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HomeMy WebLinkAbout01-28-13 IN RE: ESTATE OF ROBERT M. IN THE COURT OF COMMON PLEAS MUMMA, deceased OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 PETITION TO COMPEL COMPLIANCE WITH cv _.J %RT'S ORDER DATED JULY 30, 2012 AND FOR •IANC~"S AND ALTERNATIVELY, TO VACATE SAID ORDER LU petitioner, Robert M. Mumma, II, hereby respectfully submits this Petition to compel compliance with the Court's Order dated July 30, 2012 and for sanctions. In addition, and/or alternatively respectfully requests that said Order be vacated. In support hereof, Petitioner avers as follows: 1. On July 30, 2012, upon the recommendation of the Auditor in this matter, the Court entered an Order permitting Lisa Morgan, as President of D.E. Distribution Corporation, to cancel, redeem or terminate life insurance policies purportedly owned by D.E. Distribution and "hold the proceeds for distribution...." (See Order attached hereto as Exhibit "1" hereto) 2. The Order further required within 10 days of the Order that D.E. Distribution and the residuary trust (the "Trust"), for which Ms. Morgan is trustee, "shall provide all counsel with the method and the documents supporting the same for ascertaining the proportional shares each shareholder/party holds in the corporation..."; and further that each party would have 5 days from receipt of the required information to object. 1 3. The Order refers to and attaches the Auditor's Report and Recommendation, which in turn refers to and attaches excerpts of a purported "transcript" of a hearing on July 26, 2012 as evidence of an alleged agreement of counsel for Petitioner to the liquidation of the insurance policies the relief set forth in the Order. 4. The Petitioner was represented by Jeffrey G. Brooks, Esquire, at the July 26, 2012 hearing and at the time the Order was entered. 5. A copy of the Court's Order was never served on Petitioner or his counsel, Attorney Brooks. 6. Petitioner obtained a copy of the Order and Auditor's Report and Recommendation only on January 8, 2013, when following his receipt of a check in the amount of $210,450.24 from D.E. Distribution in the mail on January 7, he went to the Courthouse and requested and obtained a copy form the Clerk of the Court. 7. Petitioner is still in the process of investigating the circumstances leading to the entry of the Order and the actions purportedly taken by Ms. Morgan and her counsel in reliance on same, but has as of this date determined the following: a. Based on information obtained by Petitioner in the last two weeks, it is believed and therefore averred that the insurance policies at issue were issued on the life of Petitioner to Pennsy Supply Inc., a Pennsylvania corporation in which Petitioner was and is a shareholder. b. It is believed and therefore averred that the policies were acquired by Pennsy Supply Inc. as "key man" insurance on Petitioner to be used by Pennsy Supply Inc. to redeem Petitioner's Pennsy Supply Inc. stock., N 2 c. It is further believed and averred that Petitioner was also entitled, under the terms of the policies and agreements with Pennsy Supply, to borrow against the accumulated value of the policies for his own use and benefit. d. It is further believed and averred that the collective cash surrender value of the policies exceeded $2 million and the collective death benefit of the policies was approximately $4.5 million. e. Petitioner was never advised nor did he agree or consent to the purported transfers of the policies to DE Distribution, is to this day unaware of how, when and by whom the policies were purportedly transferred to DE Distribution, and believes and therefore avers that the transfer was unlawful and in violation of the rights of Pennsy Supply Inc. its shareholders and Petitioner. f. Petitioner did not receive a copy of the July 26, 2012 Report and Recommendation of the Auditor, or the purported excerpt to the transcript of the hearing of that date until he obtained a copy of same and the Order on his own on January 8, 2013. g. Petitioner was unaware of the purported agreement of counsel to the liquidation of the insurance policies represented in the Auditor's Report and Recommendation and never authorized or agreed to same. h. It is believed and therefore averred that at some point during the proceedings before the Auditor, Petitioner's counsel, Attorney Brooks, advised the auditor and other counsel that he was not authorized to enter into any such agreements and/or that he requested additional information 3 concerning the policies at issue, their terms and the method and implications of their proposed liquidation prior to implementation of any such agreement. i. It is believed and therefore averred that the need and request for copies of the relevant policies and their terms, as well as the request for information concerning the purported interests of the parties in those policies through DE Distribution was reflected in the Auditors Report and Recommendation and clearly understood by the Auditor and counsel for the parties, including Ms. Morgan's counsel, No Otto, III, Esquire, and Brady Green, Esquire. j. It is believed and therefore averred that the need for such material information prior to any liquidation of the policies or distribution of proceeds is recognized in the terms of the Order referencing the obligation of Ms. Morgan, as Trustee, to provide relevant information within ten (10) days after the issuance of the Order and allow the parties five days thereafter to object. k. The need to disclose such information to the parties prior to any effective agreement concerning the liquidation or distribution of proceeds of the policies is in any case so patently obvious that enforcement or implementation of any contrary process by this Court would be the equivalent of endorsement of an actual or constructive fraud, inequitable jr, and unconscionable. 