HomeMy WebLinkAbout04-26-13 IN RE: ESTATE OF ROBERT M. : IN THE COURT OF COMMON PLEAS OF
MUMMA, deceased : CUMBERLAND COUNTY, 13ENNSYLVANIA
ORPHANS" COURT DIVISION
NO. 21-86-398
AUDITOR'S INTERIM REPORT, APRIL 24, 2013 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
than thirty-five (35) 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
following report was prepared by me and ready in November 2012, but I had filed a request for
interim payment prior to issuing the report. Your Honor entered a recent Order directing
payment of my costs and fees and a check was delivered to my office on April 4, 2013.
Unfortunately I was out of the country and have recently returned and file this report as written
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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 the proposed sale of real estate.
Your humble servant conducted a series of many 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.
Following our 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 issues were 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 and the interpretation of the Will's residuary disposition provision and the powers, duty
and authority of the surviving trustee. I therefore scheduled argument for July 26, 2012 at 1:00
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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, proceeds cashed and
distributed and therefore, I requested an Order permitting the same. Your Honor entered an
Order directing that "Lisa Morgan, in her capacity as President of D. E. Distribution Corporation,
cancel, redeem or 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 this Order, D. E. Distribution Corporation and the residuary trust established
by the Last Will and Testament of Robert M. Mumma through their accountants 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. Upon receipt of the
information each party shall have five (5) days to object and if no objection is made, Lisa
Morgan, as president of D. E. Distribution Corporation, shall distribute the net proceeds received
from the terminated policies to all shareholders in accordance with his, her or its proportional
interest."
The undersigned had waited to be noticed as to whether the cancelation and redemption
of the life polices had occurred and if it had occurred the amount of funds received, and if
redeemed that funds had been received, if the amount of funds received was sufficient to assure
continued administration of the Trust. The parties had stated the cash values of the policies were
approximately two million dollars.
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During a recent conference call the undersigned was advised by the trustee's counsel that
he had not received the cash value from the respective carriers on the life policies because Mr.
Brooks, counsel for Robert M. Mumma, II, had not responded to his requests relative to the
matter. Mr. Rinaldo, counsel. for Barbara Mumma, had responded to the inquiry. Mr. Brooks
stated he had not received this Honorable Court's Order. The undersigned inquired of the Clerk
of the Orphan's Court and determined that Your Honor's Order was sent to Mr. Brook's office
via United States First Class mail many months ago and that it had not been returned to the
Clerk's office by the postal service. The undersigned had sent copies of my interim report and
proposed order by means of electronic mail to all parties or their counsel prior to presenting it the
Your Honor. Your Honor's Order directed counsel to exchange the proposed proportionate share
distribution and only if a party objected within a short time frame he or she by their inaction was
deemed to approve and the trustee could then receive the proceeds and distribute them in
accordance with the proportionate shares of interest.
Counsel for the Estate and the trusts created thereunder did not report that the trusts were
in any immediate need of funding beyond the funds it believed would be received from the cash
value of the life policies.
The undersigned will address the remaining two issues relating to the proposed sale of the
property referred to as the UPS property and also to the trustee's, Lisa Morgan's, request to hire
certain experts and begin a plan of liquidation and distribution of the assets of the Estate and the
trusts thereunder, to the residuary beneficiaries.
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THE PROPOSED SALE OF PROPERTY- UPS DRIVE AND REQUEST TO BEGIN PLAN
OF LIQUIDATION OF TRUST ASSETS
The parties entered into the following stipulation of facts:
1. Lisa M. Morgan is the sole Trustee of the Marital Trust (the "Marital Trust") and the
Residuary Trust (the "Residuary Trust") under Mr. Mumma's will. The Will of Robert M.
Mumma is attached hereto as Exhibit "A".
2. Respondents Robert M. Mumma II ("RMM II"), Barbara M. Mumma (`Gabs
Mumma"), and Linda Mumma ("Linda Mumma") are, along with Mrs. Morgan, remaindermen
of the Marital Trust and the Residuary Trust.
3. Robert M. Mumma died on April 12, 1986.
4. Barbara McK. Mumma, widow of Robert M. Mumma, died on July 17. 2010.
5. RMM II and Babs Mumma filed Objections to all of the accounts filed by Mrs.
Mumma and Mrs. Morgan.
6. Attached as Exhibit "B" is a Summary of Appraisals, identifying the various parcels
of real property in which the Trusts claim interest, either directly or through ownership by the
Trusts of interest in various entities, stating appraised values of such real estate as of July 17,
2010, as submitted by an appraiser retained by Lisa Morgan.
7. The Agreement Among Tenants-in-Common known as "MRA-1" lists the following
ownership interest:
Estate of Robert M. Mumma 81.82507%
RMM II 4.24708%
Linda Mumma 4.23555%
Babs Mumma 4.23555%
Lisa M. Morgan 4.23555%
Barbara McK. Mumma 1.22120%
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The MRA-I Agreement is attached hereto as Exhibit "C."
8. The Agreement Among-Tenants-in-Common known as "MRA-lI" lists the
following ownership interest:
Estate of Robert M. Mumma 98.08612%
RMM II 0.47847%
Linda Mumma 0.47847%
Babs Mumma 0.47847%
Lisa M. Morgan 0.47847%
Barbara McK. Mumma 0.47847%
The MRA-II Agreement is attached hereto as Exhibit"D".
