HomeMy WebLinkAbout10-08-13 Robert B. Eyre, Esquire Attorneys for Robert M. Mumma, II
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IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTYP ` r
PENNSYLVANIA _a Cr 0
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In re: ESTATE OF ROBERT M.
MUMMA, Deceased. : ORPHANS' COURT DIVISION
No. 21-86-398
OBJECTIONS OF ROBERT M. MUMMA, II TO ACCOUNT OF RESIDUARY
TRUST FOR PERIOD JULY 18,2010 TO DECEMBER 31,2012,
AND ACCOMPANYING PETITION FOR ADJUDICIATION
FILED BY LISA M. MORGRAN TRUSTEE ON SEPTEMBER 6 2013
Robert M. Mumma, lI ("RMM II"), a beneficiary of the above-reference
Residuary Trust, by and through his undersigned counsel, files the following objections
to the Account of Marital Trust for the Period July 18, 2010 to December 31, 2012 (the
"Account") and accompanying Petition for Adjudication ("Adjudication Petition") filed
by Lisa M. Morgan, Trustee, on September 6, 2013:
Objection No. 1: Pendency of Objections to Prior Accounts of Estate and Trusts
1. Pursuant to the Will of Decedent Robert M. Mumma, the Marital Trust
and Residuary Trust were each to be funded from the assets of the Decedent's Estate.
2. The funding of both Trusts is the subject of previous accounts (the "Prior
Accounts") stated by the Executors of the Estate and Trustees of the Trusts (collectively,
the"Fiduciaries") for periods through July 18, 2010.
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3. The current Account assumes that the Prior Accounts are accurate and
proper accountings for, and use, disposition and distribution of assets by the Estate Trusts
by the Fiduciaries as set forth in the Prior Accounts.
4. RMM 1I previously filed Objections to the Estate Inventory ("Objections
to Inventory") and Objections to the Prior Accounts (the"Prior Account Objections").
5. RMM 11's Objections to Inventory dispute the Estate's claim to ownership
of assets listed in the inventory and to the right of the Fiduciaries to retain, use and
dispose of those assets, including to fund the Marital Trust and Residuary Trust.
6. RMM 11's Prior Objections incorporate RMM II's Objections to Inventory
and set forth additional specific objections to the Fiduciaries accountings for, use,
disposition and distribution of assets by the Estate to fund the Trusts and the accountings
for, use, disposition and distribution of assets by the Trusts.
7, The Prior Accounts and Prior Objections of RMM II (and others) to such
Prior Accounts have been the subject of an audit by Joseph Buckley, Esquire (the
"Auditor") who has filed various interim reports and recommendations adopted by this
Court (the "Interim Reports") and a "final" August 7, 2013 Report of Auditor Joseph D.
Buckley,Esquire(the"August 7,2013 Auditor Report").
8. Certain of the Auditor's Interim Reports and Orders of this Court adopting
same are the subject of appeals pending before the Superior Court of Pennsylvania
captioned at 1028 MDA 2013 and 1003 MDA 2013 (the"Superior Court Appeals").
9. The August 7, 2013 Auditor Report is the subject of Objections filed by
RMM II on September 18, 2013 (the "RMM II Objections to Auditor's Report"), as well
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as objections filed on September ]b, 2013 by beneficiary Barbara M, Mumma ("Babs")
and Morgan,
10, In so far as the present Account and Petition for Adjudication rely on the
Estate Inventory and Prior Accounts, and such Inventory and Prior Accounts are
themselves subject to objections and appeals, including RMM II's Objections to
Inventory, Prior Account Objections, and Objections to Auditor's Report, and the
Superior Court Appeals, the present Account cannot be fully evaluated, audited,
adjudicated or confirmed unless and until such Objections to Inventory, Prior Account
Objections, Objections to Auditor's Report and Superior Court Appeals are themselves
determined,
11, RMM II accordingly incorporates by reference his Objections to
Inventory, Prior Account Objections, Objections to Auditor's Report and Superior Court
Appeals as part of his Objections to the present Account and Petition for Adjudication
and, for the reasons stated therein, objects to the present Account and Petition for
Adjudication.
