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HomeMy WebLinkAbout07-30-12~~Jv ~;.: ;-i,. 11i ti, AJ K ~;c'f_~ _.. i~ I C IN RE: ESTATE OF ROBERT M MUM1'~r~~ce't~ec~~ ~~ ~: ~_~;-; GPPH.~~i`J'S ~U CUMBcRl.A~1(~ CU., PA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 AUDITOR'S INTERIM REPORT, July 30, 2012 AND REQUEST FOR ORDER To the Honorable J. Wesley Oler, Jr.: Your Honor has appointed me Auditor in the above captioned matter and charged me with reviewing the most recent and final account and proposed distribution in the above matter and holding a hearing on the most recent accounting and proposed distribution. I had held more then thirty-three (33) days of hearings on the objected accounts of this Estate and Trusts created thereunder. The parties had stated following the final hearings that they were attempting to hold meetings and discuss possible resolution of some or all of their respective issues. In the interim certain Petitions were filed which your Honor has referred to me for an interim report. The Trustee, Lisa Morgan has filed a two Petitions, the first seeks permission from the court to hire a real estate expert and begin to liquidate the trust's assets including certain real estate assets which the trust has a substantial interest and to terminate or cash-in certain life insurance policies owned by one of the corporations, D. E. Distribution Corporation. One of the reasons stated for the request was to inject the trust with funds to insure ongoing expenses can be paid. The second Petition relates to two parcels of land owned by joint tenants which include the trust, the four children of Robert M. Mumma (Robert Mumma II, Barbara Mumma, Linda Mumma, and Lisa Morgan) and the Estate of Robert M. Mumma's widow, Barbara Mck. Mumma. The two parcels are located on UPS Drive in Dauphin County and are unimproved land 1 ,G~ totaling approximately 2 acres. The property was appraised in 2010 for $202,000.00 and the proposed agreement of sale has a consideration of $350,000.00. Your humble servant conducted a series of four telephone conferences with the parties' counsel. Ms. Linda Mumma, one of the four children of Robert M. Mumma and a beneficiary of the trust had written to this office, but I did not personally review the contents of the letter. I directed my assistant return the letter to the address from which it was sent and requested Ms. Mumma provide our office with a current address and phone number and further advised her that if she proposed to file an answer to the Petitions of the trustee, she should file the same with the Clerk of the Orphan's Court. Ms. Mumma was advised by mail of the first telephone conference and invited to participate; however, she did not contact this office with a telephone number or a current address. The letters from this office including the Notice of Hearing on the current petitions were sent to Ms. Mumma at the address on the envelope of her initial letter and none were returned to my office by the United States Postal Service. During our four telephone conferences and in the weeks separating each conference, the parties exchanged information and advised that they anticipated stipulating to the facts and only desired legal argument on the issues. The main issue was the authority vested in the trustee to sell certain real estate and the affect of the MRA I and MRA II agreements on the authority of the trustee. I therefore scheduled argument for July 26, 2012 at 1:00 PM and sent notices to all the parties and beneficiaries or their counsel of record. Counsel provided a stipulation of facts to my office two days prior to the argument hearing. The argument hearing was held at 1:00 PM July 26, 2012 in the Courtroom of the Old Courthouse as noticed. During the hearing the parties agreed that the life insurance policies currently owned by D. E. Distribution Corporation would be terminated and requested and 2 Order permitting the same. I attach a copy of the portion of the transcript relating to the agreement and the terms. The parties also agreed that the $350,000.00 consideration for the UPS Drive property partially owned by the trust was the fair market value of the property, but requested a five business day continuance on that matter so that the Respondents' counsel could review the actual boundaries of the property. Counsel were provided copies of Dauphin County Tax Assessment Office overlays, but needed to confirm the actual corner points. Counsel advised the Auditor that if the actual boundaries differed from that provided or assumed by their clients then they would concur in the petition to sell the property. Counsel for the parties requested a three week period to provide a legal memo in support of their respective positions. The parties also advised the Auditor that although they will continue to advise their clients to engage in meaningful discussion toward a global family resolution that they desired a final report on their objections and responses thereto. Therefore I recommend that your Honor enter an Order authorizing the Trustee Lisa Morgan, in her capacity as President of D.E. Distribution Corporation to terminate the life insurance policies owned by D. E. Distribution Corporation, receive the proceeds of the same and hold the proceeds for distribution to all shareholders of D.E. Distribution Corporation according to their respective interest in said corporation. Further that within ten days of the Order, D.E. Distribution Corporation and the trust through their accountants shall provide all counsel with the method and the documents supporting