9. Mrs. Morgan, in her representative capacity as Executrix of the Estate of Barbara
McK. Mumma, is the sole shareholder, director and officer of Mumma Realty Associates, Inc.,
(MRA, Inc."). the manager of the assets governed by both the MR,k-I Agreement and the MRA-
11 Agreement.
10. Real estate Mrs. Morgan believes is governed by the MRA-1 Agreement:appears on
Exhibit"B" as items 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22 and 23.
11. Real estate Mrs. Morgan believes is governed by the MRA-I1 Agreement appears
on Exhibit`B" as item numbers 9 and 14.
12. Mrs. Morgan also believes that the Residuary Trust owns two parcels of real estate,
set forth as item numbers 24 and 25 on Exhibit "B," and a parcel of real estate in Leadville,
Colorado having an appraised value as of$670,000.00, as stated in an appraisal submitted by an
appraiser retained by Lisa Morgan.
13. Mrs. Morgan also believes that the Marital Trust claims ownership of real estate
known as Pennsboro Center in Cumberland County, Pennsylvania. This real estate is set forth as
item number 2 on Exhibit `B".
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14. D-E's assets consist of at least three parcels of real estate. accounts receivable from
various affiliated entities, some tangible personal property, in the form of fully depreciated
equipment of minimal value and certain life insurance policies having cash values collectively of
approximately $2.033,064.00, Real estate owned by D-E is set forth on Exhibit "B" as items 5, 6
and 7.
15. GAT's assets consist of at least one parcel of real estate and an escrow account
held for the benefit of RMM II as a result of a certain lawsuit by RMM 11 asserting dissenters'
rights with respect to the sale of certain of GAT's assets.
16. Real Estate owned by GAT is set forth as item number 8 on Exhibit `B'".
17. Mrs. Morgan has advised RMM II, Babs Mumma and Linda Mumma that she
"does not intend", as Trustee, to sell or otherwise dispose of real estate, stock or other non-cash
assets in the Trusts, the Mumma Realty Associates tenancies, D-E Distribution Corp. or G-A-T
Distribution Corp. without seeking and obtaining prior approval of the Orphans' Court. Mrs.
Morgan will continue to make expenditures for costs and expenses incurred by the Trusts of the
corporate entities, including, without limitation, operating expenses professional fees and taxes."
18. Mrs. Morgan desire to sell two parcels of real estate! pursuant to a proposed sales
agreement, which document is attached hereto at Exhibit "E".
19. The Real Estate is contiguous to a parcel of approximately 61 acres of real estate
owned by Bobali Corporation (`Bobali Property") the appraised value of which parcel, according
to the appraisal performed by the appraiser retained by Lisa Morgan, was $2,300,000. as of July
17, 2010.
20. Gibson Boulevard, in the vicinity of UPS Drive and the Bobali Property, is a
divided roadway.
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21. The remaindermen identified in paragraph 2 hereof are among the shareholders of
Bobali Corporation.
The Undersigned sets forth the following facts relating to the matters raised by the Trustee as
determined from previous hearings and the record of this case as follows:
1. Robert M. Mumma's Last Will and Testament dated May 19, 1982 and his First Codicil
to Last Will and Testament dated October 12, 1984 were duly probated with the Register
of Wills in and for the County of Cumberland. (Copies previously attached)
2. Mr. Mumma's wife, Barbara McK. Mumma and his daughter, Lisa Morgan were named
and appointed as Co-Executrices and also as Co-Trustees of both trusts established in the
Last Will and Testament.
3. The Seventh and Eighth sections of Mr. Mumma's Last Will and Testament establish
trusts for the lifetime benefit of his wife, Barabara Mck. Mumma.
4. The final paragraph of the Seventh section of Mr. Mumma's Last Will and Testament
states: "Upon the death of my said wife, the principal of this Trust, as it is then
constituted, shall be paid over by my surviving Trustee unto my children, ROBERT M.
MUMMA, II, BARBARA M. McCLURE [ now Mumma], LINDA M. ROTH [now
Mumma] and LISA M. MUMMA [now Morgan], free of this trust, share and share alike,
per stripes and not per capita."
5. The second paragraph of the Eighth section of Mr. Mumma's Last Will and Testament
states: "Upon the death of my said wife, the principal of this trust, as it is then
constituted, or, if my said wife does not survive me, upon my death, my residuary estate,
shall be paid over by or my surviving trustee or by my successor Executor, as the case
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may be. unto my children, ROBERT M. MUMMA. II, BARBARA M. McCLURE [ now
Mumma]. LINDA M., ROTH [now Mumma] and LISA M. MUMMA [now Morgan]„
free of this trust, share and share alike, per stripes and not per capita."
6. The last paragraph of the Eighth section of Mr. Mumma's Last Will and Testament
states: "The Trustees shall be vested with reasonable discretionary powers in all matters
not otherwise herein specifically provided, they shall exercise their sound judgment and
discretion in the performance of their duties. They shall not be liable for any error of
judgment provided that such error is honestly made."
7. The Ninth section of Mr. Mumma's Last Will and Testament details the broad powers
granted to the trustees and provides, in part : "as in their discretion they deem advisable,
in addition to and not in limitation of their common law and statutory powers:
(1) To allot, assign, ... convey,...mortgage, ...sell ... and in general do any and every
act and thing and to enter into and carry out any and every agreement with respect
to the property included in any trust created under this Will which they could if
they were the absolute owners thereof, without being limited in any way by the
specific grants of power hereinafter made.
(2) ...retain .. all or any part of my property or assets which constitute a part of the
trusts... .
