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HomeMy WebLinkAbout10-04-91 IN RE: EST ATE OF ROBERT M. MUMMA, Deceased, late of Cumberland County, Pennsyl vania IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 21-86-398 ORPHANS' COURT DIVISION STATEMENT OF GENERAL OBJECTIONS TO THE FIRST AND INTERIM ACCOUNT FOR THE ESTATE OF ROBERT M. MUMMA. DECEASED AND THE FIRST AND INTERIM ACCOUNTS FOR THE MARITAL AND RESIDUARY TRUSTS UNDER WILL OF ROBERT M. MUMMA. DECEASED AND NOW COMES Robert M. Mumma, II, individually, and Robert M. Mumma, II and Gary M. Gilbert, the Court-appointed Guardians of the Estates of Susan Mann Mumma and Marguerite Mann Mumma, (hereinafter "Objectant") by their attorneys, Charles E. Shields, III, of Mechanicsburg, and William C. Costopoulos, of Lemoyne, and respectfully represent: 1. Robert M. Mumma, II is a beneficiary under the duly probated will of his father, Robert M. Mumma, and is an interested party to these proceedings. 2. Robert M. Mumma, II and Gary M. Gilbert are the Guardians of the Estates of Susan Mann Mumma and Marguerite Mann Mumma, having been appointed to such position by Order of the Court of Common Pleas of York County, Pennsylvania, Orphans' Court Division, dated October -L-, 1991. Susan Mann Mumma and Marguerite Mann Mumma are holders of shifting executory devises under the duly probated will of their grandfather, Robert M. Mumma, and are also interested parties to these proceedings. 3. The above parties have filed in conjunction with the general objections hereinafter set forth certain specific objections to the First and Interim Account for the Estate of Robert M. 1 Mumma, Deceased and the First and Interim Account for the Marital Trust under the will of Robert M. Mumma, Deceased. These specific objections are incorporated herein by reference. GENERAL OBJECTIONS I. Improper Diversion of Family Assets 4. In addition to the aforesaid specific objections, the Objectants hereby file a general objection to the administration of the Estate of Robert M. Mumma, Deceased, and the Marital and Residuary Trusts created under the will of Robert M. Mumma on the basis that Barbara McK. Mumma and Lisa M. Morgan, in their capacities as executrices and trustees, have breached their fiduciary duties to the beneficiaries under the Decedent's will by systematically engaging in acts of self-dealing and personal enhancement with the intention of ultimately vesting in their individual control the family enterprises in which the Decedent, Robert M. Mumma, had an interest at the time of his death. Such actions are not only in violation of the Pennsylvania statutory and judicial prohibitions against self-dealing and the Pennsylvania statutory prohibitions against actions by interested directors and shareholders, but are also in direct contravention of the Decedent's testamentary intention that his family enterprises ultimately pass to his four children in equal shares. In support of this objection, the Objectants specifically aver the following: (a) Barbara McK. Mumma and Lisa M. Morgan, in their capacities as executrices and trustees, have intentionally allocated stock in the Decedent's family enterprises to the marital trust created under the Decedent's will in order to subject such stock to the withdrawal power that Barbara McK. Mumma has over such trust (b) To date, Barbara McK. Mumma and Lisa M. Morgan have diverted to Barbara McK. Mumma through her withdrawal power the following shares of stock: (i) 195.842 shs. of common stock of Nine Ninety-Nine, Inc. (ii) 118.268 shs. of preferred stock of Nine Ninety-Nine, Inc. (iii) 30.75 shs. of Hummelstown Quarries, Inc. (c) By diverting such stock to Barbara McK. Mumma she now holds in her 2 individual capacity the following percentages of stock originally held by the Decedent's estate: (i) 29.96% of common stock of Nine Ninety-Nine, Inc. (ii) 14.26% of preferred stock of Nine Ninety-Nine, Inc. (iii) 5% of Hummelstown Quarries, Inc. (d) The Objectants believe, and therefore aver, that Barbara McK. Mumma ultimately intends to either transfer such shares by will or gift to her daughter, Lisa M. Morgan, so that her daughter will eventually own a majority interest in such family enterprises, or Barbara McK. Mumma intends to sell such stock and to leave the proceeds therefrom to her said daughter so that she will receive more than her allotted one-fourth share of the value of the family enter- pnses. (e) Given the present life expectancy of Barbara McK. Mumma, it is anticipated that she will, in time, be able to withdraw from the marital trust sufficient shares of stock that, when coupled with the shares of stock passing to Lisa M. Morgan upon the termination of such trust, her said daughter will be able to either exercise control over the family enterprises or, in the event of a subsequent sale, to receive more than her allotted one-fourth share of the value of the family enterprises. (f) The aforesaid plan of Barbara McK. Mumma and Lisa M. Morgan is evident from the fact that, at the end of 1987, they rushed to distribute to the marital trust certain stock in the family enterprises so that Mrs. Mumma could exercise her 1987 withdrawal right over such stock. Had the executrices delayed the funding of the marital trust until the beginning of 1988, Mrs. Mumma's withdrawal right for 1987 would have irrevocably lapsed. The haste with which the aforesaid distribution was consummated is evident not only from the date on which it purportedly occurred (December 27, 1987) but also from the fact that copies of Mrs. Mumma's actual withdrawal requests are incomplete in certain important respects including valuation of the underlying trust assets. (g) The actions of Barbara McK. Mumma and Lisa M. Morgan belie any pretense 3 that the withdrawal distributions to Mrs. Mumma were intended to alleviate any financial hardship that she may have been purportedly experiencing. If such a hardship had existed, it would obviously have been preferable to distribute to her cash, other liquid assets or marketable real estate. Instead, the trustees have consistently and exclusively distributed non-marketable closely held stock. Furthermore even the relative percentages of the actual stock distributed to Mrs. Mumma reflect the trustees' goal of achieving control over the family enterprises since, on a percentage basis, Mrs. Mumma has received twice as much common stock as preferred stock, even though only the latter stock is income producing. (h) By engaging in the aforementioned scheme to systematically divert stock in the Decedent's family enterprises to Barbara McK. Mumma, the executrices and trustees have not only breached their fiduciary duty to the beneficiaries under the Decedent's will by acting solely for their own aggrandizement, but they have also damaged such beneficiaries in the following respects: (i) By allocating stock in the family enterprises to the marital trust the Decedent's estate was needlessly forced to incur capital gains of $1,170,687.90 which resulted in the payment of over $360,000.00 in fiduciary income taxes for the year of funding. These taxes were attributable to the fact that funding a pecuniary marital trust with property-in-kind is a taxable event for federal income tax purposes. Had the executrices allocated the same stock in the family enterprises to the residuary trust such an allocation would not have resulted in the payment of any income taxes. However, the executrices were unwilling to allocate such stock to the residuary trust, notwithstanding the obvious income tax advantages resulting therefrom, because Mrs. Mumma was not vested with a withdrawal right over the assets in such trust Rather than frustrate their own scheme to wrest individual control over the family enterprises, the executrices elected to needlessly incur $360,000.00 in capital gains tax. (ii) By fully allocating the common stock in Nine Ninety-Nine, Inc. 4 to the marital trust, the executrices have jeopardized the continued qualification of such trust for the federal estate tax marital deduction. Under current law, in order for a trust to qualify for the federal estate tax marital deduction, the trust must be income-producing. As evidenced by the First and Interim Account filed by the executrices in the Decedent's estate, the common stock of Nine Ninety-Nine, Inc. is non-income producing. As such, prudent estate planning would dictate that, to the fullest extent possible, such stock should be allocated to the non-marital residuary trust since this latter trust need not be income-producing. However, allocation of such stock to the residuary trust would place such stock outside of the withdrawal right of Mrs. Mumma Rather than frustrate their own scheme to wrest individual control over the family enterprises, the executrices elected to risk potential disqualification of the marital trust by allocating such stock to it. (iii) By fully allocating the common stock in the family enter- prises to the marital trust the executrices have needlessly and imprudently subjected such stock to federal estate taxation upon the death of Barbara McK. Mumma Under current law, assets allocated to a decedent's marital trust are subject to federal estate taxation upon the death of the decedent's spouse, while assets allocated to the decedent's non-marital residuary trust pass tax-free. For this reason, prudent estate planning dictates that assets which are expected to greatly appreciate in future value, such as common stock in closely-held family enterprises like Nine Ninety-Nine, Inc., should be allocated to a decedent's non-marital trust rather than the marital trust. In so doing, all post-death appreciation in the value of such stock will escape death taxation. However, in the present instance, allocation of the common stock of Nine Ninety-Nine, Inc. to the Decedent's non- marital residuary trust would preclude Mrs. Mumma from exercising her withdrawal right over such stock. Rather than frustrate their own scheme to wrest individual 5 control over the family enterprises, the executrices elected to subject such stock to federal estate taxation upon the death of Mrs. Mumma (iv) By withdrawing from the marital trust the stock in the family enterprises the executrices have needlessly and imprudently subjected such stock to Pennsylvania inheritance taxation. Under current law, assets held in a decedent's marital trust are not subject to Pennsylvania inheritance taxation upon the death of the decedent's spouse. Conversely, assets held outright by the spouse are subject to inheritance taxation upon the spouse's death. For this reason, prudent estate planning dictates that, to the fullest extent possible, a~sets should remain in a decedent's marital trust, rather than being withdrawn. This is especially true since the spouse receives the income from such assets even though they remain in trust. However, in the present situation, to allow the stock in the family enterprises to remain in the marital trust of Robert M. Mumma would result in such stock passing to the decedent's four children in equal shares and would preclude Lisa M. Morgan from eventually attaining majority control over the family enterprises. Rather than trustrate their own scheme to wrest individual control over the family enterprises, the executrices have elected to subject the stock in such enterprises to Pennsylvania inheritance taxation upon the death of Mrs. Mumma II. Impermissible Withdrawals 5. In addition to the general objection set forth above with respect to the executrices' utilization of Barbara McK. Mumma's withdrawal right over the marital trust to circumvent the testamentary intentions of the Decedent, the following additional objections are raised with respect to the exercise of such withdrawal right (a) The withdrawal right granted to Barbara McK. Mumma over the marital trust does not vest her with a corresponding right to select individual assets of the trust to fund the 6 same. Instead, it only gives her a right to receive a designated dollar amount from the trust equal to $5,000.00 or 5% of the current value of the trust, whichever is greater. In electing to fund this amount with assets-in-kind, this transaction is treated for federal income tax purposes as a sale of the distributed assets to Mrs. Mumma Analogously, the essence of this transaction for state law purposes is a sale of stock by the marital trust to Mrs. Mumma or, conversely, a purchase of stock by Mrs. Mumma, with the consideration for such purchase being the cash amount due her under her withdrawal right. As such, this transaction falls squarely within the statutory provisions governing self-dealing transactions between a fiduciary and an estate or trust. Having failed to secure the requisite court approval before engaging in such transfers, the sales of stock to Barbara McK. Mumma arising from the exercise of her withdrawal right should be nullified. (b) Pursuant to the liquidation of the Decedent's interest in Pennsylvania Supply Company, Inc., the Decedent's interest in Nine Ninety-Nine, Inc., Hummelstown Quarries, Inc. and Union Quarries, Inc. became subject to a right of first refusal in the Decedent's four children, including the Objectant, Robert M. Mumma, II. By allocating the stock of such companies to the marital trust, and especially by utilizing such stock to fund the withdrawal right of Barbara McK. Mumma, the executrices and trustees violated the right of first refusal held by Robert M. Mumma, II and such transfers should, therefore, be nullified. (c) Under the operative terms of the will of Robert M. Mumma, in funding the withdrawal right of Barbara McK. Mumma over the marital trust, the trustees of such trust are required to revalue the trust assets each time such right is exercised. From 1988 onward, the trustees have failed to annually revalue the marital trust assets in computing the allowable withdrawal amounts, thereby violating the plain directive of the Decedent's will. Objection is hereby made to the trustees' failure to carry out the terms of the Decedent's will. (d) Objectants believe, and therefore aver, that in exercising the 1987 withdrawal right over the marital trust, the executrices overfunded such right and may have subsequently altered the estate records to comport therewith. In support of this objection, the Objectants note 7 that on the estate's status report dated May 16, 1988, counsel for the estate swore under oath that the value of the distributions made as of such date by the estate to all beneficiaries, including beneficiaries other than the marital trust, totaled $4,000,000.00. However, the 5% withdrawal amount made by Mrs. Mumma in December of 1987 was predicated upon a marital trust value of $5,516,231.00. Even if the full $4,000,000.00 shown on the status report had been fully allocated to the marital trust, this would still leave such trust with a valuation deficit of $1,516,231.00. Objectants believe that the executrices improperly assumed in December of 1987 that there was no need to make an actual funding of the marital trust in order to exercise Mrs. Mumma's withdrawal right, but instead felt that such right could be exercised over assets still held in the estate which were earmarked for distribution to the marital trust. As evidence of this misapprehension on the part of the executrices, Objectants note that the withdrawal documents executed by Mrs. Mumma attempt to exercise her withdrawal right both over assets held in the marital trust and assets held in the estate but allocable to the marital trust. Objectants believe, and therefore aver, that the executrices, acting under this misapprehension, either failed to fund or only partially funded the marital trust at the time of Mrs. Mumma's purported exercise in 1987. Subsequently, when the executrices learned that the withdrawal right only extended to assets actually within the marital trust, the executrices may have altered estate records to give the appearance of a full funding of such trust, instead of allowing Mrs. Mumma to partially waive her 1987 withdrawal right. Any such waiver would have delayed the effectuation of their scheme to divert stock in the family enterprises to their individual control. III. Failure To Maximize Asset Values 6. In order to effectuate their scheme to gain control of the Mumma family enterprises, Lisa M. Morgan and Barbara McK. Mumma have refused to entertain offers for the sale of such enterprises, other than an offer by a foreign purchaser who, through an improper side agreement, would have guaranteed them employment with the purchaser. By refusing to consider offers for the sale of the family enterprises, the executrices have breached their fiduciary duty to maximize the 8 underlying value of the assets in the estate. Accordingly, Objectants file a general objection thereto. (a) In support of this objection, the Objectants note that Robert M. Mumma, II has on numerous occasions attempted to negotiate with Barbara McK Mumma and Lisa M. Morgan for the purchase of substantial and significant portions of the Decedent's family enterprises. On each and every occasion he has been willing to acquire such assets at a value substantially in excess of their fiduciary carrying value. However, his efforts to purchase such assets have been continually thwarted by the executrices without any justification. (b) Attorneys for Lisa M. Morgan and Barbara McK. Mumma have advised Robert M. Mumma, II that the executrices will not consider any further offers for the sale of the family enterprises. By refusing to explore any efforts to sell the family enterprises, regardless of the value of the offers that may be forthcoming or the advantageous terms and conditions attendant thereto, the executrices have unjustifiably failed to exercise the minimum responsibility expected of all fiduciaries in the Commonwealth of Pennsylvania. This action becomes all the more egregious in the present instance since Objectants believe that Lisa M. Morgan and Barbara McK Mumma have undertaken this action solely to advance their own financial interests through individual control over the Decedent's family enterprises. (c) Although Objectants note that it was the intention of the Decedent that his family enterprises remain in the Decedent's testamentary trusts until such enterprises passed to his children in equal shares, this intention is obviously not the reason that the executrices have refused to sell the family enterprises since, as noted heretofore, the executrices have systematically engaged in an effort to divert control of the enterprises to themselves individually. Moreover, this defense is specifically not applicable to Robert M. Mumma, II since all parties having a viable interest in the Decedent's trusts have in the past agreed that he should have a right of first refusal over the family enterprises and should be permitted to acquire the same. (d) The executrices cannot justify their retention of the family enterprises from a tax 9 standpoint. As noted previously, retention of the family enterprises will not forestall the realization of any inherent gain therein since the executrices, by effectuating their diversionary scheme, have already been forced to realize such gain both upon the funding of the marital trust and the funding of Mrs. Mumma's withdrawal right. Additionally, any sale of the family enterprises would make the marital trust more liquid and more income-producing, thereby helping to preserve the marital deduction for such trust. (e) The refusal of Barbara McK. Mumma and Lisa M. Morgan to even entertain offers for the sale of the Decedent's family enterprises is part and parcel of their plan to divert such assets to themselves in derogation of the best interests of the heirs under the Decedent's will and in contravention of the Decedent's testamentary plan. Such action constitutes not only a basis for a general objection to their administration of the Decedent's estate and trusts, but also strong grounds for their removal from their present fiduciary positions. IV. Acts of Cor:porate Self-Dealin~ 7. During the course of their administration of the Decedent's family enterprises, Barbara McK. Mumma and Lisa M. Morgan, in their fiduciary capacities as executrices and trustees, have utilized their majority control over such enterprises to engage in acts of self-dealing for their personal benefit to the detriment of the heirs under the will of Robert M. Mumma Accordingly, the Objectants specifically object to all actions taken by the executrices and trustees during the administration of the family enterprises which involve either self-dealing or personal enhancement. (a) Despite repeated requests by or on behalf of the Objectant, Robert M. Mumma, II, the executrices and trustees have failed to divulge any information concerning salaries, expense accounts, perquisites, or other benefits that they have personally derived from the family enterprises during their administration thereof. In addition, they have failed to divulge any information concerning contracts, agreements or other business relationships that may exist between the family enterprises and other entities in which they have an interest, nor have they divulged any information concerning fees, salaries or retainers paid to firms in which they now 10 have or have had a personal interest or which have assisted them during the administration of the Decedent's estate and trusts. (b) The will of Robert M. Mumma does not contain any provision that specifically authorizes the executrices or trustees to hire or retain themselves for financial remuneration as officers, directors, agents or employees of the Decedent's family enterprises. Absent such specific authorization, any such action constitutes impermissible self-dealing. In addition, any agreements between the family enterprises and the executrices (or entities in which they have an interest) may be violative of the Pennsylvania Business Corporation Law of 1988 (15 PA. C.S.A. s.1101 et seq.) which precludes directors and shareholders from entering into agreements with their respective corporations unless a majority of disinterested directors or shareholders approve the same. (c) The Objectants believe, and therefore aver, that during their administration of the Decedent's family enterprises, Barbara McK. Mumma and Lisa M. Morgan have systematically engaged in acts of self-dealing without specific authorization under the Decedent's will, they have acted for their own personal aggrandizement and they have repeatedly violated the statutory constraints imposed under the Pennsylvania Business Corporation Law. Therefore, objection to such action is specifically made. V. Reservations of Objections 8. Objectants reserve the right to raise such additional objections as facts and evidence produced through future discovery may prove warranted. WHEREFORE, the Objectant respectfully requests this Honorable Court to enter a Decree or Decrees to: 1. Revoke the distribution of the stock in the family enterprises to Barbara McK. Mumma 2. Surcharge the executrices/trustees for the capital gains tax incurred upon funding the marital trust with the stock of the family enterprises, or in distributing the stock therefrom. 11 3. Surcharge the executrices/trustees for the loss of the benefit of the bargain in failing to (i) sell the stock in the family enterprises to Robert M. Mumma, II, or (ii) actively market such stock with third parties. 4. Deny all compensation to the executrices/trustees, whether the same was received from the decedent's estate, the trusts under the decedent's will or the decedent's family enterprises. 5. Reduce or deny compensation to Morgan, Lewis & Bockius and Lucker, Kennedy & Felmeden, whether the same was received from the decedent's estate, the trusts under the decedent's will or the decedent's family. 6. Surcharge the executrices/trustees for all acts of self-dealing, whether the same occurred during the administration of the decedent's estate, the trusts under the decedent's will or the operation of the decedent's family enterprises, and invalidate any agreements or actions that they have made or taken in violation of the Pennsylvania Business Corporation Law or the Pennsylvania Estates, Trusts and Fiduciaries Code. 7. Surcharge the executrices/trustees for the costs, fees, and expenses which have been paid or incurred by Objectant to protect their interests in the estate and trusts as a result of the improper administration by the executrices/trustees, including without limitation Objectant's attorneys' fees and costs, plus interest. 8. Additionally, Objectant requests that the Court not approve the accounts as filed, surcharge the executrices/trustees for any losses to the estate or trusts resulting from the self- 12 serving actions taken by them, and take such further action as the Court deems appropriate to preserve the estate and trusts for the benefit of the residuary beneficiaries and any other persons in similar circumstances. Respectfull y submitted, Charles E. Shields, III Commonwealth National Bank Bldg. 2 West Main Street Mechanicsburg, P A 17055 (717) 766-0209 J.D. # 38513 William C. Costopoulos 831 Market Street Lemoyne, P A 17043 (717) 761-2121 By ~ r:.4Lik Charles E. Shields, III, Attorneys for Objectant ~tI 13 IN RE: ESTATE OF ROBERT M. MUMMA, late of cumberland County, Pennsylvania IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA . . : NO. 21-86-398 : ORPHANS' COURT DIVISION AFFIDAVIT ." COUNTY OF ~)a.ltpbn Before me, the ) ) SS: ) COMMONWEALTH OF PENNSYLVANIA undersigned authority, personally appeared ROBERT M. MUMMA, II, who, being first duly sworn according to law, deposes and says that all of the averments set forth in the foregoing Objections are true and correct according to the best of his knowledge or as is informed and believes. ~ nt. IluMUAWlA.1L Robert M. Mumma, II Sworn to and subscribed before(ime, this ,..)r!VLday of ~'(Jm~'r>L , 1991. &." /, I .,f""/>nl I ,to) l (/ I Notaf/ /) /} ~ u', (1A, ,'I'd Public J KIMBE;', ,.10TARIAl SEA , . , -, .... CROSTLEY t "', ' bl" Mv CIty of Harrisburg. Da'u~hi~' c;U Ie . CommissIon Exoires J'an. 4. 1993 CERTIACATE OF SERVICE I, Charles E. Shields, III, certify that a copy of the attached STATEMENT OF GENERAL OBJECTIONS TO THE ARST AND INfERIM ACCOUNT FOR THE ESTATE OF ROBERT M. MUMMA, DECEASED AND THE ARST AND INfERIM ACCOUNfS FOR THE MARITAL AND RESIDUARY TRUSTS UNDER WILL OF ROBERT M. MUMMA, DECEASED was served by first class mail on 0 d. ~ 1991 upon the following: Richard W. Stevenson, Esquire McNees, Wallace & Nurick P.O. Box 1166 Harrisburg, PA 17108-1166, for Barbara M. McClure 129 S. Lewisberry Road Mechanicsburg, P A 17055 John Hardin Young, Esquire Porter, Wright, Morris & Arthur 1233 20th Street, N.W. Washington, D.C. 20036-2395, for Linda M. Roth 5104 Wessling Lane Bethesda, MD 20814 Thomas M. Kittredge, Esquire Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993, for Barbara McK. Mumma and Lisa M. Morgan Attorney General Commonwealth of Pennsylvania Strawberry Square Harrisburg, PA 17120 William F. Martson, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, PA 17013, for Barbara McK Mumma and Lisa M. Morgan (Courtesy Copy) Robert M. Frey, Esquire 5 South Hanover Street Carlisle, P A 17013 tJM~ f:~ J1L Charles E. Shields, III IN RE: ESTATE OF ROBERT M. MUMMA, deceased, late of Cumberland County, Pennsylvania : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : NO. 21-86-398 : ORPHANS' COURT DIVISION STATEMENT OF OBJEcrIONS TO ARST AND INfERIM ACCOUNT FOR THE ESTATE OF ROBERT M. MUMMA. DECEASED AND NOW COMES Robert M. Mumma, II, individually, and Robert M. Mumma, II and Gary M. Gilbert, as court-appointed guardians of the estates of Susan Mann Mumma and Marguerite Mann Mumma, (hereinafter "Objectant'') by his attorneys, Charles E. Shields, III, of Mechanicsburg, and William C. Costopoulos, of Lemoyne, and respectfully represents: 1. Robert M. Mumma, II is a beneficiary under the duly probated will of his father and is an interested party to these proceedings. 2. Robert M. Mumma, II and Gary M. Gilbert are the court-appointed guardians of the estates of Susan Mann Mumma and Marguerite Mann Mumma pursuant to Order of Judge John T. Miller of York County Orphans' Court, dated October 4 , 1991. 3. The above-named Susan Mann Mumma and Marguerite Mann Mumma are holders of shifting executory devises under the duly probated will of their grandfather and are also interested parties to these proceedings. 4. The above parties make the following objections to the account for the following .....J reasons: 1 A. OBJECTIONS BASED ON MISV ALVA TION OR ON OMISSION OF LISTING OF RECEIPTS OF PRINCIPAL 1. REAL PROPERTY (Page 1) a BENDER PROPERTY. COMPOSED OF NINE (9) TRACTS IN OR NEAR MOUNT HOLLY. CUMBERLAND COUNTY (i) This property is valued at $144,000.00. (ii) This valuation is objected to as being undervalued because in valuing the property, they failed to take into consideration the income stream generated by the mineral rights inherent in such property, together with strategic business value to the overall operation of the family business enterprises. b. GROVE PROPERTY. COMPOSED OF 195.733 ACRES IN OR NEAR MOUNT HOLLY. CUMBERLAND COUNTY (i) This property is valued at $117,439.00. (ii) This valuation is objected to as being undervalued because in valuing the property, they failed to take into consideration the income stream generated by the mineral rights inherent in such property, together with strategic business value to the overall operation of the family business enterprises. c. PENNSBORO CENfER. WORMLEYSBURG. CUMBERLAND COVNfY (i) This property is valued at $1,500,000.00. (ii) This valuation is objected to because it is substantially undervalued. d. PROPERTY KNOWN AS LEADVILLE. COLORADO (i) This property is omitted from the account (ii) The omission is objected to. 2 (iii) The said property is improperly listed on the original Pennsylvania inheritance tax, Schedule A, as vacant land of 167 1/2 acres, valued at its cost of $3,161.00. e. AMITY -FARMS PROPERTY (i) The omission of this real property is objected to as being inconsistent with the inclusion of the personal property located thereon and therein in Pennsylvania Inheritance Tax Return, Schedule E. f. SAILFISH POINT CONDO. FLORIDA (i) The omission from the account of the Sailfish Point Condo is objected to. Based on information and belief, we believe this to be an asset of the estate. g. SAILFISH POINT GOLF CLUB MEMBERSHIP (i) The omission from the account of the Sailfish Point Golf Club Member- ship of decedent is objected to. Based on information and belief, we believe this to be an asset of the estate. h. W A TIS PROPERTY (i) The omission of this real property from the account is objected to. Based on information and belief, we believe this to be an asset of the estate. 1.. 441 & CHAMBERS HILL ROAD (i) The omission of this real property from the account is objected to. Based on information and belief, we believe this to be an asset of the estate. 2. STOCKS a. PENNSYLVANIA SUPPLY COMPANY (i) The estate at date of death held 700 shares of the common stock of Pennsylvania Supply Company, the flagship of the Mumma family enter- 3 prises system. It has since been liquidated for income tax purposes along with another Mumma corporate enterprise called Kim Co. As a result of the liquidation all real estate held by the two (2) aforesaid corporations was distri- buted into Mumma Realty Associates I and II as tenants in common and the estate then became a direct owner of two (2) subsidiary corporations of Pennsylvania Supply Company. These subsidiaries are Union Quarries, Inc. and Nine Ninety-Nine, Inc. (ii) The Pennsylvania Supply Company was valued at $9,144,493.00. (iii) This is objected to as being undeIValued because the aforesaid valuation fails to adequately reflect the underlying value of the assets comprising Union Quarries, Inc., Nine Ninety-Nine, Inc., and the operating subsidiaries of Nine Ninety-Nine, Inc., including in particular Pennsy Supply Company, Inc. 3. CASH AND MONEY ACCOUNfS (Page 3) a DECEDENT HELD A SWISS BANK ACCOUNT (i) This property is omitted from the account (ii) This omission is objected to because we believe this asset was in existence as of the date of death and we question whether it has been misappropriated by the executrices. b. DECEDENT OR HIS EST ATE WERE ENfITLED TO PAYMENTS OF BENEFITS FROM SEVERAL LIFE INSURANCE POLICIES (i) These policies or their proceeds are omitted from the account (ii) This omission is objected to because we believe that several life insurance policies exist In the event that they are payable to a trust and are not subject to tax, we still believe that as beneficiaries of any such trust, we are entitled to an accounting of the proceeds and a copy of the trust instrument. 4 4. TANGIBLE ASSETS (Page 8) a. GRANDFATHER'S CLOCK (i) This clock is valued at $1,000.00. (ii) This valuation is objected to as being undervalued because the beneficiary thereof must now be burdened with accepting this asset with an unrealistically low basis. b. JEWELRY (i) This was valued in an unitemized fashion for $200.00. (ii) The lack of itemization is objected to. To the best of petitioner's knowledge the distribution to the beneficiary reflected the following as being all of the jewelry: (a) three watches: (Patek Philippe; Massey Tissot; and unnamed dress watch); one pair of cuff links; one wedding ring; one key chain; and one money clip. (iii) The valuation is objected to as being undervalued because the beneficiary thereof must now be burdened with accepting this asset with an unrealistically low basis. (iv) Further objection is made because beneficiary believes there were other items of jewelry which were improperly omitted from the account and were not transferred to beneficiary. c. MISCELLANEOUS PERSONAL PROPERTY (i) This was valued at $8,800.00. (ii) The lack of itemization is objected to. (iii) The itemization should, at the least, include but not be limited to the following: (aa) 21 Club Medallions 5 (bb) Office furniture at Amity Farms Office (cc) "Remington" Silver Collection (dd) Assorted items of gold (ee) Assorted items of silver (ff) Lieca Camera (gg) Guns, including at least the following: [1] Colt 45 (Pistol) [2] Colt 32 (Pistol) [3] Winchester Model 41 (Rifle) [4] Ruger Mini 14 (Pistol) (hh) Assorted fishing rods (ii) Jet Boat (ij) Jeep (kk) Oldtown boat and engine (ll) Bass boat with Yamaha engine (mm) Yacht (no) The executrices have also failed to provide a complete inventory and accounting of all assets held in the decedent's safe deposit box or boxes. In the event that any safe deposit box was in joint names, then the rental charge to the estate is improper. (Page 23) B. OBJEcrIONS BASED ON MORTGAGES AND NOTES PAYABLE AT DATE OF DEATH (Pages 10-11) Objectant believes that executrices engaged in self-dealing by permitting mortgages and notes payable to them personally to remain outstanding during the adminis- tration of the estate despite the fact that such obligations contained interest rates that were exorbitant in relation to the rates then prevailing in the open market Objectant 6 reserves the right to question the nature of these obligations to the extent additional information may become available. Such obligations include but are not limited to Sailfish Point Condo and Peoosboro Center. C. OBJEcrIONS TO INCREASES AND DECREASES ON SALES LIOUlDA TIONS AND DISTRIBUfIONS (PAGES 15-16) By virtue of transferring the estate's stock in Hummelstown Quarries, Inc., Nine Ninety-Nine, Inc. and Union Quarries, Inc. to the Marital Trust, the estate created an income tax obligation of $1,170,687.90, which obligation would have been avoided if said stock were allocated to the residuary trust. D. OBJEcrIONS TO FUNERAL AND ADMINISTRATIVE EXPENSES CHARGEABLE TO PRINCIPAL (Beginning on Page 19) 1. Morgan & Morgan (Page 20) a. Morgan & Morgan is a law firm comprised of Lisa M. Morgan, an executrix of the estate, and Scott Morgan, her husband. In an apparent case of self-dealing, without prior court approval, Lisa M. Morgan hired her own firm to provide certain services to High Spec., Inc., a Rorida corporation dedicated to real estate development with 10,000 shares of stock issued, 5,000 shares each to Robert M. Mumma (now held by the estate) and to Robert M. Mumma, II. The value listed in the estate's account at Page 2 is $5,000.00 for the value of the shares held by the estate. b. The nature of these services and why they were necessary is not given nor are they itemized. c. Morgan & Morgan was paid the sum of $2,360.95. d. This payment is objected to as a matter of self-dealing without court approval. 