of the MRA agreements, empowers Mrs. Mumma and Lisa to transfer properties held by the MRA tenancies-in-common= and TRUE C~i''Y FRS ~~ M TealmoeY ~'~• m+d tn. s.a a said Court:t c,~Ma.. Pa. s~- RrahonottN)- EXHIBIT "A" M 1 . iVO. 66 EQUITY 1988 3) Robert M. Mumma, II was never given an oral right of first refusal to purchase Pennsy Supply, Inc., in June, 1987, in exchange for his promise to execute a power of attorney fox Lot 1-B in Lemoyne. By the Court, Harold E. Shee y, P.J. Thomas M. Kittredge, Esquire Richard W. Stevenson, Esquire John Hardin Young, Esquire Anthony Vale, Esquire liam F. Martson, Esquire Charles E. Shields, III, Esqufre :pbf r BARBARA McK. MUMMA and s LISA M. MORGAN, individually and as Executrices of the s Estate of ROBERT M. MUMMA, s deceased, and LINDA M. ROTH, Plaintiffs s V : ROBERT M. MUMMA, II and BARBARA M. McCLURE, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY NO. 66 EQUITY 1988 IM RE: DECLARATORY J1J1fGlLE1~T BEFORE SBEELY. P.J. OPII~IODT AND ORDER OF COURT On March 4, 5, 6, and 13, 1991, a hearing was held to determine through a declaratory judgment 1) whether the two tenancy-in-common agreements (MRA I and II) were validly executed on December 19, 1986, 2) whether the MRA power of attorney executed by Robert M. Mumma, II on December 19, 1986 was irrevocable, and 3) whether Robert M. Mumma, II had a right of first refusal to purchase Penney Supply, Inc. From this hearing we make the following findings of fact: FINDINGS OF FACT 1. On April 12, 1986, Robert M. Mumma died testate. 2. Plaintiffs, Barbara McR. Mumma (Mrs. Mumma) and Lisa M. Morgan (Lisa) are executrices of the Estate of Robert M. Mumma (the Estate). 3. At the time of Mr. Momma's death the following conditions existed with respect to the family owned business, Pennsylvania Supply Co. (Penney Supply): ,. .•~ ~~. ' NO. 66 EQUITY 1988 a) The Estate owned approximately 98 percent of the stock of Pennsy Supply. b) Pennsy Supply owned more than 82 percent of the outstanding stock of Rim Company, the second tier holding company. c) Kim Company was the largest shareholder of Nine Ninety-Nine, Inc. (999) . d) The Estate controlled, through its majority stock holdings, both Pennsy Supply and Rim Company. e) Pennsy Supply was a wholly-owned subsidiary of 999. f) The Estate, Mrs. Mumma, Lisa, Linda M. Roth (Linda), Robert M. Mumma II (Bob), and Barbara M. McClure (Barbara) were the shareholders of Rim Company. g) The Estate, Mrs. Mumma, Lisa, Linda, Bob and Barbara were also the shareholders of 999. 4. At a meeting at the offices of Pennsy Supply on November 5, 1986. Arthur L. Klein, a tax specialist at Morgan, Lewis and Bockius, brought to the attention of the shareholders of Pennsy Supply and Rim Company, the unfavorable changes in the federal tax laws caused by the passage of the 1986 Tax Reform Act. 5. The 1986 Tax Reform Act overruled the General Utilities doctrine which had previously permitted corporations to liquidate and pay only one tax on the appreciation in the value of corporate assets rather than two taxes; one at the corporate and the other at the shareholder level. -2- ~,. ' NO. 66 EQUITY 1968 6. The November 5, 1986 meeting at Pennsy Supply was attended by Mr. Klein, Mrs. Mumma, Lisa, Bob, Linda, Barbara, and George W. Hadley. 7. Mr. Hadley is a partner in the accounting firm of Luckey, Kennedy and Felmeden in Buffalo, New York and is the accountant for the Mumma family businesses. 8. At the November 5 meeting, the shareholders, Mr. Klein and Mr. Hadley discussed the desirability of liquidating Pennsy Supply and Rim Company prior to December 31, 1986, in order to take advantage of the grace period allowed by the 1986 Tax Reform Act. 9. Mr. Klein advised Mrs. Mumma and Lisa that they could avoid the unfavorable consequences of double taxation if the assets of Pennsy Supply and Rim Company were transferred to the shareholders as tenants-in-common. 10. If the assets of Rim Company and Pennsy Supply had been transferred to the family members as a partnership, both the transferors and the recipients would have been required to pay real estate transfer taxes to the Commonwealth of Pennsylvania. 11. It was the understanding of Mr. Hadley that the tenancies-in-common which were formed to receive the assets of the dissolved corporations would function similar to partnerships. (Hadley Direct, Vol. II, p.302). 12. The tenancy-in-common agreements were drafted to include provisions for majority-in-interest control over the management of the properties and voting control of the tenants- in-common based upon their percentage holdings in Pennsy Supply -3- ~ ,~ ~ , NO. 66 EQUITY 1988 and Kim Company. (Klein Direct, Vol. I, pp.33-35, Hadley Direct, Vol. ii, p. 303. 13. Following the November 5, 1986 meeting, Mr. Klein sent Bob a letter explaining that complete liquidation of the corporation could take place and the charter of Pennsy Supply would not be terminated as long as no corporate actions were taken for a sufficient length of time following the dissolution. 14. Lisa circulated a single draft agreement among tenants-in-common (Exhibit R-10) to Mrs. Mumma, Bob, Linda, and Barbara along with a cover letter dated December 11, 1986. (Mrs. Mumma Direct, Vol. II, pp. 189-190, Klein Cross, Vol. I, p.74). 15. Following the circulation of the single draft agreement among the because Kim Company Supply, it would be among the tenants-i~ percentages for the p.371). tenants-in-common, it was decided that was not a wholly-owned subsidiary of Pennsy preferable to have two separate agreements n-common due to the different shareholding two companies. (Lisa Direct, Vol. II, 16. One tenancy-in-common agreement would govern the properties formerly owned by Rim Company (agreement commonly referred to as MRA I) and the other tenancy-in-common agreement would control the properties formerly held by Pennsy Supply (agreement commonly referred to as MRA II) (Exhibits P-l, P-2). 17. As of December 18, 1986, the two separate tenancy- in-common agreements (MRA I and II) concerning the liquidation of Pennsy Supply and Kim Company had been prepared. (Lisa Cross, Vol. III, p.481). -4- ' :M '~i. N0. 66 EQUITY 1988 18. Both MRA I and MRA II contained additional language under Section 14 that had not been included when the single draft agreement among tenants-in-common was circulated on December 11, 1986. 19. On the evening of December 18, 1986, language was added to section 14, entitled "Further Assurances," which provided that each tenant would execute a power of attorney to facilitate any transactions to 'be made pursuant to the agreement. (Lisa Cross, Vol. III, pp. 482-483). 20. MRA I and MRA II were completed by the morning of December 19, 1986. 21. The signature pages of MRA I and MRA II agreements differed because each agreement set forth the percentage interest of each tenant-in-common. The percentages used corresponded with the percentage interests of the tenants-in-common as shareholders of Pennsy Supply and Rim Company. (Klein Cross, Vol. I, p.74), Skinner Direct, Vol. I, p.135). 22. The other difference between the two agreements was that MRA I contained language referring to the Union Quarries stock owned by Rim Company which language did not appear in MRA II. 23. Mr. Skinner inserted additional language into Section 2 of MRA I after speaking to Mr. Klein and Mr. Hadley on the morning of December 19, 1986. (Skinner Direct, Vol. I, p.136). 24. The inserted language in Section 2 stated: "except for $272.617.95 being distributed to the individual -5- ~, ~. . N0. 66 EQUITY 1988 owners (of Kim Company] in lieu of Union Quarries, Inc. stock, which shall be held by Manager for distribution to them in 1987." (Exhibit P-1, p.8, Skinner Direct, Vol. i, p.136). 25. Prior to December 19, 1986, Kim Company owned fifty percent of the stock of Union Quarries and the Hempt family owned the remaining fifty percent of the stock. (Klein Direct, Vol. I, pp.37-38). 26. The language was inserted into Section 2 upon the advice of Mr. Hadley that the Union Quarries shares should be held in a block. This would preclude the possibility that one or more of the Rim Company shares might be transferred to the Hempts, giving the Hempts voting control over the corporation. (Hadley Direct, Vol. II, p.295, Lisa Direct, Vol. II, pp. 368-69, Bob Direct, Vol. III, p.640). 27. Bob and the other shareholders of Kim Company agreed that the Union Quarries' shares should be held in a block. (Rlein Direct, Vol. I, p.38). 28. As a result of the Estate owning more than eighty percent of the Rim Company stock, the Estate would hold the block of Union Quarries' shares. (Hadley Direct, vol. II, p.295, Lisa Direct, Vol. II, p.370). 29. The figure of $272,617.95 inserted into Section 2 of MRA I represented the proportional value of the individual holdings of Mrs. Mumma, Lisa, Lfnda, Bob, and Barbara, through their respective interests in Kim Company, in Union Quarries at the time of the liquidation of Kim Company. (I?adley Direct. Vol. II, p.295). -6- 4 1~ N0. 66 EQUITY 1988 30. On the morning of December 19, 1986, William S. Skinner, an associate at Morgan, Lewis & Bockius's Philadelphia office brought the two tenant-in-common agreements in addition to several deeds and documents to Harrisburg. (Klein Cross, Vol. I, p.71). 31. On the afternoon of December 19. 1986, a meeting was held at the offices of Pennsy Supply in Harrisburg to execute the two tenancy-in-common agreements and other documents concerning the liquidations of Rim Company and Pennsy Supply. Another purpose of the meeting was to take the necessary steps to create the two new corporations, Mumma Realty Associates, Inc. and Hummelstown Quarries, Inc. (Skinner Direct, Vol. i, pp.143- 147). 32. Mzs. Mumma, Bob, and Mr. Skinner attended the December 19, 1986 meeting in person. Lisa and Mr. Klein were present by telephone from the offices of Morgan, Lewis & Bockius in Philadelphia and Linda was present by telephone from St. Louis. Barbara waa not present at the meeting. (Skinner Direct, Vol. I, p.372, Barbara Direct, Vol. III, p.579, Bob Direct, Vol. III, p.638). 33. Mr. Hadley was also present in Harrisburg for portions of the December 19, 1986 meeting which pertained to the valuation figure used for the Union Quarries' shares in Section 2 of MRA i. (Mrs. Mumma Cross, Vol. II, pp.232-33, Hadley Cross, Vol. II, p.322). 34. Mr. Skinner provided Mrs. Mumma and Bob with copies of the two tenancy-in-common agreements. During the -7- ,, .-, ~ . NO. 66 EQUITY 1988 course of the meeting Mrs. Mumma and Bob reviewed the agreements with Lisa, Linda, Mr. Klein and Mr. Skinner. (Skinner Direct, Vol. I, p.139, Mrs. Mumma Direct, Vol. II, p.193, Lisa Direct, Vol. II, p.373, Bob Dfrect, Vol. III, pp.636, 639). 35. At the meeting, Bob had some concerns about whether the agreements would affect his ability to pledge his interest as collateral and transfer his interest in the properties in trust for the benefit of his children. (Klein Direct, Vol, i, pp.46-47, Skinner Direct, Vol. i, pp.140-142, Mrs. Mumma Direct, Vol. II, pp.193-94, Lisa Direct, Vol. Ii, p. 374, Bob Direct. Vol. III, pp.640-41, Bob Cross, Vol. IV, pp.690- 91). 