(3) To sell or exchange, either privately or at public sale and without prior approval
of any court at such time or times and at such prices and on such terms and
conditions as the trustees may consider advisable all or any part of the trust
property ... .
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(4) To manage any real property held by them in such manner as they may determine,
including authority to alter, repair, maintain or improve, ... to erect or demolish
buildings thereon. ... and to charge the cost of any action taken with regard to any
such property to the principal or income as they may determine.
(5) To lease any real estate subject to the Trust ... as may be in the discretion of the
trustees in the best interest of the trust estate.
(6) To invest ... or acquire ... real or personal property ... as they may deem
advisable, ... it being my intention to give my trustees power to act in such
manner as they believe to be in the best interest of the Trusts created herein.
(7) To pay income tax on gains from the sale ... .
(8) To amortize, ... mortgage ... against any real estate [and] ... the trustees shall
specifically keep and perform all of the covenants, terms and conditions of any
existing mortgage or mortgages upon said real estate ... .
(9) To ... exercise all rights and privileges pertaining to securities which are available
(10) To receive or make distribution of any trust herein, either in money or in-
kind ... The judgment of the trustees as to what constitutes an equitable
distribution or apportionment shall be binding and conclusive on the beneficiary
hereof. Nothing herein contained, however, shall empower the trustees to make
distribution before the time or times specified herein
(1 l) To pay ... any claim ... .
(12) To use income ... to maintain any policies of life insurance ... if the
trustees determine that the best interest of my family would be served ...
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(13) To employ counsel. ... accountants, ... appraisers ... and others and ... to
pay their compensation ... .
(14) To borrow money ... .
(15) To incorporate ... .
(16) To carry on and conduct any business enterprise in which I may be
engaged at my death.
(17) To hold ... consolidated funds ... as they may determine.
(18) As to each Trust created herein, to exercise all the powers granted and all
duties imposed herein until such time after the termination of that Trust as the
property included in that Trust has been fully distributed and to do all other acts
which in their judgment, may be necessary or appropriate for the proper or
advantageous management, investment or disposition of any property included in
any Trust created herein."
8. The Estate of Robert M. Mumma and/or the trusts created thereunder has a majority
ownership interest various parcels of real estate pursuant to two agreements commonly
referred to as MRA and MRA II and the real estate subject to the agreements are
collectively called the Premises and a list of the parcels subject to the respective
agreement are attached as an Annex to each agreement.
9. The MRA I agreement paragraph 1(b) provides that the manager, (Mumma Realty
Associates, Inc.), has certain duties, rights and authority, for and on behalf of the Owners
and include : to advertise space for rent, to rent space, to collect rent, to institute legal
action for delinquent rent, to make repairs, to contract for utilities, to perform services
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for care, protection and maintenance, to hire, supervise and discharge employees, prepare
and file forms. establish and maintain files, review bills and insurance policies, and to
maintain books and accounts.
10. The MRA I agreement paragraph 1 (e) specifically states that "... [Ti]o manager (or
Owner) on behalf of the owners, without the consent of the Owners, shall have any right
or authority implied or apparent : (i) to sell or encumber the Premises or any part thereof
or any interest of an Owner therein except as provided in Section 3 below."
11. The MRA I agreement paragraph 3, states, in part, in subsection (b) "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 divided 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."
12. The MRA I agreement paragraph 4 states: "Action by Owners. 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 a part thereof, shall be
vested in the Owners jointly and each owner shall abide by the policies and decisions
with respect thereof. Any agreement, approval, decision, consent, request or other action
of the Owners shall be by a majority (in interest) vote and in writing unless otherwise
indicated.'"
13. The MRA I agreement also provides that any owner has the option to have any dispute
resolved before a single arbitrator and all parties to this :matter do not desire binding
arbitration on this matter.
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14. One property owned and managed contains two contiguous parcels of vacant land
totaling approximately 2.17 acres located on UPS Drive in Dauphin County and having
been designated as parcel number 63-024-102 ("UPS property") was appraised in 2010 at
$205.000.
15. Another property in which the parties to this matter have an ownership interest, through
their respective interest in the Bobali Corporation, is a parcel of vacant land of
approximately 61 acres property and contiguous to the UPS property and having
boundaries on both UPS Drive and Gibson Boulevard in Dauphin County ("Gibson
property') was appraised in 2010 at $2,300,000.00. (A copy of an aerial photograph of
the properties together with a super imposed boundary line provided by the Dauphin
County Tax Assessment Office is attached for reference only. The UPS property is
outlined and cross hatched in red and the Gibson property in green)
16. Sometime in 2011, Lisa Morgan notified her brother Robert and sisters Barbara Mumma
and Linda Mumma that she would be seeking a purchaser for the UPS property.
17. Lisa Morgan had negotiated for the sale and purchase of the UPS property to United
Parcel Services, Inc. and/or its affiliate BT-Newyo, LLC for $350,000.00.
18. Lisa Morgan, as trustee of the trusts holding majority interest ownership of the UPS
property, authorized Mumma Realty Associates, Inc, the manager of the UPS property, to
enter into a purchase agreement with BT-Newyo, LLC for $350,000.00.
19. On April 11, 2012, Lisa Morgan, as President of Mumma Realty Associates, Inc. signed
an agreement for the sale and purchase of the UPS property for the offered $350,000.00
contingent on this Honorable Court's approval.