the same for ascertaining the proportional share each party holds in the corporation. Upon receipt of the information each party shall have ten (10) days to object and if no objection is made, Lisa Morgan as president 3 shall distribute the net proceeds received from the terminated policies to all shareholders in accordance with his, her or its proportional interest. I further recommend that I be permitted to differ any recommendation on sale of the UPS Drive property until the next Friday pending review by the Respondents' counsel of the boundaries and further I be permitted to differ any recommendation on the request of the Trustee to begin marketing and selling the real estate of which the trust holds a substantial interest until after the legal memos are received and reviewed. I further recommend that if your Honor agrees with my recommendations, you enter an Order accordingly and I have attached a recommended order to accomplish the same. Respectfully submitted, ~fh D. Bt{ckl Esquire, A upreme Court I # 38444 1237 Holly Pike Carlisle, PA 17013 (717) 249-2448 JoeBLaw(a~aol com 4 1 f E 1C 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 THE AUDITOR: We're back on the record. We had a discussion off the record, and the parties 3 agreed as follows: That the life insurance policies ~ currently held by D-E Distribution Corporation shall i be liquidated and may be liquidated by Lisa Morgan, prior to liquidation or signing any documents for that liquidation, Mr. George Hadley, the accountant for D-E Distribution Corporation, shall provide to counsel the reasons and methods he utilized to determine the appropriate values in the corporation of the Marital Trust under the Will of Robert M. Mumma, the Estate of Barbara McKimmie Mumma to Robert Mumma, II, to Linda Mumma, to Barbara Mumma and to Lisa Morgan. Once that is provided to counsel, counsel agrees that so long as the information has been received and equates to the value given in the petition of paragraph 24, that Lisa Morgan, in her capacity as president of D-E Distribution Corporation, may then terminate the policies, receive the proceeds from the policies and distribute to the Marital Trust; the Estate of Barbara McKimmie Mumma; Robert Mumma, II; Linda Mumma; Barbara Mumma, and herself, Lisa Morgan, in accordance with the percentages as provided and supported by Mr. Hadley. (Discussion held off the record.) 2 1 THE AUDITOR: So we're agreed with what we 2 just read on the -- I can ask Judge Oler to make that 3 an Order. f c 1C 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ~ MR. RINALDO: Yes. ~ MR. OTTO: May I just iterate an ~ understanding of it so that we're clear? That Mrs. ' Morgan's authority, as president of D-E, is not going to be questioned, it's going to be part of the Order; and she may take action as president of D-E under the authority of the Court to terminate these policies and make a distribution of the proceeds in proportion to all the shareholders their proportionate interests. MR. RINALDO: And the distribution won't be made until I get that information from Hadley that establishes for me that she has a majority. MR. OTTO: As best we can. MR. RINALDO: I understand. MR. BROOKS: Well, just so I'm clear, though, my concern was whether the Orders were limited to liquidate on the cash values as opposed to the policies, themselves. I don't know if that's the distinction about the difference because I don't know enough about the terms of these policies. THE AUDITOR: We're going to terminate -- MR. OTTO: We're going to terminate the 3 f 1C 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 policies. 2 THE AUDITOR: Yeah. They're going to 3 cancel the policies and cash them in, terminate them. ~ MR. RINALDO: The only thing I'm going to > say about that is -- and off the record I asked Mr. Otto to check on that, and I don't think he's ' going to find there are any surrender or substantial handling charges for that. If there are, we need to talk before he does it. And he knows that, and he and I have agreed on that. I mean, you don't want to take a $500,000 loss. THE AUDITOR: I understand that that would not be prudent. MR. OTTO: But that action will not occur until we've endeavored to have Mr. Hadley give you information that satisfies you about the ownership of the entity D-E. MR. RINALDO: Exactly. I'm happy with that. THE AUDITOR: And you could, in the interim -- MR. RINALDO: Well, in the interim, Mr. Otto, you could contact the insurance company and find out if there are such charges. 4 1( 17 l~ 13 14 15 16 17 18 19 20 21 22 23 24 25 1 MR. OTTO: We will not delay for that 2 reason. But until you're satisfied with the 3 ownership -- 4 MR. RINALDO: My understanding, by the way, 5 is that D-E was the beneficiary of these policies. 6 MR. OTTO: Yes. That's my understanding as 7 well. 3 MR. BROOKS: And GAT -- a MR. OTTO: There may be some tax > consequences here, by the way. I can't speak to them, but it's possible. MR. RINALDO: If Mr. Hadley would provide us with a brief summary of what he thinks those are. I'm not asking for that as a precondition. I would certainly like to know what they. I'm not a tax lawyer. THE AUDITOR: Next question I have is, Mr. Otto suggested that we take D-E and GAT out of the requirement of notifying the Court of any sale that they wish to do and allow D-E and GAT to make determinations either corporate -- MR. RINALDO: You know, I really think that since we have just entered into a stipulation that will provide the Trust with, as I recall correctly, at least double what it said its debts were; plus if you