36. During the meeting, Bob also had questions about Section 2 of MRA I and was told that the provision was inserted to maintain the Union Quarries' stock as a block. (Skinner Direct, Vol. I, p.142, Lisa Direct, Vol. II, p.374). 37. Mrs. Mumma and Hob signed the two tenancy-in- common agreements (MRA I and MRA II) at the December 19, 1986 meeting. The signature pages were attached to the original agreements when Mrs. Mumma and Bob signed them. (Skinner Cross- Vol. I, pp.147, 167-168, Mrs. Mumma Direct, Vol. II, pp194-95, Mrs. Mumma Cross, Vol. II, pp.236-37, Exhibits P-1, P-2). 38. In addition, Mrs. Mumma and Bob signed several additional loose signature pages identical to those attached to the agreements. (Skinner Cross, Vol. I, pp.167-68, Mrs. Mumma Cross, Vol. II, p.237). -8- - .. N0. 66 EQUITY 1988 39. Bob admits that his signature appears on Exhibit P-1 and Exhibit P-2. (MRA I and MRA II agreements). (Bob Direct, Vol. III, pp.642-43). 40. Lisa signed the MRA agreements on the evening of December 18, 1986, at Morgan, Lewis & Bockius in Philadelphia. (Lisa Direct, Vol. II, p.376). 41. Mr. Skinner and Lisa attest that Exhibits P-1 and P-2 are exact copies of the MRA agreements as signed by Mrs. Mumma and Sob. (Skinner Cross, Vol. I, p.167, Liea Direct, Vol. II, p.376). 42. Following the December 18, 1986 meeting, both Mr. skinner and Lisa saw the executed originals of MRA I and MRA II. (Skinner Cross, Vol. I, pp.158-59, Lisa Cross, Vol. III, pp.499- 500). 43. At the end of the December 19, 1986 meeting, Pam Smeltzer, an employee of Pennsy Supply, was given the MRA agreements and extra signature pages signed by Mrs. Mumma, Lisa, and Bob. (Skinner Direct, Vol. I, p.148, Mrs. Mumma Cross, Vol. II, p.239). 44. Linda signed both MRA agreements around Christmas, 1986. (Linda Direct, Vol. III, p.567, Lisa Cross, Vol. III, p.571, Exhibit P-1, Exhibit P-2). 45. Barbara signed both MRA agreements and remembers signing some documents prior to December 31, 1986, in connection with the liquidations. (Barbara Direct, Vol. III, p.583, Exhibit P-1, Exhibit P-2). -9- .~, ~. N0. 66 EQUITY 1988 46. Mrs. Mumma explained that she would not have gone forward with the liquidation of Pennsy Supply and Rim Company if Bob had refused to sign the two tenancy-in-common agreements on December 19, 1986. (Mrs. Mumma Direct, Vol. II, p.195). 47. Section 3(e) of each of the MRA agreements provides in part as follows: Except as hereinafter provided in this Section, no owner shall dispose of, sell, transfer, assign, convey, mortgage, pledge, grant a security interest in, hypothecate, or encumber part or all of his or her undivided interest in the Premises without the prior consent of the owners. (Exhibit P-1, pp.8- 11, Exhibit P-2, pp.8-11). 48. Section 4 of each of the MRA agreements provides as follows: General, overall management of the Premises and of all matters arising out of or in connection with the Premises, including a sale or mortgage of the entire Premises or any part thereof, shall be vested in the Owners jointly and each Owner shall abide by the policies and decisions in respect thereof. Any agreement, approval, decision, consent, request or other action of the Owners shall be by majority (in interest) vote and 1n writing unless otherwise indicated. (Exhibit P-1, p.12, Exhibit P-2, p.12) . 49. Section 3(b) applies to the situation where a co- owner desires to independently sell his or her interest. In this situation the other family members possess a right of first refusal to buy the interest and preclude the entry of a stranger into the ownership of the properties. (Klein Direct, Vol. I, pp.43, 86-87, Lisa Cross, Vol. III, pp.548-49, 553-55). 50. In contrast, Section 4 was meant to govern situations where a majority-in-interest of the tenants-in-common -10- ,. -. ~. NO. 66 EQUITY 1988 desire to sell one or more pieces of property owned by the tenancies-in-common. Under this section, the will of the majority prevails. (Rlein Cross, Vol. I, pp.87-88, 116 Lisa Cross. Vol. III, pp.554-57). 51. Section 14 of the MRA agreements requires that the individual tenants-in-common execute documents or perform other necessary actions to carry out the intent of the agreement or to effectuate decisions of the majority in interest. (Exhibit P-l, Exhibit P-2, Klein Direct, Vol. I, pp.44-45, Skinner Direct. Vol. I, pp.148-149). 52. In addition to the execution of the MRA agreements on December 19, 1986, the shareholders of Kim Company and Pennsy Supply, including Bob, executed a bill of sale transferring certain real and personal property of Kfm Company and Pennsy Supply to themselves in proportion to their respective shareholdings in the two corporations. (Exhibit P-3, Skinner Direct, Vol. I, pp.146-47). 53. On December 19, 1986, Bob in his capacity as Vice- President of Kim Company and Penney Supply, also executed a joint deed transferring all real estate owned by Rim Company and Pennsy Supply to their shareholders as tenants-in-common under the MRA i and MRA II agreements. (Exhibit P-4, Skinner Direct, Vol. I, pp.146-47). 54. In addition to the master deed, Hob, in his capacity as Vice-President of Pennsy Supply, also executed on December 19, 1986, four deeds transferring various rights and interests from Pennsy Supply to Hummelstown Quarries, inc. (Skinner Direct, Vol. I, pp.145-46). -11- .-, ~•. N0. 66 EQUITY 1988 55. The shareholders took possession of the transferred property as tenants-in-common under the fictitious name of Mumma Realty Associates. 56. A fictitious name certificate and a certificate of incorporation for Mumma Realty Associates, inc. was filed with the Secretary of State on December 19, 1986. (Skinner Direct• Vol. I, p.136). 57. A certificate of incorporation for Hummelstown Quarries, Inc. was also filed with the Secretary of State on December 19, 1986. (Skinner Direct, Vol. I, p.136). 58. Pursuant to Section 1 of the MRA agreement, Mumma Realty Associates, Inc. was appointed manager of both of the properties governed by MRA I and MRA II. (Rlein Direct, Vol. I, p.42). 59. Mrs. Mumma and Lisa are the officers and directors of Mumma Realty Associates, Inc. 60. Mrs. Mumma is the sole shareholder of Mumma Realty Associates, Inc. (Skinner Direct. Vol. I, p.144). 61. On December 19, 1986, Bob executed a power of attorney (the MRA power of attorney) pursuant to Section 14 of the MRA agreements. (Skinner Direct, Vol. I, pp.148-49, Mrs. Mumma Cross, Vol. II, pp. 140-41, Bob Direct, Vol. III, p.644, Exhibit P-12). 62. The MRA power of attorney named the other tenants- in-common, including the Estate. Mrs. Mumma and Lisa, as Bob's attorneys in fact to execute on his behalf any deeds or other instruments necessary and desirable to carry out any of the purposes under the MRA agreements. (Exhibit P-12). -12- N0. 66 EQUITY 1988 63. The MRA power of attorney states that it is coupled with an interest and is irrevocable. (Exhibit P-12). 64. Mrs. Mumma, Lisa, and Linda executed similar powers of attorney. Mrs. Mumma and Lisa also executed a power of attorney as executrices of the Estate. (Mrs. Mumma Cross, Vol. II, pp.242-43). 65. The purpose of the MRA powers of attorney signed by the tenants-in-common was to enable a the tenants to proceed with transactions control provisions of Section 4 of the M effectuate decisions with or without the of an individual tenant. (Klein Direct, Direct, Vol. I, p.149). majority in interest of pursuant to the majority RA agreements and subsequent cooperation Vol. I, p.45, Skinner 66. The MRA power of attorney signed by Bob on December 19, 1986, was not connected with or motivated by Bob's upcoming trip to Colorado. (Klein Cross, Vol. I, pp.91-92). when Mr. Skinner prepared the power of attorney, he was not aware that Bob would be out of town in late December and early January. (Skinner Direct, Vol. I, p.149). 67. One of the reasons powers of attorney were needed for all of the tenants-in-common was because Bob was seldom in town, Barbara was often unavailable, and Linda was living in St. Louis. (Mrs. Mumma Cross, Vol. II, pp.240-41, Lisa Direct, Vol. II, p.377). 68. Following the execution of the MRA agreements in December, 1986, Gerald T. Brawner, a partner at Morgan, Lewis & Bockius, was asked to review the MRA agreement and make -13- ., ,, NO. 66 EQUITY 1988 appropriate changes or revisions. (Klein Cross, Vol. i, pp.101- 02). 69. On March 11, 1987• Mr. Brawner sent the revised MRA agreements with a cover memorandum to the tenants-in -common and to Mr. Klein for their review and comment. (Klein Cross, Vol. I, pp.101-02, Lisa Dizect, Vol. II, p.380, Exhibit P-7). 70. On April 21, 1987, Mrs. Mumma, Lisa, Bob, and Barbara met with Mr. Brawner at the offices of Pennsy Supply to review the revised agreements among tenants-in-common. (Lisa Direct, Vol. Ii, pp.381-82, Barbara Dfrect, Vol. ii, p.579, Exhibit P-10). 71. Following the April 21. 1986 meeting, Mr. Brawner prepared new revised agreements among tenants-in-common and sent them to Lisa. (Lisa Direct, Vol. II, p.386. The signature page was paginated "18". Exhibit P-16). 72. On June 7. 1987, upon Lisa's request, all of the tenants-in-common signed the revised agreement except for Bob. An acknowledgement of the agreement was taken by Charlie Lear, a notary at Pennsy Supply. (Lisa Dfrect• Vol. II, pp.386-87, Exhibit P-16). 73. The possibility of Bob making an offer to purchase Pennsy Supply became a subject of discussion in the autumn of 1986. (Lisa Dfrect• Vol. II, p.387). 74. On November 10. 1986• Lisa sent Mr. Bad ley a cover letter and a copy of a draft letter to Bob which explained that the executrices were willing to consider an offer from Bob for the purchase of Pennsy Supply. (Exhibit P-7). Lisa and Mr. -14- . -, ' ~, NO. 66 EQUITY 1988 Klein had prepared the draft letter. (Lisa Direct, Vol. II, p.388). 75. Mr. Klein explained to Lisa that the executrices had to be careful when giving Bob an opportunity to buy the business that they did not violate their duties as fiduciaries to obtain a fair price for the business and that an arm's length transaction existed. (R le in Direct, Vol. I, pp.54-56, Lisa Direct, Vol. II, p.388). 76. A decision was made not to send the letter drafted by Lisa and Mr. Klein. (Lisa Direct, Vol. II, p.389). 77. On November 20, 1986, Mrs. Mumma sent Bob a different letter from the one drafted by Lisa and Mr. Klein which invited Sob to make an offer for Pennsy Supply. (Mrs. Mumma Direct, Vol. Ii, pp.195-96, Lisa Direct, Vol. II, p.389, Exhibit P-9) . 78. Under the instruction of the executrices, Mr. Hadley provided Bob with certain financial information which he desired in reference to the company. (Mrs. Mumma Direct, Vol. II, p.196, Hadley Cross, Vol. II, p.312, Lisa Direct, Vol. II, p.389). 