12, Without limitation of the foregoing, RMM II specifically renews and
restates herein the following Prior Objections and claims:
a, his Objections to Inventory disputing the Estate's or the Trust's claim of
ownership of stock subject to redemption agreements or other restrictions
on ownership and transfer, including (without limitation) the stock in the
following companies: Pennsylvania Supply Company ("PSC"), Pennsy
Supply Inc., High Spec, Inc. and Lebanon Rock;
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b. his Prior Objections to the Fiduciaries' transfer of stock in corporations
held by the Decedent, RMM II, Kim Company and PSC in violation of
applicable bylaws and shareholder agreements restricting such transfers;
c. his Prior Objections to the fraudulent inducement of RMM tI's agreement
to the Plan of Liquidation of Kim Company and PSC;
d. his alternative objections to the violation of the same Plan of Liquidation
by failure to distribute the assets of Kim Company to its shareholders
prior to the distribution of PSC assets to its shareholders, and instead
distributing them into accounts in the name of two non-existent entities,
"MRA I"and "MRA It" to facilitate the use, disposition and diversion of
such assets for the disproportionate benefit of Decedent's wife, Barbara
McKimmie Mumma ("Kim"),, as beneficiary of the Martial Trust and
Morgan,as primary beneficiary of Kim's own estate and trust;
e, the conversion and fraudulent transfer, use and disposition of the assets of
Pennsy Supply Inc., including the Silver Springs Quarry and policies of
insurance on the life of RMM Il;
f, the undervaluation of assets and overfunding of the Marital Trust in
violation of Articles Seventh and Eighth of the Will and applicable
fiduciary accounting principles;
g. the failure and refusal of the Fiduciaries to implement the intention of
Decedent, expressed (inter alia) in Article Thirteenth of his Will that the
control and management of the Mumma family businesses by the
immediate family be preserved, so far as"expedient and possible..."; and
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(v) the use, disposition and distribution of assets after the death of
Decedent's wife, Barbara McKimmon Mumma ("Kim") on July 17,
2010, in violation of the express provisions of Articles Seventh and
Eighth that the residuary of all assets remaining in the Trusts as of such
date be distributed to the beneficiaries "as it is then constituted...share
and share alike...'; and
h. other improper distributions of assets to or for the benefit of the Marital
Trust, Kim and Morgan, as set forth in the Prior Objections and
Objections to Auditor's Report.
13. RMM I1 has also determined that the Fiduciaries failed to account for a
September 5, 1485 loan in the original principal amount $184,135,84, and bearing
interest at 9% per annum,owed by Decedent to Kim Company.
14. In addition, RMM II restates and renews his request for a jury trial
pursuant to 20 Pa.C.S.A. § 777(a) to the extent his objections and claims dispute the
Estate's ownership of assets.
Oblection No. 2: Failure to Account for Fair Market Value of Assets
15. The Account appears to use "accounting values" as opposed to fair market
values of the assets accounted for.
16. The use of"accounting values" is contrary to proper fiduciary accounting
and perpetuates the effects of the gross undervaluation of assets allocated to the Marital
Trust and consequent overfunding of such Trust and excessive distributions of principle
and income to Kim as beneficiary of such Trust and income beneficiary of the Estate.
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17. The use of"accounting values"further fails to account for the appreciation
and gain on the assets included in the account that, under the terms of the Will and
applicable fiduciary accounting principles, should accrue to the benefit of the Residuary
Trust, and results in the improper inclusion of such appreciation and gain in the assets of
the Marital Trust and underfunding of the Residuary Trust.