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20. On May 21. 2012, Lisa Morgan notified her siblings, Robert M. Mumma. II, Barbara
Mumma. and Linda Mumma that she had authorized an agreement for the sale and
purchase of the UPS property and the terms of the sale. She requested their concurrence
and stated that if they did not concur she would seek approval from the Court.
21. Lisa Morgan desires to sell the UPS property in her capacity as a residuary beneficiary.
22. Robert M. Mumma II objects to the sale.
23. Barbara Mumma objects to the sale.
24. Linda Mumma was contacted but she has not communicated whether she consents or
objects to the sale, either verbally or in writing.
25. Lisa Morgan, as trustee, desires to begin a plan of liquidation and distribution of the
remaining assets of the Estate of Robert M. Mumma and the trusts established
thereunder, including the real estate subject to the MRA I and MRA II agreements.
26. Lisa Morgan individually consents to her proposed liquidation and sale of the assets.
27. Robert M. Mumma II objects to the sale of real estate assets or other assets.
28. Barbara Mumma objects to the sale of real estate assets or other assets.
29. Linda Mumma was contacted but she has not communicated whether she consents or
objects to any additional sale or liquidation of assets.
30. Robert M. Mumma believes that the remaining assets of the Estate and the trust must be
individually separated and that each separated, individual asset must then be transferred
to himself and his three siblings as either tenants in common or joint tenants with the
right of survivorship.
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ARGUMENT OF THE PARTIES
A. Lisa Morgan
Lisa Morgan, as the sole surviving trustee, argues that Section 3351 relating to the
powers of the personal representative and the PEF Code Section 3354 relating to testamentary
powers to sell real property, supports her position. She also argues that the Ninth Section,
paragraph 3 of the Last Will and Testament of Robert M. Mumma grants her the authority as
surviving trustee, to sell or exchange, either privately or at public sale and without prior approval
of any court any part of the trust property, real, personal or mixed and to execute all deeds, bills
and other documents necessary to effectuate the same.
She further argues that her siblings, Robert Mumma and Barbara Mumma have no right
to insert themselves into her decision making process regarding the disposition of the trust assets
as she bears the burden of a fiduciary subject only to possible audit after the fact. She asserts she
is not required to seek the Court's permission but is currently requesting clarification based on
her previous promises to this Court and the "uniquely contentious environment that surrounds"
this matter.
In support of her position, Lisa Morgan further argues that the Pennsylvania Superior
Court's recent decision involving her administration of this estate rejected the argument by
Robert M. Mumma, II that she as trustee was required at the death of her mother to make an
immediate, equal, in-kind, distribution of the trust assets to the residual beneficiaries. She argues
that this rejection was an affirmation of her authority to make independent decisions relating to
the liquidation and equal distribution of the trust's assets.
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Lisa Moran, as the sole Trustee, argues that she has the authority, as trustee, to sell the
UPS property and to sell all the other properties subject to the MRA I and the MRA II
agreements without the advice or consent of the owners of minority interests. She bases this on
the fact that the Estate is the Owner of more than more than eighty (80%) percent of the Premises
and because of the super-majority needs no approval from the other Owners, her siblings, who
owns a combined total of less than thirteen (13) percent of MRA I and less than two (2) percent
of MRA II. She further argues that this Honorable Court by the Orders and Opinions of the
Honorable Harold E. Sheely dated March 24, 1992 and November 5, 1992 at Docket No. 66
Equity 1988, has previously determined that the trustees because of this super majority
ownership interest did not need to seek approval from the minority Owners or this Honorable
Court.
B. Robert M. Mumma II
Robert M. Mumma, II first argues that the statements made by the Superior Court in its
recent opinion were merely dicta and that its rejection of his many raised issues creates no
precedential value. He argues the questions before the Superior Court was whether Lisa Morgan,
as Executrix and Trustee of his father's estate and also as Executor of his mother's estate created
a conflict of interest and whether Lisa Morgan had breached her fiduciary duty. The issue
presented before this Honorable Court and before the undersigned relates to a very specific issue
relating to Lisa Morgan's authority to sell estate assets and the interplay between the specific
provisions of the Last Will and Testament of Robert M. Mumma and the PEF Code.
Robert M. Mumma II next argues that his father's Last Will and Testament granted
specifically defined powers and Pennsylvania Courts and the PEF Code support his position that
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Lisa Morgan power as trustee terminated at the death of Barbara 1VIcK. Mumma, her Co-trustee.
He cites the PEF Code's provision relating to events which terminate or partially terminate a
trust and their effect on the continuing power and duties of a trustee. 20 Pa. C.S. Section 7780.7.
Robert M. Mumma, II further argues that the Pennsylvania Courts have determined the
polestar in every trust is the settlor's intent and in every will the testator's intent, is the
controlling factor. (cites omitted) He asserts the clear intent of his father was that immediately
upon the death of his wife, Barbara McK. Mumma, the trust's assets were to be distributed
equally to his four children. Under the governing terms of his father's Will he argues Lisa
Morgan is not the sole trustee of any trust as both trusts have terminated by the occurrence of the
death of his mother. He claims the original purpose of the trust was to benefit his mother during
her lifetime and at her death the purpose ceased and the trust terminated. He argues that Lisa
Morgan has no standing or authority to act in any role as a putative trustee.
Robert M. Mumma Il agrees arguendo that MRA I is the owner of the UPS property and
he absolutely agrees that Bobali Corporation is the owner of the Gibson property. He argues that
the UPS property should not be sold because it provides additional access to the Gibson property
and that Lisa Morgan did not fully evaluate the effect the sale of the UPS property may have on
the Gibson property. He presented no facts and cited no legal authority for his argument.