79. Mr. Hadley provided Bob with extensive financial information regarding Pennsy Supply in a letter dated March 2, 1987. (Hadley Direct, Vol. ii, pp.297-98, Hadley Cross, Vol. II, pp.312-13, Lisa Direct, Vol. II, p.390, Bob Direct. Vol. Iii, p.645, Exhibit P-37). Bob was previously provided with depreciation schedules for equipment and facilities. (Hadley Direct, Vol. II, pp.297-98, Bob Direct, vol. Ii, p.645). -15- .'~; ~ •. N0. 66 EQUITY 1988 80. in March, 1987, a meeting was held at Mrs. Mumma's home to give Bob the opportunity to present his offer to purchase Pennsy Supply. Mrs. Mumma. Lisa, Bob, and Mr. Hadley were all present at the meeting. (Hadley Direct, Vol. II, pp.298-99, 300, Lisa Direct, vol. II, pp.390-91). 81. Mrs. Mumma, Lisa, and Mr. Hadley expected Bob to make an offer for the purchase of Pennsy Supply at the meeting because Bob had already received the financial information he had requested in reference to the company. (Mrs. Mumma Direct, Vol. II, p.199, Hadley Direct, Vol. II, p.299, Lisa Direct. Vol. Ii, p.390). 82. At the beginning of the March, 1987 meeting, there was a discussion of an appropriate price for Pennsy Supply. (Hadley Direct, Vol. II, p.300, Lisa Direct, Vol. II, pp.391-92, Bob Direct, Vol. III, p.646). Bob explained that he was interested in buying Eico Concrete, a wholly-owned subsidiary of Pennsy Supply. (Mrs. Mumma Direct, Vol. Ii, pp.197-200, Hadley Direct, Vol. II, p.300, Lisa Direct, Vol. II, p.391). 83. At the March, 1987 meeting, Mrs. Mumma informed Bob that she was not interested in selling Elco separately from the rest of Penney Supply. (Hadley Direct, Vol. II, p.300, Mrs. Mumma Direct, Vol. II, pp.199-200, Lisa Direct, Vol. II, p.392). 84. Bob left the meeting and never made an offer to purchase Pennsy Supply or Elco Concrete. (Hadley Direct, Vol. II, p.300, Lisa Direct, Vol. II, pp.392-93). 85. During March or April of 1987, the executrices began considering the sale of Lot 1-B located in Lemoyne, -16- r •, N0. 66 EQUITY 1988 Pennsylvania. The lot was owned by Mumma Realty Associates under the MRA I agreement. (Mrs. Mumma Direct, Vol. II, p.201, Lisa Direct, Vol. II, pp.401-02). 86. Lot 1-B was one of two adjacent parcels of realty owned by the Mumma family interests in Lemoyne. The second lot was owned by High Spec, Inc., a corporation owned 50 percent by Bob and 50 percent by the Estate. 87. Mrs. Mumma told Bob that Taco Beil had approached the executrices about buying Lot 1-B. (Mrs. Mumma Direct, Vol. II, p.202). 88. Bob explained to Mrs. Mumma that the executrices should not accept less than $500,000 as the asking price for Lot 1-B. (Mrs. Mumma Direct, Vol. II, p.202). 89. Taco Bell was not willing to pay the asking price of $500,000 for Lot 1-B. (Mrs. Mumma Direct, Vol. II, p.202). 90. Subsequently, the executrices were approached by Tom Flynn, a developer from Camp Hill, Pennsylvania who was interested in Lot 1-B. Mr. Flynn agreed to the price of $500,000 quoted by the executrices for Lot 1-B. (Mrs. Mumma Direct, Vol. II, p.203, Lisa Direct, Vol. II, pp.402-04). 91. Bob explained to Mrs. Mumma in a telephone conversation that $500,000 would be the asking price for Lot 1-B (the middle lot) and $600,000 would be the asking price for the adjacent corner Lot 2. Bob thought that the middle lot should be sold before the corner lot. (Lisa Direct, Vol. II, p.403). 92. During a trip to Europe in April, 198 „ Sob told Mrs. Mumma that he had heard that she sold Lot 1-B to Tom Flynn. -17- • •~, NO. 66 EQUITY 1988 Mrs. Mumma explained to Bob that she had negotiated the lot, but no settlement had been reached with respect to the lot at that time. During this conversation, Bob did not voice any protest or objection to the sale of Lot 1-B. (Mrs. Mumma Directr Vol. II, pp.203-04). 93. After the April, 1987 trip to Europe, Mrs. Mumma and Lisa learned that Bob indicated that he would not go along with the sale of Lot 1-B to Mr. Flynn. (Mre. Mumma Direct, Vol. II, p.205, Lisa Direct, Vol. III, p.425, Bob Direct, Vol. III, p.647). 94. On June 30, 1987, a meeting was held at Barbara's house to discuss the sale of Lot 1-B. (Mrs. Mumma Direct, Vol. Ii, p.206, Mrs. Mumma Cross. Vol. II, p.254, Barbara Direct, Vol. III, pp.586-87). 95. Mrs. Mumma, Lisa, Linda, Bob, and Barbara attended the June 30, 1987 meeting. (Mrs. Mumma Direct, Vol. Ii, p.206, Lisa Direct, Vol. III, p.426, Bob Direct, Vol. III, p.650). 96. At the June 30, 1987 meeting, Lisa told the family members about the proposed sale of Lot 1-B to Mr. Flynn for the price of $500,000. (Lisa Direct, Vol. III, pp.426-27). 97. During the June 30, 1987 meeting, Lisa also explained to the family members the reason they needed to execute new powers of attorney in connection with the sale of Lot 1-B. By executing new powers of attorney, the family members could avoid filing the MRA I agreement which would have been required had the MRA powers of attorney been used to complete the sale of Lot 1-B. (Lisa Direct, Vol. IIi, p.427). -18- ~. N0. 66 EQUITY 1988 98. At the June 30, 1987 meeting, Bob had no objection to the $500,000 asking price for Lot 1-B and said that the price was a fair one. (Mrs. Mumma Direct, vol. Ii, p.206, Lisa Direct, Vol. III, pp.427-28, Bob Direct, Vol. IiI, p.650, Bob Cross, Vol. IV, p.701). 99. On June 30, 1987, in the middle of discussions regarding the sale of Lot 1-B, Bob stated that he wanted aright of first refusal as to Pennsy Supply. (Mrs. Mumma Direct, Vol. II, p.206, Lisa Dfrect, Vol. III, p.427, Bob Direct, Vol. III, pp.651-52). 100. After Bob brought up the subject of a right of first refusal as to Pennsy Supply, Barbara asked Bob if the family members could resolve the sale of Lot 1-B first, and then discuss the right of first refusal issue. (Mrs. Mumma Direct, Vol. II, p.207, Lisa Direct, Vol. III, p.427). 101. Bob agreed to sign the necessary documents for the sale of Lot 1-B to Mr. Flynn. (Mrs. Mumma Direct. Vol. II, p.207). 102. On June 30, 1987, each of the family members signed a power of attorney. (Exhibit P-15, Exhibit P-13). The powers of attorney signed by Kim, Lisa, Barbara, and Linda were identical and were provided to Lisa by Mr. Brawner. (Lisa Direct. Vol. III, p.423). 103. Bob's power of attorney was different from the other family members because Bob insisted upon the removal of paragraph 4 from his power before he would sign it. After the meeting, Lisa returned to the offices of Pennsy Supply and had -19- ' NO. 66 EQUITY 1988 the power retyped without paragraph 4. The revised power was then hand delivered to Bob who signed the power on the same day as the other family members. (Lisa Direct, Vol. III, pp.423-24, 428, Exhibit P-13). 104. All of the powers of attorney signed by the family members on June 30, 1987, were notarized. (Exhibit P-13, Exhibit P-15). 105. After Bob agreed to sign for the sale of Lot 1-B, the discussion at the June 30, 1987 meeting turned to Bob's request for a right of first refusal as to Penney Supply. (Mrs. Mumma Direct, Vol. II, p.207, Lisa Direct, Vol. III, p.429). 106. Mrs. Mumma and Lisa told Bob at the June 30, 1987 meeting that they were not willing to grant him a right of first refusal as to Penney Supply without first speaking to their lawyers and accountants. (Mrs. Mumma Cross, Vol. II, pp.255-56, Lisa Direct, Vol. III, p.429, Linda Cross, Vol. III, p.571). 107. At the June 30, 1987 meeting, there was no discussion of the duration, terms, contingencies or other specifics regarding Bob's proposed right of first refusal. (Lisa Direct, Vol. III, p.430). 108. After the June 30, 1987 meeting at Barbara's house, Lisa told Mr. Klein that Bob had asked for n right of first refusal as to Pennsy Supply. Lisa asked Mr. Klein for his advice as to whether the executrices should grant Bob such a right. (Klein Direct, Vol. I, pp.53-54). 109. Mr. Klein responded to Lisa's question by stating that the executrices could give Bob the first opportunity to bid -20- ,, NO. 66 EQUITY 198s on Pennsy Supply, but Mr. Klein stressed that the executrices should not give Bob a right of first refusal as to Pennsy Supply. (Klein Direct, Vol. i, pp.54-56, Lisa Direct, Vol. III, p.437). Mr. Klein explained that giving Bob such a right would jeopardize the marketability of the company. Potential purchasers of the company would be unwilling to incur the costs of due diligence if Bob had the ability to simply match whatever offer they put together and buy the company himself. Sy granting Bob a right of first refusal, the executrices could handicap themselves. The executrices would eliminate the chance of selling Penney Supply to anyone but Bob, and as a result could potentially breach their fiduciary duties to the Estate. (Klein Direct, Vol. i, p.57). 110. In addition to Mr. Klein, Lisa consulted with Mr. Hadley. who also strongly advised against giving Bob a right of first refusal. (Lisa Direct, Vol. IIi, p.437). 111. Mrs. Mumma also talked with Mr. Klein and Mr. Hadley about whether Bob should be given a right of first refusal. Both Mr. Hadley and Mr. Klein advised against giving Bob the right. (Mrs. Mumma Cross, Vol. II, p.257). 112. Subsequent to the discussions Mrs. Mumma and Lisa had with Mr. Klein and Mr. Hadley, Mrs. Mumma explained to Linda, Sob. and Barbara, that following the advice of their advisors. the executrices were unwilling to give Bob a right of first refusal as to Pennsy Supply. (Mrs. Mumma Cross, Vol. II, p.258, Lisa Direct, Vol. III, pp.437-438, Linda Cross, vol. III, pp.571- 72, Barbara Direct, Vol. III, p.592, Bob Direct. Vol. III, p.654). -21- e ~ ,~~ /. N0. 66 EQUITY 1988 113. Early in July, 1987, Bob telephoned Lisa and demanded that the power of attorney he executed on June 30, 1987 be returned. (Lisa Direct, Vol. III, pp.432-33, Hob Direct- Vol. III, pp.654-55). 114. Following a discussion with Mr. Klein, Lisa returned Bob's June 30, 1987 power of attorney. (Lisa Dfrect, Vol. III, pp.433-34, Bob Direct, Vol. III, p.655). 115. The sale of Lot 1-B was closed on or about July 7, 1987. The executrices used Bob's original MRA power of attorney, in addition to excerpts of the MRA I agreement provided by Mr. Skinner, to close the sale of Lot 1-B instead of using Bob's June 30, 1987 power of attorney. (Lisa Direct, Vol. III, pp.434-35, Exhibit P-58). 116. During the late summer and early fall of 1988, the executrices were approached and began discussions with a foreign company interested in purchasing Pennsy Supply. (Lisa Direct, Vol. III, pp.441-43). 117. On November 2, 1988, Bob sent a letter to Barbara in which he asserted a right of first refusal as to Pennsy Supply. Bob claimed the right stemmed from the June 30, 1987 meeting at Barbara's house. (Lisa Direct- Vol. III, p.444, Barbara Direct, Vol. III, pp.593-94, Exhibit P-84). Lisa also received a copy of the letter. (Lisa Direct, Vol. III, p.444). 118. Prior to the November 2, 1988 letter, Bob had never asserted to the executrices that he possessed aright of first refusal as to Pennsy Supply. (Lisa Direct, Vol. III, p.444). -22- '~ NO. 66 EQUITY 1988 119. Following receipt of Bob's letter of November 2, 1988, Barbara had her attorney draft a response to Bob, which she never sent, explaining that Barbara did not believe that Bob was granted a right of first refusal as to Penney Supply as a result of the June 30, 1987 meeting. It was Barbara's understanding that Mrs. Mumma decided not to give Bob a right of first refusal when her attorney told her that granting such a right to Bob would dissuade other potential purchasers from making offers. (Lisa Direct, Vol. III, p.446, Barbara Cross, Vol. III, pp.615- 19, Exhibit P-18, Exhibit P-35). 