Obiection No. 3: Continuina Violations of Articles Seventh, Eighth and Thirteenth
of Will
18. Article Thirteenth of the Will expressing the following intention of the
Decedent:
It is my desire that if expedient and possible, the
businesses which I have personally directed during my
lifetime and of which I have had an interest be continued
for the benefit of and under the management and control of
my immediate family.
(Will, Article Thirteenth; emphasis added)
19. In addition, the provisions of the Decedent's Will specifically governing
Martial Trust (Article Seventh) and the Residuary Trust (Article Eighth) each provide
that upon the death of Kim Mumma, the entire remainder of the Estate and Trusts were to
be distributed "as it is then constituted...share and share alike—"
20. These provisions were consistent with, if not required by, the terms of the
Will of Walter M, Mumma, Article Second, providing that the bulk of his estate—from
which the Mumma family businesses were derived—were to be held for the benefit of,
and eventual distribution in equal shares to, RMM 11 and his siblings; and the terms of an
August 8, 1961 Order of the Dauphin County Orphans' Court (the "Dauphin County
Order"), directing that the Silver Springs Quarry, previously owned by Highspire Sand &
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Gravel, be similarly held in trust for the benefit of, and eventual distribution to, RMM II
and his siblings.
21. As set forth in the Prior Objections and Objections to Inventory, RMM II
contends that, to the extent Decedent held any interests in such businesses at the time of
his death, these interests were subject agreements that required their redemption for the
benefit of RMM II and his siblings as intended by the Will of Walter M. Mumma and the
Dauphin County Court Order.
22. In furtherance of these intentions, the millions of dollars of life insurance
on life of Decedent and his son, RMM II, was purchased for the Mumma companies to
assure sufficient cash and liquidity was available to fund the redemption of Decedent's
shares in the relevant corporations upon his death. The proceeds of the redemption of
these shares would in turn provide cash for the funding of the Martial Trust and
Residuary Trust.
23. The present Account reveals a continuation of the actions of the
Fiduciaries and their professionals to use, dispose of and distribute assets of the Mumma
family businesses (which were never properly part of the Estate) in a manner contrary the
to the intentions of Decedent and his father, Walter M. Mumma, that such assets pass
directly to RMM II and his siblings; and contrary as well to the intention of Articles
Seventh, Eighth and Thirteenth of the Will.
24. Upon the death of Kim Mumma, the only purpose of continuing the Trusts
was to prepare for their distribution as constituted, to RMM I1 and his siblings in equal
shares.
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25. Instead of doing so, and in violation of Articles Seventh, Eighth and
Thirteenth of the Will, Morgan, as Trustee, and her professionals have continued not only
to hold the assets of the Trusts, but to use, dispose of and distribute such assets in a
manner that has and continues to fundamentally alter the constitution of such assets and
liquidate the Mumma family businesses out of existence.
2$. The intention to liquidate the Mumma family businesses in violation of the
foregoing provisions of Decedent's Will is now explicit in Morgan's proposed plan to
liquidate the remaining assets before distribution to RMM II and his siblings.
Obiection No. 4 Obiections to Principal Listed in Schedule A
27. RMM II objects to the items of principal listed in Schedule A of the
Account for the reasons set forth in his Prior Objections, Objections to Inventory and
Objections to Auditor Report.
28. RMM 11 objects to the account of 1,401 shares of stock of Bobali, Inc. on
Schedule A (p.4) as insufficiently explained and requests additional information to verify
the ownership of such stock by the Residuary Trust,
29. RMM 11 objects to the listing of a liability of $2,338,500 to the Marital
Trust (p.4) as insufficiently explained and requests additional information to review and
verify the propriety of such loan. RMM II believes and avers that insofar as the assets of
the Martial Trust were to be distributed to RMM II or his siblings after the death of Kim
Mumma, there was no legitimate basis for loaning money to the Martial Trust by the
Residuary Trust.
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Obiection No. S: Obieetions to Schedule C (Administration Expenses)
30. RMM II objects to the expenses listed in Schedule C (p.14)of the Account
for fees of Crary Buchanan in the Florida High Spec litigation (pp.12-13) as excessive
and improper and not in the best interests of the Trust.