Robert M. Mumma Il: also acknowledges the differing ownership interests but argues,
Lisa Morgan's reliance on her ability to control the Estate's ownership percentage, and the
voting power associated with it, is misplaced and that she is only entitled to vote the share she
owns in her individual capacity. He cites no legal authority for his argument and does not
attempt to distinguish Judge Sheeley's findings and determination in this matter at Docket No.
66 Equity 1988.
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Robert M. Mumma, II finally argues that Lisa Morgan should not be permitted to sell the
UPS property because she has not fully explored all options relating to the propertv's potential to
generate income. He cites no relevant facts to support this argument nor does he cite any legal
authority for the argument.
C. Barbara Mumma
Barbara Mumma first argues the sale of the UPS property should not be approved
because Lisa Morgan did not provide the advance notice to her and to all the other the owners
of the UPS property in accordance with the MRA I agreement. She provides no legal authority
for this argument and does not attempt to distinguish Judge Sheeley's findings and determination
in this matter at Docket No. 66 Equity 1988.
Barbara Mumma's next argues that because Lisa Morgan failed to make distribution to
the trust's assets to the Estate's residuary beneficiaries following, the death of her mother, as
directed in her father's will, she has violated her duties of impartiality. She cites the PEF Code as
her authority: "If a trust has two or more beneficiaries, the trustee shall act impartially in
investing, managing and distributing the trust property, giving due regard to the beneficiaries'
respective interests in light of the purpose of the trust. (20 Pa. C. S. Section 7773)." Barbara
Mumma asserts that had Lisa Morgan followed her duties as set fbrth in the Will and the PEF
Code and distributed the Estate's proportional share of the MRA I assets equally among and
between the residuary beneficiaries, the Estate's ownership interest: would have been reduced to
zero and each of the four beneficiaries' respective share of ownership would have been increased
by 20.45626701%. This would result in Lisa Morgan in her capacity as trustee and individual not
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having authority and control of a majority interest. She argues this failure to distribute is a ploy
to maintain majority control and not grant first rights of refusal to the other owners. Barbara
Mumma cites the Restatement (Third) of Trusts, Section 79 (2007) as authority for this position
but offers no Pennsylvania legal authority accepting that section or any other legal authority
supporting this argument.
Barbara Mumma next argues that Lisa Morgan did not consider other options with
respect to the UPS property that would be less detrimental to the Gibson property. She offers no
factual or legal authority for this argument.
Barbara Mumma also argues that Lisa Morgan has no right or authority to sell any other
property and should transfer the assets equally share and share alike to the four residuary
beneficiaries. She stated she adopted Robert M. Mumma's arguments in support of her position,
but provided no additional legal authority in support of the same.
AUDITOR'S RECOMMENDATION AND REASONING
The parties have agreed to the facts of this matter through a stipulation and also other
facts supplemented during their oral argument and facts of record. After reviewing not only their
arguments and their authorities, the agreements, the Last Will and Testament of Robert M.
Mumma and its Fist Codicil, the decisions of this honorable Court, the Pennsylvania Superior
Court and the Pennsylvania Supreme Court, I would recommend that the sale of the UPS
property should be approved. I would further recommend that Lisa Morgan, in her capacity as
surviving trustee. has the authority over all the assets of the estate of her father and the trusts
created thereunder, including the authority to develop and the discretion to implement a plan of
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liquidation of those assets; and following that, to distribute the resulting assets in equal shares
without the concurrence of the residuary beneficiaries and without further order of this
Honorable Court.
The MRA Agreements
As determined by this Honorable Court many years ago. the NIR.A 1 and MRA II
agreements were simply legal vehicles developed_ approved and executed by the Estate of Robert
M. Mumma., his wife and his four children, after consultation with accountants and tax attorneys,
to take advantage of certain benefits (i.e. The General Utilities Doctrine) of the then federal tax
code which were set to expire on December 31. 1986. ("Tax Reform Act of 1986, effect January
1, 1987. citation omitted) (See Judge Sheely's Opinions and Orders at Docket 66 Equity 1988.
supra.) These vehicles provided a great tax benefit to the estate and ultimately to the
beneficiaries. These agreements specifically segregated and separated certain Estate assets which
were not part of Robert M. Mumma's date of death quarrying operations. Their additional
purpose was to insure the Estate's power to control those assets without interference from
minority owners which were then Mrs. Mumma and her four children. These agreements were
drafted and executed prior to any funding of the trusts established under Mr. Mumma"s Last Will
and Testament. As Judge Sheely determined the minority- owners not only executed the
agreements but also executed irrevocable powers of attorney and other documents in favor of the
Estate. Judge Sheely did determine that the agreements and/or the assets represented by the
agreements were duly transferred to the trustees. Judge Sheely also determined that during their
administration of the Estates and the trusts created thereunder, the trustees. Barbara McK.
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Mumma. the wiJow of Mr. Mumma, and Lisa Morgan held a super majority ownership, thus
controlling interest. This controllino interest conferred upon them as trustees near absolute power
over the assets. The trustees could treat them as their own and, irrespective of the notice
requirements of the agreements, they, acting as the trustees, were not required to seek or obtain
the prior permission or consent of the residuary beneficiaries: Robert M. Mumma, IL Barbara M.
Mumma. Linda Mumma or Lisa Morgan, the children of Mr. Mumma. In the matter of the sale
of the UPS property and the matter of future dispositions of property, the dispositive ownership
interest of the trusts in the assets included in the MRA I and MRA II Agreements has not
changed. Furthermore, the reasoning for the agreements has not changed therefore, there is no
need to seek nor receive approval from any one or any combination the minority owners.
INTERPRETATION OF THE LAST WILL AND TESTAMENT OF ROBERT M. MUMM.A
AND THE TRUSTS CREATED THEREUNDER
The Pennsylvania Superior in its opinion filed February 22, 2012 (see Mumma v. Estate
of Mumma, 40 A.3d 198, 2411 (Pa. Super. Ct., 2011)), rejected Robert M. Mumma, II's
argument that Lisa Morgan had the duty to distribute the trusts' assets to him and his siblings
immediately following the death of their mother, Barbara McK. :Mumma. The Court also
determined her failure to distribute immediately neither evidenced a conflict of interest nor
grounds for her removal as trustee or personal representative. Robert M. Mumma, II had
petitioned this Honorable Court requesting Lisa Morgan be removed as trustee and executrice of
his father's Estate based an alleged conflict of interest. This Honorable Court determined he had
not provided sufficient evidence to support his claims and denied his petition. The Superior
Court addressed the issue raised by Robert M. Mumma II relating to Lisa Morgan's powers and
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duties as trustee. - While listed as six distinct issues. Mumma 11 essentially presents a single
I C
issue for our consideration. namely whether Morgan*s roles in connection with the estates of
:Mumma. Sr. and Mrs. Mumma constitute a conflict of interest requiring her disqualification and
removal." Id. at 49. In addition to his contention that Lisa Morgan had failed to make required
distributions to him and his siblings following the death of his mother, Robert M, Mumma. 11
also suggested that Lisa Morgan and the late Mrs. Mumma had improperly transferred assets
from the 'Trusts established under his father's will to a separate independent trust in Florida
controlled by his mother. The Superior Court affirmed this Honorable Court's finding of
insufficient evidence to support any allegation of wrongdoing on the part of Lisa Mumma and
continued:
-With respect to the distribution of assets to the four sibling beneficiaries, the trial court
determined that Morgan's testimony established she is completing the process of obtaining
valuations of the estate and trust assets and has asked the beneficiaries if they have a preference
regarding the receipt of any particular assets or cash and that she intends to make an equitable
distribution of the assets to the beneficiaries after collecting the information. We agree with the
trial court that this approach does not constitute any breach of fiduciary duty. Mumma, Sr.
specifically provided Morgan, in her role as his personal representative when making an
equal distribution among the four sibling beneficiaries, with the power to decide how to
"make distribution of any trust herein created, either in money or in kind, or partly in
money and partly in kind." Item Ninth (10), quoted supra. Mumma, Sr. further indicated that
the "judgment of the trustees as to what shall constitute an equitable distribution or
apportionment shall be binding and conclusive upon the beneficiaries hereof."" Id. at 50.
(emphasis added)
Robert M. Mumma 11 argues that the issue before the Superior Court differs from the
issue involved in the matter before this Honorable Court and thus the statements relating to the
duty to distribute or not to distribute trust assets is dicta.
Robert M. Mumma, 11 was the party who raised this specific issue in his appeal to the
Superior Court. It is ironic that he now argues the issue to which he demanded an answer should
now not be controlling.
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Black's Law Dictionary defines dicta, in pertinent part, as follows:
"Expressions in court's opinion which go beyond the facts before court and
therefore are individual views of author of opinion and not binding in
subsequent cases."
Black's Law Dictionary, 408 (5th ed. 1979).
The portion of the opinion relating to Lisa Morgan's powers and duties under the Last: Will and
Testamnet of Robert M. Mumma do not go beyond the facts and issues presented on appeal. It is
not the individual view of the Judge, but an interpretation of the Last Will and Testament based
on the current status of the law. Assuming, even for argument sake, that the statements and
reasoning of the Superior Court is dicta, which it is not, the reasoning is still persuasive.
As set forth below, Robert M. Mumma in his Last Will and Testament set forth specific
and detailed duties and direction to his trustees and granted them broad discretionary powers.
The death of Mrs. Mumma may have triggered some additional duties on the part of Lisa
Morgan, as surviving trustee, but it did not require her to immediately transfer any assets to the
four residuary beneficiaries of the Estate and the trusts created thereunder.
The death of Barbara McK. Mumma, the life beneficiary of the trust, ended the primary
purpose of the trust; however, there remained the duty and responsibility to distribute the assets
equally among and between the residuary beneficiaries. Thus, as a result, the trust and the estate
must continue until the distributions are completed and the estate closed. A reasonable
interpretation of the Last Will and Testament of Robert M. Mumma, a review of applicable
Pennsylvania case law, together with an interpretation of applicable provisions of the PEF Code
lead the undersigned to this conclusion.
"When interpreting the provisions of a trust, "the polestar in every trust is the
settlor's intent and that intent must prevail. The rules for determining a settlor's intent are
the same for a trust as for a will. The settlor's intent must be ascertained from a
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consideration of(a) all the language contained in the four corners of the instrument and
(b) the distribution scheme and (c) the circumstances surrounding the testator or settlor at
the time the will was made or the trust was created and (d) "the existing facts."
Technical rules or canons of construction should be employed only if the
language of the instrument is ambiguous or conflicting or the intent of the settlor or
testator is for any reason uncertain. When provisions of a trust instrument conflict, "they
should be read in such a fashion as to give effect to both and/or fulfill the intent of the
settlor."