120. Linda never gave Bob a right of first refusal to Penney Supply at either the June 30, 1987 meeting or at any other time.. (Linda Direct, Vol. III, p.568). CONCLU6IOWS OF LAW In declaratory judgment actions, the burden of proof in the vast majority of the cases recta with the moving party. Philic A. Hunt v. Mallinckrodt Chemical Works, 72 F.Supp. 865 (1947). Having sought the declaratory judgment on the MRA agreements, Mrs. Mumma and Lisa are the moving parties in this case and therefore have the burden of proof. In addressing the first issue, this court finds that MRA I and MRA II, the two tenancy-in-common agreements were validly executed on December 19, 1986. Mr. Skinner, Mrs. Mumma, and Bob were the only ones present in person at the meeting on December 19, 1986, and both Mr. Skinner and Mrs. Mumma testified -23- 1 ~ f ~~ N0. 66 EQUITY 1988 . that Bob signed the signature pages which were attached to the complete copies of the MRA agreements. (Skinner Crosse Vol. I, p.167). Mrs. Mumma 's testimony parallels Mr. Skinner's. She stated that the draft agreements signed by both Bob and herself on December 19, 1986, had signature pages attached to them. (Mrs. Mumma Directs Vol. II, p.195). Mrs. Mumma confirms that in addition to the complete agreements, Mr. Skinner also supplied Bob and herself with loose signature pages. It is clear that Mrs. Mumma remembers Bob signing the agreements, because she said that if Bob had refused to sign the agreements, she would not have gone forward with the liquidation of Pennsy supply and Rim Company. (Mrs. Mumma Direct, Vol. II, p.195). Having established that MRA I and MRA II were validly executed, we now must address whether the language in sections 3 and 4 of the two agreements provided Bob with a right of first refusal with respect to all transfers of MRA properties. Sections 3 and 4 of the tenancy-in-common agreements do not grant Bob the expansive right of first refusal to all transfers of MRA properties which he claims he is entitled to under the tenancy- in-common agreements. In construing a contract, this court shall look at the intentions of the parties and the purposes the parties sought to accomplish when executing the agreements. See Walton v. Philadelvhia National Bank, 376 Pa. Super. 329, 338-40~ 545 A.2d 1383, 1388 (1988)= In Re Carter's Claim, 390 Pa. 365, 371-372, 134 A.2d 908, 912 (1957). -24- ~~ ~~ NO. 66 EQUITY 1988 Mr. Klein testified that the two tenancy-fn-common agreements (MRA I and MRA II) were drafted with the intent of providing provisions that would be substantially identical to those found in a partnership agreement. (Klein Direct, Vol. I, p.34). Under the tenancy-in-common agreements, the participants would vote on the basis of their proportionate interest just as they would have done in a partnership, but would not be penalized by the Pennsylvania realty transfer tax which would have applied to a partnership. (Klein Direct, Vol. I, pp.33-35). Mr. Klein explained the significant difference in the application of Sections 3 and 4 of the two MRA agreements. Section 3(b)1 applies to the situation where a co-owner desires to independently sell his or her interest. The provision provides that the tenant who wishes to sell his or her interest must offer it to the co-tenants before the interest can be sold to a stranger. (Klein Direct, Vol. I, p.43). Section 3(b) thus represents a very limited right of first refusal meant to prevent outsiders from entering into the family tenancy-in-common. (Klein Cross, Vol. I, p.116). l Section 3(b) of each of the MRA agreements provides in part as follows: Except as hereinafter provided in this section, no owner shall dispose of, sell, transfer, assign, convey, mortgage, pledge, grant a security interest in, hypothecate, or encumber part or all of his or her undivided interest in the premises without the prior consent of the owners and any such transaction purported to be accomplished contrary to the provisions hereof shall be absolutely void. (Emphasis supplied, Exhibit P-1, Exhibit P-2). -25- ,, .- • c. N0. 66 EQUITY 1988 By contrast Section 42 applies when the majority in interest of the tenants-in-common (i.e., the Estate and executrices) vote to dispose of one oc more pieces of property owned by the tenants-in-common. Under Section 4 the decision to sell is made by majority rule. (Rlein Cross, Vol. I, pp.87-88, 116, Lisa Cross, Vol. III, pp.553-557). The Estate, therefore, being the largest shareholder of both Pennsy Supply and Rim Co., would exercise majority control over the properties because the properties held by the tenants-in-common were to be based upon the interests of the respective tenants in the pre-existing corporations of Pennsy Supply and Rim Company. (Rlein Direct, Vol. I, pp.33-35, Hadley Direct. Vol II, p.303). It is clear from the testimony provided by Mr. Rlein and Mr. Hadley that the MRA agreements were never drafted with the intention of providing any tenant-in-common with a right of first refusal as to individual parcels of property owned by the tenants-in-common. Section 3(b) only granted a very narrow right of first refusal to the MRA tenants-in-common and pertained to a single tenant-in-common selling his or her undivided interest in Z Section 4 of each of the MRA agreements provides as follows: General, overall management of the Premises and of all matters arising out of or in connection with the Premises, including a sale or mortgage of the entire Premises or any part thereof, shall be vested in the Owners jointly and each Owner shall abide by the policies and decisions in respect thereof. Any agreement, approval, decision, consent, request or other action of the Owners hereunder shall be by majority (in interest) vote and in writing unless otherwise indicated. (Emphasis supplied). (Exhibit P-1, Exhibit P-2). -26- N0. 66 EQUITY 1988 ' ~ the premises. (Klein Cross, Vol. I, p.116). The provision was not intended to provide a broad right of first refusal over every independent property transfer. C,~tizen Care v. Dept. of Public Wel e, 118 Pa. Cmwlth 397, 401, 545 A.2d 455, 457 (1988) (when a written contract is clear and unequivocal, its meaning must be determined by its contents alone). Unless, therefore, there is a sale of nn undivided interest by an individual tenant, in which case Section 3(b) would apply, the majority rule set forth in Section 4 serves as approval for all transfers of MRA properties. This court notes that Bob's percentage interest in the two tenancy-in-common agreements is very minimal fn comparison to the total value. Bob hold 4.24708 percent of MRA and .47847 percent of l~tA II. (Exhibit P-1, Exhibit P-2). By contrast, however, Mrs. Mumma and Lisa, through their individual or representative capacities, hold 87.28 percent. in MRA I and 98.56 percent in MRA II. (Exhibit P-1, Exhibit P-2). Under the majority rule of Section 4 of the I~IItA agreements, Bob therefore has no right of first refusal with respect to any transfers of MRA assets, and because of his minimal holdings he also has no effective control over these assets. The intent of the MRA agreements was to place the power and control of the MRA assets with the majority-in-interest because this paralleled the set up in the pre-existing majority-controlled corporations of Rim Company and Pennsy Supply Co. Under the I412A agreements, as with the pre-existing corporations, Bob, therefore, has no right of first refusal or control over the transfer of NIIi.A assets. Bob is only entitled to a share of the assets held by the MRA tenancies- in-common that are proportionate to his percentage interest. -27- ~. NO. 66 EQUITY 1988 In addressing the second issue, this court finds that the MRA power of attorney executed by Robert M. Mumma, II on December 19, 1986 was irrevocable. The MRA power of attorney (Exhibit P-12) states that it "is coupled with an interest, is irrevocable and shall be binding upon the successors and assigns of the undersigned." We consider the MRA power of attorney irrevocable because the language of the power of attorney is to be strictly construed, Fiest v. Com Land Title Ins. Co., 499 Pa. 68, 74, 451 A.2d 674, 677 (1982) and both Mrs. Mumma and Lisa have a direct interest in the MRA properties. With respect to the construction of the power of attorney, the Pennsylvania Supreme Court in Nuzem v. Sarigas. 357 Pa. 531, 55 A.2d 402 (1947) held that "powers expressly granted will not be restricted by implication, nor will a construction be made which will effectively defeat the very purpose of the agency." Id. 357 Pa. at 533, 55 A.2d at 403. In this case. the MRA power of attorney expressly provided that it was irrevocable and coupled with an interest. When the power of attorney fs coupled with an interest, the power is irrevocable. The agent's interest must be in the subject matter of the power. See Bartlgy's Aoveal, 53 Pa. 212, 213-214 (1866). in this case, when Bob executed the power of attorney, appointing Mrs. Mumma and Lisa as his agents, the power was clearly coupled with an interest. Mrs. Mumma and Lisa, as co-owners of the MRA properties, controlling more than 85 percent of each of the tenancies, had an interest in the power of attorney because the value and disposition of the MRA properties would have a direct effect upon their holdings. -28- ~, ,.' ~ R NO. 66 EQUITY 1988 In addition to the power of attorney being irrevocable, there is nothing in the language of the power of attorney, or in Section 14 of the MRA agreements,3 which provides Bob with a right of first refusal as to transfers of M1tA properties which would be subject to the exercise of the MRA power of attorney. with respect to the third issue, this court finds that Robert M. Mumma, II was never granted a right of first refusal to purchase Pennsy Supply. There is nothing in the record which indicates that an agreement ever existed. between the parties that Bob would be granted aright of first refusal in exchange for his signature on the power of attorney to sell the Lemoyne lot. In contrast, the testimony is uncontradicted that Bob agreed to the transfer of Lot 1-B at the June 30, 1987 meeting, before any discussion of his interest in a right of first refusal as to Pennsy Supply occured. Even if this court were to consider Bob's agreement to sign the power of attorney as an offer of a quid pro quo in exchange for a right of first refusal, it was subject to an express condition precedent. At the meeting on June 30, 1987, Mrs. Mumma and Lisa explained to Bob that their acceptance of his offer was conditioned upon their attorneys' and accountants' approval. "It is a basic principle of the law of contracts that an acceptance must be unconditional and absolute," Thomas A. Armbruster. Inc. v. Barron, 341 Pa. Super. 