4 8. It is further believed and therefore averred that the Trustee, Ms. Morgan, and her counsel were specifically aware of the fact that the Court's Order of July 30, 2012 was not properly served on Petitioner or his counsel, and that there was no effective agreement to the liquidation of the policies or the distribution of proceeds, as late as December 4, 2012, when these facts were made known in a telephone conference with the Auditor. 9. Specifically, based on information obtained by Petitioner in the last tow weeks, it is believed and therefore averred that when, during that conference call, Lisa Morgan's counsel and the Auditor referred to the entry of the Order on July 30, 2012, both Petitioner's counsel, Attorney Brooks, and counsel for Barbara Mumma, Richard Rinaldo, Esquire, both responded that they had never received the Order. 10. It is further believed and averred that Attorney Brooks stated that Petitioner still required copies of the insurance policies before authorizing their liquidation. 11. Despite knowing that the July 30, 2012 Order had not been served on Petitioner, Barbara Mumma or their counsel, and despite knowing that Petitioner still had not received adequate information concerning the policies and their terms, Lisa Morgan and her counsel provided neither the Order nor the material information and proceeded instead with the liquidation of the policies and distribution of the proceeds, on information and belief, sometime in late December 2012. 12. Lisa Morgan so proceeded in violation of the express terms of the Order requiring that the material information be provided within ten (10) days of issuance of the 5 Order and Petitioner be provided the opportunity to object and be heard regarding the proposed liquidation and distribution. 13. Petitioner accordingly requests that Lisa Morgan, as Trustee of the Residuary Trust, be compelled to comply with the Court's July 30, 2012 Order and provide full disclosure and an accounting of the liquidation of the insurance policies, including providing full and complete copies of each of the insurance policies liquidated, full and complete disclosure of the proceeds received from each such policy terminated and liquidated, the dollar amount of any fees paid to terminate and surrender each such policy, and full and complete disclosure of all distributions, including disclosure of any sums not distributed. 14. Petitioner further requests that the July 30, 2012 Order be vacated and stayed pending an opportunity for Petitioner, following full disclosure of the material information, to object to the Auditor's Report and Recommendation and otherwise to the relief granted in the July 30, 2012 Order, and request appropriate relief. 15. Among other objections that may be warranted based upon the information yet to be disclosed concerning the policies and their ownership, Petitioner continues to maintain his position that this Court lacks subject matter jurisdiction over the disposition of assets of corporations, including DE Distribution, in which the estate's only interest is as a putative shareholder, and particularly since the expiration of the Trust upon the death of Barbara McKimmie Mumma on July 17, 2010.. WHEREFORE, Petitioner respectfully requests that this Court issue an Order (i) directing Lisa Morgan to provide full and complete disclosure of the insurance policies, insurance policy cancellations and liquidations and full and complete disclosure of the I 6 distributions made, including any sums that have not been distributed, and (ii) vacating and staying further implementation of the July 30, 2012 Order pending compliance with the foregoing and an opportunity for Petitioner to object and be heard on his objections to the Order and appropriate relief. Respectfully submitted, Robert M. Mumma, II, Petitioner 7 VERIFICATION I, Robert M. Mumma, II, verify that that the statements made in the forgoing Petition to compel compliance with court's order dated July 30, 2012 and for sanctions and alternatively, to vacate said order, are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. Cons. Stat. Ann. Sec. 4904, relating to unsworn falsification to authorities. Date: obert M. Mumma, 11 CERTIFICATE OF SERVICE I, Robert M. Mumma, II, hereby certify that a copy of the foregoing Petition to compel compliance with court's order dated July 30, 2012 and for sanctions and alternatively, to vacate said order was served on this date, first class mail, postage prepaid, to the following: Jeffrey G. Brooks, Esquire Richard F. Rinaldo, Esquire Minto Law Group, LLC Williams Coulson Johnson Lloyd Two Gateway Center Parker & Tedesco, LLC 603 Stanwix Street, Suite 2025 One Gateway Center, 16th Floor Pittsburgh, PA 15222 Pittsburgh, PA 15222 Ms. Linda M. Mumma Joseph D. Buckley, Esquire P.O. Box 30436 1237 Holly Pike Bethesda, Maryland 20824 Carlisle, PA 17013 No V. Otto, III, Esquire Brady Green, Esquire Martson Law Offices Morgan Lewis & Bockius 10 East High Street 17 N. Second Street, 14th Floor Carlisle, PA 17013 Harrisburg, PA 17101 g~iy- A~~W",f OBERT M. MUMMA, II DATE: