HomeMy WebLinkAbout10-08-13 (2) Robert B. Eyre, Esquire Attorneys for Robert M. Mumma, Il
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IN THE COURT OF COMMON PLEAS OF CUMBERLAND7601JNTY, °
PENNSYLVANIA
In re: ESTATE OF ROBERT M.
MUMMA, Deceased. ORPHANS' COURT DIVISION
No. 21-86-398
OBJECTIONS OF ROBERT M. MUMMA, II TO ACCOUNT OF MARITAL
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, II ("RMM II"), a beneficiary of the above-reference Marital
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;
Obiection 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, 20106
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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 II previously filed Objections to the Estate Inventory ("Objections
to Inventory") and Objections to the Prior Accounts(the"Prior Account Objections").
5. RMM II'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 II's Prior Objections incorporate RMM 1I'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 11 (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 I1 Objections to Auditor's Report"), as well
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as objections filed on September 16, 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"), High
Spec,Inc., Pennsy Supply Inc, Kim Company 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 II'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 II" 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 11;
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 McKimmie 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. In addition, based on obtained by RMM II from Kim Company pursuant
to Order of the United States District Court for the Middle District of Pennsylvania in
2011, RMM II has determined that the Fiduciaries have failed to account for a September
5, 1985 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.
Obiection 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
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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.
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.
Objection No. 3: Continuing 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 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
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Order"), directing that the Silver Springs Quarry, previously owned by Highspire Sand &
Gravel, be similarly held in trust for the benefit of, and eventual distribution to, RMM Il
and his siblings.
21. As set forth in the Prior Objections and Objections to Inventory, RMM ti
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 11 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 it, 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 II 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.
26. 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.
Objection No. 4: Objection 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.
Obiection No. 5: Objections to Schedule C(Administration Expenses)
28. RMM 1I objects to the expenses listed in Schedule C (p.14) of the Account
for"Leffler Litigation" for lack of sufficient explanation of the reasons for such expenses
and the connection of such litigation to the Estate and Trusts,
29. RMM II objects to the expenses listed for professional fees of Hadley &
Associates, Martson Deardorff Williams & Otto ("Marston") and Morgan Lewis &
Bockius ("MLB") 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 II requests the opportunity to review their respective time records to further assess
the reasonableness and propriety of such expenses.
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Objection No. 6: Objections to Schedule F (New Investments. Exchanges and Stock
Distributions)
30, RMM II objects to the account of "New Investments" on Schedule F
(p.14) and "Exchanges and Stock Distributions" on the same Schedule (p.19) as
duplicative, and requests the opportunity review additional detail concerning the basis of
these items.
31. RMM II objects to the account of receipts of DE Distribution stock on the
sale of Nine Ninety Nine, Inc., GAT Distribution, Union Quarries, Inc. and MRA II on
Schedule F (pp.17-18) as the same are the subject RMM 11's Prior Objections, Objections
to Inventory and Objections to Auditor Report,
32. RMM II objects to the account of Union Quarries stock as undervalued.
Obiection No. 7: Obiections to Schedules G (Statement of Remaining Principal)
33. RMM II objects to the account of a negative number ($3,189,289.90) in
Schedule G (pp.20 and 22), "OWED TO INCOME ACCOUNT FROM PRINCIPAL," as
premised on the flawed Prior Accounts. Further, on information and belief,this item fails
to properly credit the gain on assets to the Residuary Trust. RMM II requests the
opportunity to review additional detail concerning the basis of this item.
34. RMM II objects to the account of a negative number ($1,339,110.44) for
"SWEEP ACCOUNT TRANSACTION" as insufficiently explained and premised on the
flawed Prior Accounts and requests the opportunity to review additional detail
concerning the basis of this item.
Objection No. 8: Objections to Schedule G-1
35. RMM II objects to Trusts retention of cash and cash equivalents in the
amount of$5,785,328.21 (Schedule G-1, p. 85) on the grounds that, pursuant to Articles
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Seventh and Eighth of the Will, such cash and cash equivalents were to be distributed
upon the death of Kim Mumma to RMM 11 and his siblings,in equal shares.
Obicetion No. 9: Objections to Receipt and Retention of Income in Marital Trust
36. RMM 11 objects to the payment of dividends frorn DE Distribution to the
Marital Trust (p.23) and Union Quarries (p.45) as such dividends belong to Kim
Company or, in the alternative, should be distributed to RMM and his siblings in
accordance with Articles Seventh and Eighth of the Will.
37. RMM 11 objects to all other income paid into the Marital Trust after Kim's
death on July 17, 2008 ($2,620,89534 per Schedule A-2, p.45) as there was no basis for
payment of any income to such Trust after that date and all such income was to be
distributed to RMM I1 and his siblings, in equal shares, pursuant to Articles Seventh and
Eighth of the Will. In the alternative, to the extent it was necessary (if at all)to hold such
income in Trust, the same should have been paid to the Residuary Trust pending
distribution to RMM 11 and his siblings, in equal shares,pursuant to Articles Seventh and
Eighth of the Will.
WHEREFORE, Objector Robert M, Mumma 11, requests this Court sustain his
objections and/or grant such other relief as the Court deems a itable and just.
Dated: October 7,2013
Robe A. Eyre,Esquire
Fa & Eyre,P.C.
2 st Front Street
Media,PA 19063
610-566-5926
Attorneys for Robert M. Mumma, 11
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CERTIFICATE OF SERVICE
1 HEREBY CERTIFY that a true and correct copy of the foregoing document has been
served this _ day of
prepaid, upon: 2013, by first class mail
Postage
Ms. Lisa M. Morgan
1315 Neptune Drive
Boynton Beach, FL 33426 Miss Susan Mann Mumma
c/o Mr. Robert M. Mumma 11
Mr. Robert M. Mumma 11 P.O. Box F
P.O. Box F Grantham, PA 17027
Grantham, PA 17027
Miss Marguerite Mann Mumma
Ms. Barbara M. Mumma c/o Mr. Robert M. Mumma 11
S41 Bridgeview Drive P.O. Box F
Lemoyne, PA 17043 Grantham, PA 17027
Ms. Linda M. Mumma Mr. Robert M. Mumma III
P.O. Box 30436 c/o Mr. Robert M. Mumma If
Bethesda, MD 20824 P.O. Box F
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
ROE T MU MA 11
By
Robert M. Mumma 11
P.O. Box F
Grantham, PA 17027
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