409, 418-19, 491 A.2d 3 Section 14 of the MRA agreements provides that the power of attorney will enable the owners of the MRA properties to "carry out any of the purposes under this agreement or to effectuate a decision of the owners thereunder." (Exhibit P-1). -29- • .' ~ • No. 66 EQUITY 1988 882, 887 (1988). In this case, the approval of the executrices' counsel was required before Mrs. Mumma and Lisa would accept Hob's offer. When Mrs. Mumma and Lisa consulted counsel they were told that granting Bob aright of first refusal could create serious problems. It would diminish the value of the Estate by making Pennsy almost impossible to sell, and could also be considered a breach of the executrices' fiduciary duties. The executrices have a duty to use care and diligence in managing the Estate, see Estate of Rutkowski, 487 Pa. 295, 301-02, 409 A.2d 357, 361 (1979), and if the Estate were to diminish in value. Mrs. Mumma and Lisa would be liable to the Estate for any loss or waste which their negligent conduct had caused. Estate of Lohm, 440 Pa. 268, 273, 269 A.2d 451, 454 (1970); Estate of Albright, 376 Pa. Super. 201, 215-16, 545 A.2d 896, 904 (1988) denied, 522 Pa. 571, 559 A.2d 33 (1989). Thus, the executrices were strongly advised by Mr. Hadley and Mr. Rlein against granting Bob a right of first refusal as to Pennsy Supply. The condition precedent to granting the refusal right, therefore, never materialized. Even if this court were to find that no express condition precedent existed with respect to giving Bob the right to purchase Pennsy Supply, Bob did not offer any consideration for the right of first refusal. Bob agreed to the sale of Lot 1-B prior to any discussion of his right of first refusal. Even if Bob claims that his promise to execute a power of attorney was made in exchange for a right of first refusal as to Pennsy -30- ~~ ~* .~ • NO. 66 EQUITY 1988 Supply, Bob's promise would not constitute consideration to support the agreement. "Consideration is a bargained for exchange, evidenced by a benefit to the promisee and a detriment to the promisor." Estate of Beck, 489 Pa. 276, 282, 414 A.2d 65, 68 (1980). "There can obviously be no such bargained for exchange if one of the parties is already legally bound to render the performance promised." Com. Dept. of Transp. v. First Pennsylvania Bank, 77 Pa. Cmwlth 551, 553, 466 A.2d 753, 654 (1983) (citing, Cha ha Communig,~tions. Inc. v. Gen. Press. Corp., 463 Pa. 292, 344 A.2d 837, 840 (2975)). The Superior Court in W~r.ren Tank Car Co. v. Dodson, 330 Pa. 281, 199 A. 139 (1936) elaborated further by stating that "a promise to carry out a contract subsisting between the parties or the performance of such a contractual duty, is not a consideration which will support a contract." Id. 330 Pa. at 284-286, 199 A. at 141. In this case, Bob had a contractual duty under Section 14 of the MRA agreements to execute the power of attorney on June, 1987, to enable the majority in interest to effectuate property transfers of the holdings in MRA I and II. Bob's promise to execute a power of attorney permitting the transfer of Lot 1-B in June, 1987, was not consideration for any right of first refusal, because Bob was only complying with his contractual duties under Section 14 of the MRA agreements. In addition, Bob had already executed a power of attorney on December 19, 1986, pursuant to Section 14 of the MRA agreements, which was ultimately used by Mrs. Mumma and Lisa in -31- ~J ',4 • NO. 66 EQUITY 1988 completing the transfer of Lot 1-H. Bob cannot argue that his execution of the MRA power of attorney on December 19, 1986, serves as valid consideration for his claimed right of first refusal because "past consideration will not support a subsequent agreement." Russell Houser, et al. v. Victor F. Houser, 36 Northampton 364, 365 (Pa. C. 1962). ORDBR OF COTJRT AND NOW, this v?~- day of ~~~'rC~/Li , 1992, in accordance with the foregoing findings of fact and conclusions of law, it is hereby ordered that the declaratory judgment shall be entered as followss 1) The two tenancy-in-common agreements MRA I and MRA II signed by Robert M. Mumma, II on December 19, 1986, are binding upon him and grant him no right of first refusal as to any transfers by the executrices. Barbara McR. Mumma and Lisa M. Morgan. of the real estate held by the MRA tenants-in-common when there is approval by a majority in interest= 2) The MRA general power of attorney which Robert M. Mumma, II executed on December 19, 1986, is valid and irrevocable, and pursuant to Section 14 of the MRA agreements, empowers Mrs. Mumma and Lisa to transfer properties held by the MRA tenancies-in-common= and 3) Robert M. Mumma, iI was never given an oral right of first refusal to purchase Pennsy Supply, inc., in June, 1987, in exchange for his promise to execute a power of attorney for Lot 1-B in Lemoyne. -32- -. ~. ~r • ~{. NO. 66 EQUITY 1988 By the Court, fsf Harold E. Sheely P.J. Thomas M. Kittredge, Esquire Richard W. Stevenson, Esquire John Hardin Young, Esquire Anthony Vale, Esquire William F. Martson, Esquire Charles E. Shields, III, Esquire :pbf -33- BARBARA McK. MUMMA AND LISA M. MORGAN, individually and as Executrices of and Trustees under the Will of ROBERT M. MUMMA, deceased AND LINDA M. ROTH, Plaintiffs V ROBERT M. MUMMA, II AND BARBARA M. McCLURE, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY : NO. 66 EQUITY 1988 IN RS a I[OTION OF DSFSNDANT ROBSAT M. MtA4tA, I I FOR POST-TRIAL RSLISF SSFORS SHESLY. P.J. ORDSR OF COURT AND NOW, this ~ r~ day of ~ ~ v-~r-~-~ ; -1992, the defendant's motion for post-trial relief is hereby DSNISD. This opinion shall be considered a FINAL DSCRSS. By the Court, Harold E. Sheely, P.J. A, ~ ' •' ` • '. TRUE COFY FROFuI RlCORD :,~; • ~ ; ~±• ~ ; , fn Testimony whQreof, I here unto set my hand ' ~' ~ ~ and the seal of„said court at Aisle, Pa. '1`~` ~3P Zs~ (~~ 90 ~ q AO~~ This ..°.jZ.,7 ., day o£. Ct-.sf~ ~/ EXHIBIT "B" ~~~9 Marc J. Sonnenfeld, Esquire Brady J. Green, Esquire William F. Martson, Esquire For Barbara Mumma and Lisa Morgan John Hardin Young, Esquire For Linda Roth Jon A. Baughman, Esquire William C. Costopoulos, Esquire Charles E. Shields, III, Esquire For Robert Mumma, II Richard W. Stevenson, Esquire For Barbara McClure Ronald M. Katzman, Esquire :pbf .,».P, 3~0 BARBARA McR. MUMMA AND LISA M. MORGAN, individually and as Executrices of and Trustees under the Will of ROBERT M. MUMMA, deceased AND LINDA M. ROTH, Plaintiffs v ROBERT M. MUMMA, II AND BARBARA M. McCLURE, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - EQUITY NO. 66 EQUITY 1988 I1T RE s lIOTION OF D8F8NDAlIT ROBERT K. M[AOtA. I I FOR POST-TRIAL RELIRF B8FOR8 SHBELY, P.J. OPIlTIOl1 AND ORDER OF COURT FACTg Based upon our findings of fact of March 24, 1992, which we herein adopt in toto, with the agreed upon amendments, the following is a factual and procedural summary of the events surrounding this action: Mrs. Mumma and Lisa Mumma Morgan (Lisa) are executrices of the Estate of Robert M. Mumma.l They, along with plaintiff Linda M. Roth (Linda), Robert M. Mumma, II (Bob), and nominal defendant Barbara M. McClure (Barbara), are the former shareholders of Rim Company and Pennsylvania Supply Company, Barrisburg, Pennsylvania (Pennsylvania Supply). On December 19, 1986, those two corporations were liquidated and their respective 1 Robert M. Mumma died testate on April 12, 1986. ~~~~ NO. 66 EQUITY 1988 assets were conveyed to the former shareholders of the corporation as tenants-in-common. Two written agreements among tenants-in-common were executed by the former shareholders contemporaneously with the liquidation of the corporations. Bob signed those two agreements, commonly referred to as MRA I and MR.A II, on December 19, 1986. By its terms, MRA I expressly governed the properties previously held by Kim Company, and MRA II governs the assets of Pennsylvania Supply. The liquidation of Pennsylvania Supply and Kim Company were motivated solely by tax considerations and not by any desire to alter the management and control structures of the corporations. The parties sought to retain structures functionally resembling as closely as possible the pre-existing corporate arrangement. The shares of the family members in the tenancies-in-common thus remained identical to their proportional stock ownership in the corporations. The MRA agreements also maintained the majority-based decision-making arrangement which existed in the corporations. Pursuant to Section 1 of the MRA agreements, MRA, Inc. was appointed mana~ Mumma and Lisa are December 19, 1986, power of attorney) Sew Exhibit P-12. tenants-in-common, ger of both of the tenancies-in-common. Mrs. the officers and directors of MRA, Inc a On Bob executed a power of attorney (the MRA pursuant to Section 14 of the MRA Agreements. The MRA power of attorney named the other including the Estate, Mrs. Mumma and Lisa, as -2- / 3 ~z • i NO. 66 EQUITY 1988 Bob's attorneys in fact to execute on his behalf any deeds or other instruments necessary and desirable to carry out any of the purposes under the MRA agreements. The MRA power states on its face that it is coupled with an interest and is irrevocable. Similar powers of attorney were executed by the other family members. The Estate, Mrs. Mumma, Lisa and Bob are also among the shareholders of the Nine Ninety Nine, Inc. (999), a privately held corporation. The Estate owns the largest interest in 999. Penney Supply, Inc. (Penney) is, in turn, a wholly owned subsidiary of 999. On June 30, 1987, the tenants-in-common under the MRA agreements held a meeting to discuss the proposed sale by Mrs. Mumma and Lisa, as officers of MRA, Inc., of a Lot 1-B located in Lemoyne, Pennsylvania. To facilitate the sale, and in order to avoid the necessity of filing the MRA agreements, Mrs. Mumma and Lisa sought to procure from the other owners powers of attorney specifically referring to the Lemoyne property. Bob agreed to, and did, sign the new power of attorney. Bob subsequently demanded the return of the later power, and Lisa complied with the request. The sale of the Lemoyne lot was completed in July of 1987. In order to effectuate the sale, Mrs. Mumma and Lisa used the still valid MRA power of attorney executed by Bob in December, 1986, rather than the June, 1987 power. Following his agreement to sign the new power of -3- /3~,3 NO. 66 EQUITY 1988 attorney for use in the sale of the Lemoyne lot, Bob requested that he be given a right of first refusal to purchase Pennsy, should Mrs. Mumma and Lisa decide to sell it. Mrs. Mumma and Lisa stated that they might be willing to grant Bob a right of first refusal as to Penney, but that they would not consent if their financial and legal advisors did not approve the step. Mra. Mumma and Lisa's attorneys counseled them that granting the first refusal right sought by Bob would not be in their financial or legal interests because it would impair the value of the Estate by rendering Pennsy, one of the Estate's largest assets, virtually impossible to sell for its full market value. In November, 1988, while Mrs. Mumma and Lisa were engaged in negotiations with a prospective buyer for a sale of stock of 999, and thus Pennsy, and real property owned by the MRA tenancies, Bob sent a letter to Barbara in which he claimed that he held a right of first refusal stemming from the June 30, 1987 meeting. On December 27, 1988, Mrs. Mumma and Lisa commenced this action in equity, upon information and belief that Bob would attempt to disrupt a proposed sale of stock of 999 and real properties owned by the MRA tenancies. Mrs. Mumma and Lisa sought a declaratory judgment removing Bob's threatened obstruction of the transfer and declaring the MRA agreements and the MRA power of attorney signed by Bob on December 19, 1986, were valid and enforceable. Following three and one-half days of testimony in this -4- / ~t.