In Re Stella Scheidmantel , 2005 Pa. Super. 6; 868 A.2d 464, 488 (2005), citing In re Trust of
Hirt, 2003 Pa. Super 287, 832 A.2d 438, 448 (2003) (other cites omitted).
The Pennsylvania Supreme Court has also given direction on construction of wills and the proper
method to interpret the intent of the testator:
"The primary consideration in the construction and interpretation of wills is that the
intent of the testator be followed . . . Absent ambiguity, that intent is to be
determined from "the four corners of his will," . . . The duty of the court is not to
determine what the testator might or should have said in light of subsequent events
but, rather, the actual meaning of the words used . . . Only if the language employed
by the testator is ambiguous should the court resort to canons of construction.
(citations omitted)
Estate of Blough, 474 Pa. 1771 185, 378 A.2d 276, 280 (1977).
It is quite clear from the wording of Mr. Mumma's Last Will and Testament that the
primary purpose for the trusts was to benefit his wife, Barbara McK. Mumma, during her
lifetime. The Seventh section reads in part : "If my wife, BARBARA McK. MUMMA, survives
me, I give and bequeath to the trustees hereinafter named, an amount equal to fifty (50%) percent
of my total gross estate ... . I direct that the trustees hold said amount, In Trust Nevertheless, to
manage, invest and reinvest the same, to collect the income and to pay over or apply the net
income to, or for, the benefit of my wife, BARBARA McK. MUMMA." The Eighth Section
provides in part: " All the rest, residue and remainder of my property and estate, I give, devise
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and bequeath unto the trustees hereunder named ... to hold ... for the benefit of my wife,
BARBARA McK. MUMMA.-
Further evidence that the trust's purpose is also contained in the Seventh and Eighth
Sections which both provide that upon the death of his wife. Barbara McK. Mumma, the
principal of the trust ... shall be paid over by his surviving trustee or his successor Executor to
his children: ROBERT M. MUMMA, I1, BARBARA M. McCLURE, LINDA M. ROTH and
LISA M. MUMMA, free of this trust, share and share alike, per stripes and not per capita."
The PEF Code supports the conclusion that the trust has terminated. It provides, in part
"A trust terminates to the extent it ... expires pursuant to its terms, and no purpose of the trust
remains to be achieved. " 20 Pa.C.S. § 7740 (2012). The terms of Mr. Mumma's Last Will and
Testament clearly and specifically state when the trusts shall terminate. The Tenth Section,
paragraph 18 of the will states:
"As to each Trust created herein, to exercise all the powers granted and all the duties
imposed herein until such time after the termination of that Trust as the property
included in that Trust has been fully distributed and to do all other acts which, in their
judgment, may be necessary or appropriate for the proper or advantageous management,
investment or disposition of any property included in any Trust created herein."
The final purpose of the trust: is also to insure that its assets are equally distributed to his four
children and Lisa Morgan, as Mr. Mumma's trustee, has been designated by her late father to be
the person to complete this final duty.
One thing I have gleaned through the many days of hearing over these past years is the
Late Mr. Mumma was a very savvy business man who loved his wife and children. He knew that
his business interests were many, that he had vast assets and a great amount of debt. He knew the
administration of his Estate would be a complex matter. Mr. Mumma established a very detailed
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plan for the administration and distribution of his estate with the advice of several noted and
respected estate attorneys and accountants. He knew and understood that which he desired and
all provisions of his ten page Last Will and Testament and his three page First Codicil have
meaning to insure his wife was protected and provided for during her lifetime, but who he
desired to control and administer his Estate. Mr. Mumma had active business interests in
differing fields and understood that the administration of his estate would not be performed in a
vacuum.
A close reading of the first codicil provides further insight to Mr. Mumma's intent that
Lisa Morgan, as trustee, and she alone has been granted the authority to liquidate the trusts'
assets. The first paragraph names his co-Executrices: his wife and daughter, Lisa Morgan. In the
event that one or both of the named co-exeutrices are been unable to serve he appointed his
daughter Barbara McClure, now Mumma, as his substitute co-executrix.
However in the codicil continues:
"I do now nominate, constitute and appoint my wife, Barbara McK. Mumma, and my
daughter, Lisa M. Mumma, now Lisa M. Morgan, to be the co-Trustees of both trusts established
by me ... In the event that my daughter Lisa M. Morgan should renounce this office, ...
predecease me, or for any reason is unable to serve in the capacity as Trustee, then ... I direct
that my daughter Barbara M. McClure, shall be the successor co-trustee to serve as co-Trustee
with my wife ... Upon the failure for any reason of my daughter Barbara M. McClure to serve in
that capacity, the Dauphin Deposit Bank and Trust Company, of Harrisburg, Pennsylvania, is
constituted and appointed to serve as successor co-Trustee with my wife , in both trusts herein
created."
By this language Mr. Mumma intended and believed that as long as she lived, his wife
would continue to be the trustee with either one of his two daughters or the bank's trust officer.
If Lisa Morgan became incapable, Barbara McClure [now Mumma] would be her replacement.
What must be noted is that Mr. Mumma did not name a successor trustee in the event of his
26
wife's inability to act or her death. It evidences his intent that the remainino, trustee should act
alone.
The language used in the two testamentary trust provisions further evidence Mr.
Mumma's intent that Lisa Morgan is granted the authority to act alone in the method of
distribution of the assets in equal shares to the beneficiaries.