31. RMM 11 objects to the expenses listed for professional fees of Hadley &
Associates, Martson Deardorff Williams & Otto ("Marston") and Morgan Lewis &
Bockius ("MLB") and Saul Ewing as excessive, and to the extent such expenses were
incurred in support of actions of the Fiduciaries that were in violation of the Will and
their fiduciary duties. RMM Il requests the opportunity to review their respective time
records to assess further assess the reasonableness and propriety of such expenses.
Objection No. b: Obiections to Schedule F (New Investments, Exchanges and Stock
Distributions)
32. RMM 11 objects to the accounting in Schedule F (p.17) of the receipt of
11401 shares of stock in Bobali, Inc, on July 18, 2010 as insufficiently explained and
requests additional information to verify the ownership of such stock by the Residuary
Trust.
33. RMM 11 objects to the accounting in Schedule F (p.18) of the Leadville
Colorado property as undervalued.
34. RMM II objects to the listing of loans payable to the Marital Trust
(Schedule F, p.18) as insufficiently explained and requests additional information to
review and verify the propriety of such loans. RMM II believes and avers that insofar as
the assets of the Martial Trust were to be distributed to RMM II or his siblings after the
death of Kim Mumma, there was no legitimate basis for loaning money to the Martial
Trust by the Residuary Trust.
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Objection No. 7: Objections to Schedule G tStatement of Remaining Principal)
35. RMM 11 objects to the listing in Schedule G (pp.20) of stocks of Bobaii,
Inc. and High Spec,Inc. as such stocks are not property of the Estate or Residuary Trust.
Obiection No. S: Objections to Schedule A-3 (Increases Resulting from Sales or
Other Dispositions of Income Assets)
36. RMM Il objects to the items listed on Schedule A-3 (p.26) as
insufficiently explained and requests the requests the opportunity review additional detail
concerning the basis of these items.
Obiection No. 11: Objections to Schedule G-1
37. RMM 11 objects to Trusts retention of cash and cash equivalents in the
amount of$1,316,556.10 (Schedule G-1, p31) on the grounds that, pursuant to Articles
Seventh and Eighth of the Will, such cash and cash equivalents were to be distributed
upon the death of Kim Mumma to RMM II and his siblings,in equal shares.
WHEREFORE, Objector Robert M, Mumma I1, requests this Court sustain his
objections and/or grant such other relief as the Court deems equitable and just.
Dated:October 7,2013
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Ro B yre, ire-- °'*
Fo 1 Eyre, P.C.
27 Mst Front Street
Media, PA 19063
610-566-5926
Attorneys for Robert M. Mumma, II
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing document has been
served this _ day of 2013, by first class mail, postage
prepaid,upon:
Ms. Lisa M. Morgan
1315 Neptune Drive Miss Susan Mann Mumma
Boynton Beach, FL 33426 c/o Mr. Robert M. Mumma II
P.O. Box F
Mr. Robert M. Mumma II Grantham, PA 17027
P.O. Box F
Grantham, PA 17027 Miss Marguerite Mann Mumma
c/o Mr. Robert M. Mumma lI
Ms. Barbara M. Mumma P.O. Box F
541 Bridgeview Drive Grantham, PA 17027
Lemoyne, PA 17043
Mr. Robert M. Mumma III
Ms. Linda M. Mumma c/o Mr. Robert M. Mumma 11
P.O. Box 30436 P.O. Box F
Bethesda, MD 20824 Grantham, PA 17027
And
c/o Ms. Barbara M. Mumma
541 Bridgeway Drive
Lemoyne, PA 17043
Cc: No V. Otto III, Esq.
Robert B. Eyre, Esquire
Richard F. Rinaldo, Esquire
Brady L. Green, Esquire
ROBER M. MUM A II
By:
Ro ert M. Mumma II
P.O. Box F
Grantham, PA 17027