~~ NO. 66 EQUITY 1988 matter, this court entered a lengthy thirty-three page opinion and order on March 24, 1992. The opinion and order set forth exhaustive and detailed findings of fact and conclusions of law. Based upon those findings and conclusions, the court entered a declaratory judgment as follows: 1) The two tenancy-in-common agreements MRA I and MRA II signed by [Bob] on December 19, 1986, are binding upon him and grant him no right of first refusal as to any transfers by the executrices, [Mrs. Mumma and Lisa], of the real estate held by the MRA tenants-in- common when there is approval by a majority in interest; 2) The MRA general power of attorney, which [Bob] executed on December 19, 1986, is valid and irrevocable, and pursuant to Section 14 of the MRA agreements, empowers Mra. Mumma and Lisa to transfer properties held by the MRA tenancies-in-common; and 3) [Bob] was never given an oral right of first refusal to purchase Pennsy Supply, Inc. [Pennsy Supply], in June, 1987, in exchange for his promise to execute a power of attorney for Lot 1-B in Lemoyne. Bob now seeks our reconsideration on the matter. In his motion for post-trial relief and his brief in support thereof, he sets forth a wide variety of arguments in an attempt to persuade this court to reconsider its findings. Among the arguments, Bob asserts that our decision is in error because: 1) Bob did not sign the MRA I and MRA II agreements, and therefore they are not valid, enforceable and binding upon him; 2) The common law provides for a right of first refusal with a tenancy-in-common; 3) Even assuming that the tenancy-in- -5- r ~ w,5 NO. 66 EQUITY 1988 common agreements are enforceable, they give each of the tenants a right of first refusal; 4) The general power of attorney executed by RMM II (Bob) does not empower the executrices to transfer properties held by the tenancies in common; 5) RMM II (Bob) was granted an oral right of first refusal with respect to the sale of Pennsy Supply, Inc.; 6) Morgan, Lewis & Bockius should be disqualified from representing the plaintiffs. We will dispense with each point for reconsideration seriatim. DISCUSSION Bob's first argument in support of his motion for post- trial relief is that the MRA agreements among tenants-in-common are not valid and binding upon him because he never signed those agreements., Bob alleges on Page six of his brief that he did not sign the documents purporting to be MRA I and MRA II, and he certainly could not have signed any such agreements at the meeting on December 19, 1986, since he was only tendered one agreement which he substantially revised. He also asserts that, "It is further clear that whatever agreement was presented to Mr. Mumma on December 19, 1986, was not signed by all the parties at such a time since not all the parties were then present, and no signature pages were attached to the document at the time of signing (December 16, 1986)." RMM II brief at p.6. Bob's contention that he "never manifested any -6- ~ ~ Il G, NO. 66 EQUITY 1988 intention to sign the agreements in the form in which they were presented to the court" is, however, belied by the testimony presented to this court. Both Mrs. Mumma and Mr. Skinner testified that at the outset of the meeting, Mr. Skinner gave Bob copies of two distinct and separate agreements among tenants-in- common. See Skinner Direct, Vol. I, p.139; Mrs. .Mumma Direct, Vol. II, p.193; Lisa Direct, Vol. II, p.373; Findings of Fact No. 34, p.7. Moreover, Mrs. Mumma and Mr. Skinner testified that, after reviewing the language of the agreements and raising some questions, Bob signed the agreements among tenants-in-common on December 19 and that, at the time of these signatures, the signature pages were attached to the original agreements. Seg Skinner Cross, Vol. I, p.167; Mrs.. Mumma Direct, Vol. II, pp.194- 95; Mrs. Mumma Cross, Vol. II, pp.236-37; Exhibit P-1, Exhibit P- 2; Findings of Fact Nos. 35, 35, 37, p.8. In addition, Bob admits that hia signature appears on MRA I and MRA II. Bob Direct, Vol. III, pp.642-43; See also Exhibit P-1; Exhibit p-2; Findings of Fact No. 39, p.9. We find no record to support, other than Bob's own testimony, his contention that he did not sign the MRA I and MRA II agreements on December 19, 1986. Indeed, no other witness who appeared at the trial of this case supported hie version of the events at the December 19, 1986 meeting. Thus, in a last ditch effort, Bob directs our attention to the fact that not all the parties were present at the December 19, 1986 meeting and that -7- l 2 ~F'1 NO. 66 EQUITY 1988 the Best Evidence Rule should be applicable here. First, we agree with the plaintiffs that whether the other signatories were or were not present on December 19, 1986, or at any other time is wholly irrelevant to the gravamen of Bob's position which is whether he in fact, signed the agreements that night. We are confident as we found in Findings of Fact No. 32 that Mrs. Mumma, Bob and Mr. Skinner attended the December 19, 1986 meeting in person and that Lisa and Mr. Rlein were present by telephone from the offices of Morgan, Lewis and Bockius in Philadelphia and that Linda was present by telephone from St. Louis. The only person not present was Barbara. See Skinner Direct, Vol. I, p.372; Barbara Direct, Vol. III, p.579; Bob Direct, Vol. III, p.638. Secondly, Bob contends that "there is no substantial evidence that there ever existed original executed MRA agreements." Bob's brief at p.7. At Page 6 of his brief, he asserts that "under Pennsylvania's Best 8vidence Rule, the executrices bore the burden of producing the original documents or of offering a satisfactory explanation for their absence." Be cites us to L.C.S. Collury. Inc. v. Globe Coal Co., 369 Pa. 1, 84 A.2d 776 (1952); Anderson v. Commonwealth of Pennsylvania, 121 Pa. Commw. Ct. 52.1, 550 A.2d 1049 (1988). It has been pointed out several times to the court that no original agreements have been produced, and that plaintiffs have given no satisfactory explanation as to why no originals have been made available for production. Mr. Mumma also asserts that there has been no -8- ~4Q NO. 66 EQUITY 1988 substantial evidence that there ever existed original executed MRA agreements. We disagree. First, at the trial Mr. Skinner, in addition to testifying as to having seen Bob sign the MRA agreements, stated that he recalls having seen fully executed, original copies of the agreements among tenants-in-common following the December 19, 1986 meeting. ,fig Skinner Direct, Vol. II, p.158. In addition, Lisa testified that she recalls seeing such originals sometime during December, 1986 or January, 1987. Lisa Direct, Vol. II, p.379; Lisa Cross, Vol. III, pp.498-99. Thus, we believe that our findings that Exhibits P-1 and P-2 are .copies of the agreements as executed at the December 19th meeting is amply supported by the record. Nor do we believe that the best evidence rule in any way impacts upon our conclusion that the MRA I and MRA II agreements, as signed by Bob, are valid and enforceable. A party seeking to prove the terms of a writing must either 1) produce the original writing or, 2) show that the original is unavailable. See e.g., Hamill-Quinlan, Inc. v. Fisher, 404 Pa. Super. 482, 489, 591 A.2d 309 (1991) (quoting Nobel C. Quandel Co. v. Stough Flooring, Inc., 384 Pa. Super. 236, 241, 558 A.2d 99 (1989); 1 Packel & Poulin, Pennsylvania Evidence 51001, at 693-94 (1987). In general, courts have recognized that destruction or loss ie a satisfactory explanation for failure to produce an original writing. See 2 McCormick on Evidence 5237, -9- /.~ 49 NO. 66 EQUITY 1988 at 76 (1992); 1 Packel & Poulin 51001.3, at 698-99. In such circumstances, a copy of the original may be admitted if properly proven, inter alia, by testimony of witnesses familiar with the circumstances surrounding the production of the copy. See Brenner v. Lecher, 332 Pa. 522, 526, 2 A.2d 731 (1938). For example, in Olson & French Inc v Commonwealth, 399 Pa. 266, 271-72, 160 A.2d 401 (1960), the original of a document had been mislaid. Plaintiff sought to introduce a photocopy of the document. The Supreme Court held that testimony of the plaintiff, as well as of the attorney who prepared the document, that the proffered photocopy was a true and correct copy of the original supported admission of the copy under the Best Evidence Rule. I . The testimony in the instant case reveals a situation almost identical to that in Olson & French, supra. As noted above, both Lisa and Mr. Skinner testified that they had seen fully executed MRA agreements subsequent to the December 19th meeting. The mere fact that the documents subsequently were lost or mislaid in the files of Morgan, Lewis & Bockius or otherwise disappeared does not in any way preclude the admission of photocopies of those documents or testimony regarding their terms and provisions. Moreover, the trial court is vested with discretion to determine whether a party has offered sufficient evidence of the unavailability of a document, See McCormick 5237 at 77. We held in our March 24, 1992 opinion and order, at Page -10- 1 2 ,~"~ NO. 66 EQUITY 1988 23, that Exhibits P-1 and P-2 are "exact copies of the MRA agreements as signed by Mrs. Mumma and Bob." See Findings of Fact No. 41. Bob's second point of contention is that the common law provides for a right of first refusal with a tenancy-in-common. At Page 9 of hie brief, Bob asserts, "The Court has authorized the sale of family-held properties on terms that are in complete derogation of defendant's common law rights." If it was the parties' intention to create a common law tenancy-in-common then Bob'e assertions would be accurate. At common law, each co- tenant enjoys an interest in the whole of the property held in common. In re EnQel's Estate, suQra, 413 Pa. 478, 198 A.2d at 507. Regardless of .what the parties entitled these agreements, we do not believe that the parties sought to enter into a common law tenancy-in-common agreement. To believe that Mrs. Mumma and Lisa, with their financial and managerial savvy, would agree to a common law tenancy-in-common agreement flies