While the fifth paragraph of the Seventh Section provides
"Upon the death of my said wife, the principal of this Trust, as it is then constituted, shall be paid
over by my surviving Trustee unto my children, ROBERT M. MUMMA, 11, BARBARA M.
McCLURE, LINDA M. ROTH and LISA M. MUMMA, free of this trust, share and share alike,
per stripes and not per capita."'
The second paragraph of the EIGHTH Section of Mr. Mumma's Last Will and Testament
provides, in part " Upon the death of my wife, the principal of this trust, ... shall be paid over by
my surviving trustee or by my successor executor, as the case may be, unto my children:
ROBERT M. MUMMA, 11, BARBARA M. McCLURE, LINDA M. ROTH and LISA M.
MUMMA, free of this trust, share and share alike, ..."
Although the wording may differ between the trust provisions in the Eighth Section and
the Seventh Section, the effect is the same, Lisa Morgan., as the surviving trustee, has the
authority to liquidate and distribute those assets among and between the four named
beneficiaries. The words "upon the death of my wife" show Mr. :Mumma's understanding that
his wife could pass at any time following the establishment of his estate, and she did. There are
two sets of circumstances to which the phrase which follows the words my surviving trustee or
by my successor executor, "as the case may be" refer. They are: (I) if wife dies before the trusts
are funded or (2) if wife dies after the trusts are funded. If the :facts in the former case had
27
occurred, no trusts would have been funded or established therefore there would be no surviving
trustees, only executrices. However, the facts of the latter did occur and his wife. Mrs. Mumma,
died after the funding, establishment and administration of the trusts. Therefore fie intended
surviving trustee,. Lisa Morgan would act alone in distributing the residuary trust's assets in
equal shares to the beneficiaries.
Mr. Mumma's intent is controlling and the language used is evidence of that intent.
When a personal representative is chosen by the testator himself, this appointment "represents
an expression of trust and confidence in the person or persons so selected" by the testator.
Beichner Estate, 432 Pa. 150, 155, 247 A.2d 779, 781 (1968).
Mr. Mumma would riot have granted powers which would conflict and which would
hinder the proper administration of his estate. (cites omitted) He did not intend an absurd result.
(cites omitted). He specifically provided that the "judgment of the trustees as to what shall
constitute an equitable distribution or apportionment shall be binding and conclusive upon the
beneficiaries hereof""Mumma v. Mumma Estate, supra. at 50. (Emphasis added).
The argument that Lisa Mumma is somehow violating the PEF Code's requirement that
all beneficiaries be treated equally because she is exercising the powers and duties granted to her
as trustee is wholly without merit.
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The UPS Property
Barbara Mumma has argued that Lisa Morgan may not have thoroughly investigated the
impact such a sale of the UPS property would have on the Gibson property. She also questioned
whether the Estate should reserve a right of way on the UPS property and how such a request
might affect the transaction.
The parties do have an ownership interest in the contiguous sixty-one (61) acres of the
Gibson property. Robert A Mumma 11 and Barbara Mumma blindly argue and speculate as what
may or may not have an effect on the Gibson property without actual evidence of the same or
supportive legal authority. They both originally argued selling the UPS property would curtail
access to UPS Drive and as a result, limit the Gibson property's access to that offered by Gibson
Boulevard. During our first of many telephone conferences t reviewed both the aerial photos
available on Microsoft's Google Earth website and the US Geological website and requested the
parties to also review the same. By these photos it appeared that the Gibson property had access
to both Ups Drive and Gibson Boulevard irrespective of that afford by the UPS property. Lisa
Morgan's counsel later provided copy of aerial photography layered with the parcels as shown
by the Dauphin County tax mapping section (now also available on their website) and the
objectors revised their argument stating the access was several hundred feet past the access the
offered by the UPS property. They argued this added distance and the fact UPS Drive's
improved portion terminates at the Gibson property might somehow diminish the value the
Gibson property. No evidence supporting this argument was offered and no continuance
requested to produce such evidence. The basic argument was that Lisa Morgan may not have
investigated alternative uses., alternative methods of transferring the property while reserving
29
certain property rights ( i.e. easements or lease backs, etc) and she had not consulted with the
Objectors. She did not because she was not required to do so as she had the discretion to do so.
Not only does Lisa Morgan have great discretion in selling the property, she negotiated a price
which exceeds the appraised value by $145,000.00.
Therefore. f recommend Your Honor approve the Petition to sell the UPS property.
Liquidation and Distribution of Remaining Estate Assets
Lisa Morgan has petitioned Your Honor to permit her to soleby, begin the process of
distribution of the Estate's Assets to the residuary beneficiaries. For the reasons detailed above I
would recommend, at this time, the petition be granted. Under the terms of Robert M. Mumma's
Last Will and Testament Lisa.Morgan has the clear authority, to begin a plan of liquidation and to
thereafter distribute the assets among and between the four children in equal shares of any and all
the remaining assets in the trust established under the Seventh Section (the marital trust) and the
Eighth Section (the residuary trust) of the Last Will and Testament of Robert M. Mumma.
I further recommend that if your Honor agrees with my recommendations, you enter
Orders accordingly and I have attached a two recommended orders to accomplish the same.
Respectfully submitted,
D.CB�uckle quire, *Jitor
Supreme 0
Supreme Court 1D 38444
1237 Holly Pike
Carlisle, PA 17013
(717) 249-2448
JoeBLaw=&,aolxom
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