in the face of reason. What the parties sought in drafting and executing the MRA I and MRA II agreements was to procure the tax advantages flowing from the liquidation of Ki.m Company and Pennsylvania Supply, while at the same time preserving as nearly as possible the pre-existing corporate structures, including majority based control of the assets held by Rim Company and Pennsylvania Supply. See Findings of Fact Noe. 9-12. There was never any -11- / ~,S'/ NO. 66 EQUITY 1988 expressed intent on the part of any of the shareholders of Rim Company and Pennsylvania Supply that the assets of those corporations would be transferred into common law tenancies-in- common. Rather, it was envisioned from the outset that the tenancies would be governed by written agreements. Because it was intended that the tenancies-in-common created at the time of the liquidation of Kim Company and Pennsylvania Supply would be governed by the written MRA agreements, invocation of common laws are inapplicable. As we stated earlier, it flies in the face of reason to think that Mrs. Mumma and Lisa would have agreed to create common law tenancies in which, as Bob notes, "tenants in common 'own and possess in equal shares an undivided interest in the whole property."' Bob's brief at 17. Clearly, the Estate, which at all times controlled the overwhelming majority of the stock and voting power of Kim Company and Pennsylvania Supply, would not for the sake of gaining a tax advantage, voluntarily have entered into an arrangement in which it would hold only an "equal share" with Bob and the other tenants-in-common. In fact, as the signature pages and the language of the MRA agreements, ae well as the testimony at trial, make clear, the Estate's majority control of the assets was to be carried over from the corporate into the tenancy-in-common structures. To create a tenancy-in- common at common law would have diminished the majority control of the Estate, which just does not seem that such a move would -12- 1.3.~z NO. 66 EQUITY 1988 have been prudent or efficacious on behalf of the executrices. Bob also argues that our interpretation of paragraphs 3 and 4 of the MRA agreements is at variance with four rules of contract construction. First, he contends that the plain meaning of the I~tA agreements grants him a sweeping right of first refusal with respect to any property owned by the tenancies-in- common. In doing so, he focuses upon Section 1(e)(i) of the agreements. That section provides that: [n]o manager (or owner) on behalf of the owners, without the consent of the owners, shall have any right or authority implied or apparent to sell or encumber the premises or any part thereof or any interest of an owner therein except as provided in Section 3 below. Exhibit P-1 at 6, Exhibit P-2 at 6 (emphasis supplied). Thus, the only circumstance in which Section 3 of the agreement is implicated in the context of a sale of a property owned by the tenancies-in-common is when such a sale is attempted without the consent of the owners, and, under Section 4 of the agreements, consent of the owners "shall be by a majority (in interest) vote." Exhibit P-1 at 12; Exhibit P-2 at 12. As a result, the provisions of Section 3 are not triggered at all in the event of a sale consented to by a majority in interest of the tenants-in- common. Based upon the clear language of the MRA agreements, we concluded that Section 36, which states: Except as hereinafter provided in this Section, no owner shall dispose of, sell, -13- /z~~ transfer, assign, convey, mortgage, pledge, grant a security interest in, hypothecate, or encumber part or all of his or her undivided interest in the premises without the prior consent of the owners. . represents "a very limited right of first refusal" applicable only in instances where a co-owner desires to independently sell his or her interest. See March 24, 1992 opinion and order at 25. Under the terms of the MRA agreements, should the Estate, the tenant controlling a majority in interest, elect to sell the Estate's interest, the Section 3(b) first refusal right would be triggered, and tenants owning minority shares would retain and may exercise a limited right of first refusal. Contrarily, should a majority in interest decide to sell the tenancv's interest in a particular property, the 3(b) right is not triggered. Bob argues, however, that the language in the MRA agreements is unclear and ambiguous. As a result, he urges us to apply the maxim that doubtful language in a contract should be construed moat strongly against its drafter. We, however, found the provisions of the MRA agreements to be clear and free from ambiguity. Even assuming, arquendo, that Sections 3-and 4 of the MRA agreements are ambiguous, rigid application of the maxim touted by Bob is inappropriate. Although it is well-settled that in the case of ambiguous writings, writings should be construed most strongly against the drafter: Where a document is found to be ambiguous, inquiry should. be made into the circumstances -14- 1.3,5"~{ surrounding the execution of the document in an effort to clarify the meaning that the parties sought to express in the language which they chose. See Nex Charter Coal Co. v. Kcxee, 411 Pa. 304, 307, 191 A.2d 830 (1963) ; Corsrwm+ealth v. Fitsa~artin, 376 Pa. 390, 393, 102 A.2d 893 (1954); Wisgard v. American Stores, 346 Pa. .253, 256, 29 A.2d 484 (1943). It is only when such an inquiry fails to clarify the ambiguity that the rule of constructions . should be used to conclude the matter against the party responsible for the ambiguity, the drafter of the document. ee A. Corbin, Corbin on Contracts 5559 (one vol.ed 1953); Restatement of Contracts 5236(d) (1932). Burns Mfg. Co.. Inc. v. B e , 467 Pa. 307, 313 n. 3, 356 A.2d 753 (1976). Therefore, in the case of ambiguity, the court should attempt to determine, from the circumstances surrounding the preparation of the contract and the intention of the parties, the intended effect of the contractual language. See March 24, 1992 opinion and order at 24 (citing Walton v. Philadelphia National Bank, 376 Pa. Super. 329, 338-40, 545 A.2d 1383 (1988) and In re Carter, 390 Pa. 365, 371-72, 134 A.2d 908 (1957)). In the case sub judice, we carefully considered the testimony of Arthur Klein and George Hadley relating to the reasons for the liquidation of Kim Company and Pennsylvania Supply and the drafting of the MRA agreements. See March 24, 1992 opinion and order at 25-26. We also carefully considered the effect that a common law tenancy- in-common agreement would have on the majority rule provision and found that a pure common law tenancy-in-common agreement would be a self-defeating entity for the Estate. Why would the Estate -15- /~{,~ NO. 66 EQUITY 1988 give up its majority share interest to stand on equal footing with the minority shareholders? We could not answer this proposition. Thus, based upon the outside circumstances, and the actions of the parties, we believe that the intent behind the MRA agreements was clear. Bob also contends that this court misinterpreted the MRA agreements by failing to apply the concept that specific provisions in contracts control more generalizations. As a result, he argues that Section 3(b) overrides Section 4 of the I~IIiA agreements. We disagree. After a careful and thorough reading of Sections 3(b) and 4, Section 3(b) is longer and more detailed than Section 4. The fact remains, however, that the two provisions are aimed at entirely different types of transactions. Hob also does not believe that our interpretation of the MFtA agreements is consistent with the "real nature and character of the transaction." We believe that we have reiterated throughout our previous opinion, as well as this one, that even though the parties may have agreed to call the agreement presently before us, a tenancy-in-common agreement, which is probably a misnomer, a tenancy-in-common, as it exists at common law is not what the parties intended. Unlike a tenancy-in-common where interests are equally shared among the co-tenants, these MRA agreements sought to retain majority control interest. Therefore, the parties did not intend for the common law rules to apply. -16- / ~ ,~~Ci N0. 66 EQUITY 1988 Bob also contends that this court erred in finding that the MRA power of attorney that he executed contemporaneously with this signing of the MRA agreements is valid. Bob contends that he executed the power of attorney .only to facilitate the liquidation of Kim Company and Pennsylvania Supply while he was in Colorado in early 1987. His assertion, however, is completely at odds with the teati.mony of Mr. Skinner, Mr. Klein, Mrs. Mumma and Lisa. According to both Mr. Skinner and Mr. Klein, the purpose of the MRA powers of attorney signed by the tenants-in- common was to allow a majority in interest of the tenants to proceed with transactions pursuant to the majority control provisions of Section 4 of the MRA agreements in the event an individual tenant was unavailable or refused to cooperate. Klein Direct, Vol. I, p.45; Skinner Direct, Vol. I, p.149. The MRA powers of attorney were expressly provided for in p,~~agraph 14 of the MRA agreements. See Exhibit P-1, p.8 (power of attorney will enable owners of MRA properties "to carry out any of the purposes under the agreement or to effectuate a decision of the owners thereunder"), Exhibit P-2, p.18 (same). Additionally, the MRA power of attorney which Bob signed expressly states that it is intended to enable the other tenants- in-common "to execute on [Bob's] behalf any deeds or other instruments necessary or desirable to carry out any of the purposes under the Agreement Among Tenants-in-Common. ." We believe that this language contradicts the notion that the MRA -17- ~ .S'7 N0. 66 EQUITY 1988 power of attorney was intended only for use during January, 1987, or only for purposes of the liquidations. We found, previously, based upon the testimony of Mr. Rlein and others that the MRA power of attorney was in no way related to Bob's upcoming trip to Colorado, and that Mr. Skinner, the drafter of the power of attorney, was not even aware that Bob would be out of town in December and January. See Findings of Fact 66. Rather, the need for the powers of attorney from each of the tenants-in-common stemmed, in part, from the fact that Bob was seldom in town, Barbara was often unavailable and Linda was living in St. Louis. See Findings of Fact 67. As a result, obtaining the signatures of the tenants-in-common on various documents posed practical difficulties. Bob also contends that the power is not valid because he was not informed of the insertion of language stating that the MRA power of attorney was "coupled with an interest." We believe this to be irrelevant. Even had the MRA power of attorney not contained such language, it was in fact coupled with an interest and therefore was irrevocable. ee Daughters of American Revolution v. Schenley, 204 Pa. 572, 54 A. 366 (1903) (where facts indicate that power is coupled with interest, power is irrevocable); c.f. Rrauss v. A merican Tobacco Co., 283 Pa. 146, 150, 129 A. 60, 61 (1925). We based our initial findings that the MRA power was valid and irrevocable upon both the language of the power itself and the fact that Mrs. Mumma and Lisa possessed -18- / ~ ~Q' NO. 66 EQUITY 1988 an interest in the subject matter of the power. See March 24, 1992 opinion. and order at 28. In addition, Bob also contends. that Lisa's desire to obtain a second power of attorney at the time of the sale of the Lemoyne lot evidences. an acknowledgement that Hob's MRA power of attorney could not be used to consummate the sales of the MRA- owned properties. This theory does ask ua to speculate upon Lisa's motives for seeking a latter power. We believe, however, that there was sufficient testimony presented at the trial to answer her motivation. Lisa testified, to our satisfaction, that counsel for the buyer in the Lemoyne lot transaction had requested that the entire MRA agreements be filed along with the MRA powers of attorney. In order to avoid the need to file the MRA agreements and thereby to make public, confidential matters relating to the MRA properties and the structure of their ownership, Lisa decided, after consultation with Mr. Klein, to prepare new powers of attorney for each of the tenants-in-common. Lisa Direct, Vol. III, pp.405-07. See also Findings of Fact 97 (citing testimony of Lisa). Therefore, the evidence illustrates that Lisa's motivation for having Bob sign a second power of attorney stemmed from a desire to keep the MRA agreements confidential. Bob further contends that he was granted an oral right of first refusal with respect to the sale of Penney at the June 30, 1987 meeting at Barbara's house. Bob alleges that his -19- 1 ~ .~9 i ~ N0. 66 EQUITY 1988 agreement to sign the power of attorney was performed in exchange for a right of first refusal. We disagree. Bob initially argues that this court previously found a right of first refusal when Bob's motion to disqualify Morgan, Lewis & Bockius was denied on February 13, 1989. However, this court's findings of fact in our March 24, 1992 opinion and order are herein adopted in toto and replace and supersede any prior inconsistent findings. The March 24th findings in regard to the declaratory judgment in no way referenced the February 13, 1989 findings regarding Bob's motion to disqualify counsel. The argument Bob has presented is contrary to the testimony heard on this issue at trial. The uncontradicted testimony indicated that Bob agreed to the transfer of Lemoyne Lot 1-B at the June 30, 1987 meeting prior to any discussion regarding a right of first refusal. The fact that he did not sign the power of attorney until later that same day, after the meeting had ended, does not detract from the finding that Bob agreed to the transfer of Lot 1-B before the right of first refusal discussion took place. Additionally, we previously found that Mrs. Momma's and Lisa's assent to the proposed right of first refusal was subject to an express condition precedent. Lisa testified that she and Mrs. Mumma wanted to discuss the issue of Bob's right of first refusal with Mr. Klein, the Estate's attorney, and Mr. Hadley, the Estate's accountant, before actually granting Bob a right of -20- i 2//1 __ ~~ N0. 66 EQUITY 1988 first refusal. (Lisa Direct, Vol. III, pp.429-30). Linda also supported Lisa's testimony during her testimony at trial. (Linda Cross, Vol. III, p.571). Thus, by conditioning their assent upon the Estate's counsel's approval of the right of first refusal, the acceptance was not unconditional and absolute. See Thomas A. Armbruster. Inc. v. Barron, 341 Pa. Super. 409, 491 A.2d 882 (1988). We are also unable to find any evidence which would support Bob's assertion that the alleged agreement was subject to a condition subsequent. There is no evidence to indicate that a contract was ever in existence whereby Bob gained a right of first refusal. The right of first refusal was not solely conditioned upon Mr. Rlein's finding of illegality in the alleged agreement. Rather, Bob gaining this right was also expressly conditioned upon the approval of Mr. Rlein and Mr. Badley regarding the best interests of the Estate. Thus, when the Estate's counsel strongly advised the executrices against granting Bob this right, the condition precedent was not met and Bob was not granted a right of first refusal. Furthermore, Bob did not offer any consideration for the right of first refusal. As stated earlier, Hob agreed to the transfer of the Lemoyne lot prior to the discussion concerning the right of first refusal. Additionally, Bob had a pre-existing contractual obligation under Section 14 of the MRA agreements to execute a power of attorney. There can be no consideration, no -21- / ~~n~ NO. 66 EQUITY 1988 bargained for exchange, where one party "is already legally bound to render the performance promised." Com. Debt. of Transp. v. First Pennsylvania Bank, 77 Pa. Commw. 551, 553, 466 A.2d 753, 754 (1983) (citing, Chatham Communications, Inc v Gen. Press r ., 463 Pa. 292, 344 A.2d 837, B40 (1975)). Thus, Bob is unable to argue that he offered consideration by signing. the power of attorney due to the fact that he was already obligated to do so. Bob further contends that a promise to compromise a disputed legal claim may serve as consideration. However, we find no merit in this argument because Sob has failed to identify any disputed claim which he agreed to compromise in the instant action. Bob has also accused Lisa of breaching her fiduciary duty by failing to deal fairly and openly with him and other attorneys. Bob claims that Lisa, inter alia, breached her fiduciary duty by not informing fellow attorneys that Bob would resist the sale of the Lemoyne lot once the right of first refusal was not granted. However, as we stated earlier, Bob agreed to the sale of the Lemoyne lot prior to discussions concerning a right of first refusal with regard to Pennsylvania Supply. Therefore, Lisa could not have advised another attorney concerning Bob's unexpressed position. We believe Bob's allegations of unethical behavior on the part of Lisa are meritless. -22- / ~/_ L r s:.v.. NO. 66 EQUITY 1988 Bob also alleges that he was entitled to specific enforcement of an exclusive right to make an offer for Pennsy within sixty days after receiving complete financial information from Mr. Hadley. Bob claims that this exclusive right was the result of a second agreement made at the June 27, 1987 meeting. In his brief Bob. states that it is "undisputed" that he never received year-end financial information that would allow him to make an offer within the sixty day limitation. While we do believe that the family agreed to give Bob an opportunity to make an offer, it is disputed that he has not received the necessary financial information to make the offer for Pennsy. Lisa testified that either she or Mrs. Mumma called Mr. Hadley and informed him to send Bob any financial information he did not already have. (Lisa Direct, Vol. III, p. 439; Lisa Cross, Vol. III, p. 516). Lisa also testified that Bob had already received most of the financial information because the fiscal year ended June 30th. Thus, any information Bob did not have would have been limited in amount and significance. Lisa testified that, with the fiscal year ending June 30th, there might not have been anything additional to supply to Hob in order to allow him to make an offer. (Lisa Direct, Vol. III, p. 430; Lisa Cross, Vol. III, p. 516). Even if this court determined that Bob did not receive adequate financial information, the promise to give him an opportunity to make an offer on Pennsy still lacks consideration. -23- I ~/ ~ . ti NO. 66 EQUITY 1988 Bob contends that the consideration for this promise was his non- opposition to the sale of the Lemoyne lot. However, as was the case in the discussion concerning the right of first refusal, this alleged "exclusive right" did not take place until after Bob had agreed to the sale of the Lemoyne lot. Bob's agreement to the sale was not contingent upon his receiving this "exclusive right." Additionally, in the case sub judice, Bob has never asked this court for relief in any form, including specific enforcement of the alleged "exclusive right." Therefore, we do not believe that Bob is entitled to specific enforcement of the alleged "exclusive right" to make an offer for Pennsy. Bob's final argument contends that this court erred in denying to disqualify Morgan, Lewis & Bockius in our lengthy opinion and order dated February 13, 1989. Bob raiaea the same argument in the present action as he raised in the initial action to disqualify, namely, that Morgan, Lewis gave Bob advice with regard to the MRA agreements, while at the same time also representing him in regard to Hob's personal estate planning. However, in our February 13, 1989 opinion and order, this court concluded that "the subject matter of the pending lawsuits are not substantially related to any prior legal representation Morgan, Lewis provided Mr. Mumma." {February 13, 1989 opinion and order, at 19). Additionally, this court cited a letter from Mr. Klein to Bob dated September 5, 1986, in which -24- i ~~„u '. NO. 66 EQUITY 1988 Mr. Klein clearly stated that Morgan, Lewis and Bockius solely represented Bob for estate planning purposes and disclaimer purposes under the will of Mr. Mumma, Sr. (Id., at 13) We do not believe that Bob has argued any issue novel to our February 13, 1989 opinion and order. Therefore, we do not believe Bob's contention that Morgan, Lewia should be disqualified from the present action contains any merit. For the reasons set forth within, the defendant's motion for post-trial relief is denied. ORDER OF COURT r AND NOW, this ~~ day of ld~e~/~-~-e-~/ , 1992, the defendant's motion for post-trial relief is hereby D81iIED. This opinion shall be considered a FINAL DECR88. By the Court, /s/ Harold E. Sheely Harold E. Sheely, P.J. -25- 1 ~ G,5 .~ ~ NO. 66 BQUITY 1988 Marc J. Sonnenfeld, Esquire Brady J. Green, Esquire William F. Martson, Esquire For Barbara Mumma and Lisa Morgan John Hardin Young, 8squire For Linda Roth Jon A. Baughman, Esquire William C. Costopoulps, Esquire Charles B. Shields, III, Esquire For Robert Mumma, II Richard W. Stevenson, Esquire For Barbara McClure Ronald M. Katzman, Esquire :pbf -26- ~ ~ r~ G K • CERTIFICATE OF SERVICE I, Tricia D. Eckenroad, an authorized agent for Martson Deardorff Williams Otto Gilroy & Faller, hereby certify that a copy of the Reply to New Matter of Barbara M. Mumma Filed on June 22, 2012, was served this date by depositing same in the Post Office at Cazlisle, PA, first class mail, postage prepaid, addressed as follows Jeffrey G. Brooks, Esquire Minto Law Group, LLC Two Gateway Center 603 Stanwix Street Suite 2025 Pittsburgh,PA 15222 Richard F. Rinaldo, Esquire Williams Coulson Johnson Lloyd Parker & 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 BY cl~~ - Tricia D. Eckenr ad Ten East High eet Carlisle, PA 17013 Dated: July 16, 2012 (717) 243-3341