7 2. Fleming, Hale & Shaw, PA. (Pages 20-21) a. Reming, Hale & Shaw is a law firm based in Palm Beach, Florida. b. They are listed as having performed legal services for the estate on account of its interest in High Spec., Inc. However, the nature of these services and why they were necessary is not given nor are they itemized. c. They were paid the sum of $59,054.11. d. This payment is objected to as excessive because the value of the under- lying asset which was the subject of the litigation was only inventoried at $5,000.00. The fees paid to Reming, Hale & Shaw, alone are almost twelve times the reported value of the asset. 3. Goldberg, Katzman & Shipman, P.C. (Pages 22-23) a. Goldberg, Katzman & Shipman, P.C., is a law firm based in Harrisburg. b. They are listed as having performed legal services for the estate. However, the nature of these services and why they were necessary is not gi ven nor are they itemized. c. They were paid the sum of $20,740.18 and the account indicates that $4,332.45 was expended on account of High Spec., Inc. d. This payment on account of High Spec., Inc. is objected to as excessive because the asset is reported at only $5,000.00 and proof of the benefit to the estate of the other services provided by said law firm (which is also the law firm which represents the executrices in their personal capacity) is hereby demanded. 4. Lisa M. Morgan (Page 25) a Lisa M. Morgan, one of the co-executrices, paid herself the sum of $230,000.00 as an executrix fee. 8 b. I t is not clear whether this is the final sum to be paid to her nor is it clear whether additional sums will later be paid to her co-executrix, Barbara McK. Mumma, for executrix fees. c. There is no delineation of whether this fee was based on percentages, time, or the like. d. This sum is objected to as excessive in light of her experience, the responsibilities assumed, the services performed, and the results achieved. Objectant believes that Lisa M. Morgan has been a full- time salaried employee of Morgan, Lewis & Bockius and/or family business corporations owned in whole or in part by the estate during the tenure of her service on behalf of the estate. Objectant requests the right to examine all time reports filed by Lisa M. Morgan as an associate of Morgan, Lewis & Bockius in order to insure that the estate was not subject to duplicate billing by her and the law firm. Additionally, we request the right to review salary, compensation, bonuses, and fringe benefits, paid to her by the various family corporations during the period of the estate administration. 5. 2800 South Dunes Drive, Sailfish Point, Florida (Pages 28-43) Objectant believes that the Florida property is non-income producing, represents no benefit to the estate or its beneficiaries, and was retained as an asset of the estate solely for the personal enjoyment of the executrices and their invited guests. 6. Fields, Wilkenson, Bryant & Aihen (Page 49) a They are listed as having received a retainer for unspecified purposes. b. This is objected to because there is no explanation of the nature of their services or of their importance to the estate. 9 7. Lucker, Kennedy & Felmeden (Page 49) a. Lucker, Kennedy & Felmeden is an accounting firm based in Buffalo, New York. b. They are listed as having performed "professional services." However, the nature of these services and why they were necessary is not given nor are they itemized. c. They were paid by the estate the sum of $83,755.57 and they were paid an additional sum of $26,549.00 by Mumma Realty Associates. d. Objection is made to this payment as being improper and/or excessive in light of the responsibilities assumed, the services performed and results achieved and because objectant believes some or all of these services may have been for the personal benefit of the executrices. A full itemization of the services underlying these payments is requested. 8. Morgan, Lewis & Bockius (Pages 49-50) a. Morgan, Lewis & Bockius is a law firm based in Philadelphia, Pennsylvania. b. They have represented the estate as counsel to the estate for the purposes of estate administration and settlement and have also represented the estate in several law suits and the executrices in their personal capacity. c. They are listed as having performed "professional services". However, the nature of these services and why they were necessary is not given nor are they itemized. d. They were paid or are to be paid by the estate the sum of $150,300.00 together with $52,404.25 from Mumma Realty Associates. e. Objection is made to this payment as being improper and/or excessive in 10 light of the responsibilities assumed, the services performed and results achieved and the conflicting interests represented. A full itemization of the services underlying these payments is requested as well as a copy of all time records. f. In addition, Morgan, Lewis & Bockius should explain why their fees should not be reduced by the following fees which were paid for work that was properly its responsibility. To Wit: (i) Morgan & Morgan in the amount of $2,360.95 (Page 20) (ii) Heming, Hale & Shaw, PA., in the amount of $59,054.11. (Pages 20-21) (iii) Goldbert, Katzman & Shipman in the amount of $20,740.18. (Pages 22-23) (iv) Kirkpatrick & Lockhart in the amount of $2,598.42. (Page 25-26) (v) Johnson, Duffie, Stewart & Wiedner in the amount of $2,922.56. (Page 47) (vi) Tive, Hetrick & Pierce in the amount of $546.73. (Page 48) (vii) Fields, Wilkenson, Bryant & Aihen in the amount of $3,000.00. (Page 49) g. Morgan, Lewis & Bockius has presumably been paid substantial fees in connection with the representation of various family enterprises and therefore we request a full itemization of such payments as well as the services underlying the same and all time billings associated therewith. E. OBJECfIONS TO PA YMENfS ON MORTGAGES. NOTES AND ACCOUNTS PAY ABLE (Page 51) 1. MRA I., Various Payments (Page 56 et seq.) a. Throughout this account references are made to MRA I and MRA II which are tenancy in common agreements to which the estate is a party. 11 The executrices have not provided any detailed information with respect to the administration of the assets held in such tenancies in common and a full accounting is therefore requested. b. Objectant believes that the executrices have made improper, inappropriate and/or disproportionate payments, allegedly on behalf of MRA I and MRA II without notice to or permission from the other tenants in common and for the purpose of satisfying their own personal obligations. F. OBJECfIONS REGARDING DISTRIBUTIONS OF PRINCIPAL (Page 60) 1. Objectant objects to the following distributions: a. Hummelstown Quarries, Inc. b. Union Quarries, Inc. c. Nine Ninety-Nine, Inc. 2. These are more fully objected to in objectant's GENERAL OBJECfIONS filed herewith. Such GENERAL OBJECfIONS are hereby incorporated herein. G. OBJECTIONS BASED UPON ADMINISTRATION EXPENSES CHARGEABLE TO INCOME (Page 77) 1. Register of Wills, Agent, Cumberland County (Page 77) a. Interest on delinquent death taxes. The executrices failed to file federal and Pennsylvania death tax returns until 180 days after the due dates. (i) This failure caused the estate to incur interest of $8,830.00 and additional assessments of $33,131.99. (ii) These interest payments and additional assessments are objected to as being patently unnecessary and unjustified. H. OBJECTIONS BASED UPON DISTRIBUTIONS OF INCOME (Page 115) 1. Marital Trust Under Will of Robert M. Mumma (Page 115) a 55.8368 shs. Nine Ninety Nine, Inc., common, $144,902.36 (12/28/87) 12 b. 70.8421 shs. Nine Ninety Nine, Inc., 10% preferred, $104,655.92 ( 12/28/87) 2. These are more fully objected to in Objectant's GENERAL OBJECTIONS filed herewith. Such GENERAL OBJECTIONS are hereby incorporated herein. WHEREFORE, the objectant respectfully requests this Honorable Court to enter a Decree or Decrees to: 1. Deny compensation to Lisa Morgan as executrix in the estate. 2. Reduce or deny compensation to Morgan, Lewis & Bockius as attorneys for the estate. 3. Reduce or deny compensation to Lucken, Kennedy & Felmeden. 4. Surcharge the co-executrices for interest paid on their notes, expenses incurred incident to the maintenance of the Horida property, interest paid on delinquent taxes, income taxes incurred as a result of misvaluation and/or misfunding the Marital Trust, fees paid to the firm of Heming, Haile & Shaw, P.A., their own self-dealing, benefits they have obtained from the payment of their personal expenses by the estate, expenses incurred by the estate as a result of their conflicts of interest and such additional surcharges as may be warranted under the facts and circumstances of this estate. 5. Surcharge the co-executrices for the costs, fees, and expenses which have been paid or incurred by objectant to protect his interests in the estate as a result of the improper administmtion of the estate by the co-executrices, including without limitation objectant's attorneys' fees and costs, plus interest. 6. Revoke the distributions of the stock of the family enterprises to the Marital Trust and any subsequent distributions therefrom. 7. Additionally, objectant requests that the court not approve the account as filed; surcharge the executrices individually and jointly for any losses to the estate resulting from the self- serving actions taken by them, reconvene the previously filed petition for removal of executrices 13 and trustees filed by Robert M. Mumma, II which is currently before your Honorable Court, and take such further action as the Court believes necessary to preserve the estate for the benefit of the residuary beneficiaries and any other persons in similar circumstances. Respectf ull y submitted, Charles E. Shields, III, Commonwealth National Bank Bldg. 2 West Main Street Mechanicsburg, P A 17055 (717) 766-0209 I.D. #38513 William C. Costopoulos 831 Market Street Lemoyne, P A 17043 (717) 761-2121 By ckk ~~7Q Attorneys for Objectant, Robert M. Mumma, II 14 IN RE: ESTATE OF ROBERT M. MUMMA, late of CUmberland County, Pennsylvania IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA . . : NO. 21-86-398 ORPHANS' COURT DIVISION AFFIDAVIT COUNTY OF !,\, I \ell I Pll,V(L J-- Before me, the ) ) SS: ) COMMONWEALTH OF PENNSYLVANIA undersigned authority, personally appeared ROBERT M. MUMMA, II, who, being first duly sworn according to law, deposes and says that all of the averments set forth in the foregoing Objections are true and correct according to the best of his knowledge or as is informed and believes. ~ ~. H1/.IAAAAUO"-P; Robert M. Mumma, II Sworn to and subscribed before me this "Jt'd.....day of ()(!t:lJ.-!X./L ---;-1991. I KIM . . . >OTARIAL SEA:. - 8Et~~.; ..... CROSTLEY t..... ;: bl' CIty of Harrisburg, Da'u~hi~' Co U Ie My Commission Expires Jan. 4. 1993 CERTIFICATE OF SERVICE I, Charles E. Shields, III, certify that a copy of the attached STATEMENT OF OBJECfIONS TO FIRST AND INTERIM ACCOUNT FOR THE ESTATE OF ROBERT M. MUMMA, DECEASED was served by first class mail on () d . L/:. J 71 { upon the following: Richard W. Stevenson, Esquire McNees, Wallace & Nurick P.O. Box 1166 Harrisburg, PA 17108-1166, for Barbara M. McClure 129 S. Lewisberry Road Mechanicsburg, P A 17055 Thomas M. Kittredge, Esquire Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993, for Barbara McK. Mumma and Lisa M. Morgan William F. Martson, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, PA 17013, for Barbara McK. Mumma and Lisa M. Morgan John Hardin Young, Esquire Porter, Wright, Morris & Arthur 1233 20th Street, N.W. Washington, D.C. 20036-2395, for Linda M. Roth 5104 Wessling Lane Bethesda, MD 20814 Attorney General Commonwealth of Pennsylvania Strawberry Square Harrisburg, PA 17120 (Courtesy Copy) Robert M. Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 ~f~J!C Charles E. Shields, III IN RE: ESTATE OF ROBERT M. MUMMA, Deceased, late of Cumberland County, Pennsylvania IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY , PENNSYLVANIA NO. 21-86-398 ORPHANS' COURT DIVISION STATEMENT OF OBJECTIONS TO FIRST AND INTERIM ACCOUNT FOR THE MARITAL TRUST UNDER WILL OF ROBERT M. MUMMA. DECEASED AND NOW COMES Robert M. Mumma, II, individually, and Robert M. Mumma, II and Gary M. Gilbert, as court-appointed guardians of the estates of Susan Mann Mumma and Marguerite Mann Mumma, (hereinafter "Objectant") by his attorneys, Charles E. Shields, III, of Mechanicsburg, and William C. Costopoulos, of Lemoyne, and respectfully represents: 1. Robert M. Mumma, II is a beneficiary under the duly probated will of his father and is an interested party to these proceedings. 2. Robert M. Mumma, II and Gary M. Gilbert are the court-appointed guardians of the estates of Susan Mann Mumma and Marguerite Mann Mumma pursuant to Order of Judge John T. Miller of York County Orphans' Court, dated CX::t-nh:=-r 4 , 1991. 3. The above-named Susan Mann Mumma and Marguerite Mann Mumma are holders of shifting executory devises under the duly probated will of their grandfather and are also interested parties to these proceedings. 4. The above parties make the following objections to the account for the following reasons: 1 A. OBJECfIONS BASED ON RECEIPTS OF PRINCIPAL (Schedule A, Page 1) 1. Objections to the valuations used for the following assets: (a) Nine Ninety-Nine, Inc. ($2,921,164.73) (b) Hummelstown Quarries, Inc. ($799,051.80) (c) Union Quarries, Inc. ($1,340,000.00) (d) Bender and Grove Properties ($277,184.50) 2. We object to the values as being less than the true values of the respective as is more specifically set forth in our objections related hereto in the estate account. 3. Miscellaneous Assets (Page 2) (a) Objectant believes that executrices engaged in self-dealing by permitting mortgages and notes payable to them personally to remain outstanding during the administration of the estate despite the fact that such obligations contained interest rates that were exorbitant in relation to the rates then prevailing in the open market. Objectant reserves the right to object to the nature of these obligations to the extent additional information may become available. B. DISBURSEMENfS OF PRINCIPAL (Schedule C, Page 4) 1. Morgan. Lewis & Bockius (Pages 4 & 5) (a) Morgan, Lewis & Bockius is a law firm based in Philadelphia, Pennsylvania. (b) They have represented the Marital Trust as counsel to the trustees for the purposes of administration, several lawsuits, and in defending the actions of the trustees which have benefitted the trustees personally to the detriment of other beneficiaries of the Trust 2 (c) Various entries are made for them with the designation "legal fees." (i) 8/6188 (ii) 7n/89 (iii) 10/10/89 (iv) 9/28/90 $ 8,690.00 79,780.00 80,000.00 293.712.00 $462,182.00 (d) The nature of the services rendered, the benefit to the trust, and why they were necessary is not given nor are they itemized. (e) Objection is made to these payments as being improper and excessive in light of the self-dealing of the trustees, their conflicts of interest as well as responsibility assumed, the services performed and results achieved. A full itemization of the services underlying these payments is requested as well as a copy of all time records. (0 Morgan, Lewis & Bockius has been paid substantial additional fees in connection with the representation of various family enterprises and there- fore we request a full itemization of all payments to Morgan, Lewis & Bockius as well as the services underlying the same and all time billings associated therewith. 3. Crai~. Hockreiter & Co. (Page 4) (a) As reflected in the account, the following payments were made to Craig, Hockreiter & Co.: (i) 1/30/89 (ii) 5/31/89 $ 11,924.17 17,226.50 (b) The nature of the services rendered, why they were necessary and the benefit received by the trust is not given nor are they itemized. (c) Objectant believes that the services provided by Craig, Hockreiter & Co. were to the benefit of family corporations and/or the trustees 3 individually should be charged accordingly. An itemization of the services underlying these payments is requested. 4. Stradley. Ronan. Stevens & Young (Page 4) (a) Stradley, Ronan, Stevens & Young is a law firm based in Philadelphia, Pennsyl vania. (b) There is an entry made for them under the designation "legal fees" in the amount of $217,253.05. (c) The nature of the services rendered, why they were necessary and the benefit received by the trust is not given nor are they itemized. (d) Objection is made to these payments as being improper and excessive in light of the self-dealing of the trustees, their conflicts of interest as well as responsibilities assumed, the services performed and results achieved. A full itemization of the services underlying these payments is requested as well as a copy of all time records. (e) Objectant believes that the services provided by Stradley, Ronan, Stevens & Young were to the benefit of certain family corporations or to the personal benefit of the executrices, and should be charged accordingly. An itemization of the services underlying these payments is requested. C. DISTRIBUTIONS OF PRINCIPAL TO BENEFICIARIES (Schedule D) (Pages 6, 7) 1. We object to these distributions as set forth in greater detail in our general objections filed in connection with the estate accounting. In particular, we object to the distributions shown in the account as being undervalued and made for the sole purpose of enabling the executrices/trustees to personally consolidate control over the family enterprises in contravention of the testamentary intent of Robert M. Mumma 4 D. CHANGES IN PRINCIPAL INVESTMENT HOLDINGS (Schedule F) (Pages 10. et seq.) 1. The interest payments made on the mortgage to Lisa Morgan have been more particularly objected under A.3(a) above and are herein renewed. E. PAYMENTS OF ADMINISTRATION EXPENSES (Schedule C-l) (Pages 52-84) 2. Lucker, Kennedy & Felmeden (a) Lucker, Kennedy & Felmeden is an accounting firm based in Buffalo, New York. (b) They are listed as having performed "professional services." However, the nature of these services and why they were necessary is not given nor are they itemized. (c) They were paid the following sums by the trustees: (i) 2n /89 $ 8,602.87 (ii) 4124/89 2,512.76 (iii) 11/28/89 2,875.00 (iv) 12/19/89 4,885.00 (v) 5/15/90 3,125.00 (vi) 3/8/91 11,466.26 (d) Objection is made to these payments as being improper and/or excessive in light of the responsibilities assumed, the services performed and results achieved and because objectant believes some or all of these services may have been for the personal benefit of the executrices/trustees. A full itemization of the services underlying these payments is requested. 3. Morgan & Morgan (Pages 77, 79) (a) Morgan & Morgan is a law firm comprised of Lisa M. Morgan, an executrix/trustee of the estate, and Scott Morgan, her husband. In an apparent case of self-dealing, without court approval, Lisa M. Morgan hired her own firm to provide certain services to the Marital Trust 5 (b) The nature of these services and why they were necessary is not given nor are they itemized. (c) Morgan & Morgan was paid twice, to wit: (i) 9/11/90 (ii) 10/25/90 $ 202.50 77.85 (d) This payment is objected to as a matter of self-dealing without court approval. nor are they itemized. (e) Objectant requests the right to examine all billings and the like submitted by Morgan & Morgan in order to insure that the estate was not charged for services which should have been rendered as part of her duties as an executrix. F. DISTRIBUTIONS OF INCOME TO BENEFICIARIES (Schedule D-1) (Page 86) 1. We object to these distributions of stock as is set forth in greater detail in our general objections filed in connection with the estate accounting. In particular, we object to the distributions shown in the account as being undervalued and made for the sole purpose of enabling the executrices/trustees to personally consolidate con- trol over the family enterprises in contravention of the testamentary intent of Robert M. Mumma WHEREFORE, the objectant respectfully requests this Honorable Court to enter a decree or decrees to: 1. Reduce or deny compensation to Morgan, Lewis & Bockius as attorneys for the Trust. 2. Reduce or deny compensation to Stradley, Ronan, Stevens & Y oung for services purportedl Y rendered to the Trust. 3. Reduce or deny compensation to Lucker, Kennedy & Felmeden. 4. Surcharge the Trustees for interest paid on their notes; fees paid to Craig, Hockreiter & Co.; fees paid to Morgan, Lewis & Bockius; Stradley, Ronan, Stevens & Young; Lucker, Kennedy & Felmeden, as a result of their own self-dealing, benefits they have obtained from the 6 payment of their personal expenses by the trust, expenses incurred by the trust as a result of their conflicts of interest, and such additional surcharges as may be warranted under the facts and circumstances of this trust. 6. Revoke the distributions of the stock of the family enterprises to Barbara McK. Mumma and to further require her to disgorge all profits received therefrom. 7. Additionally, objectant requests that the court not approve the account as filed; surcharge the Trustees individually and jointly for any losses to the estate resulting from the self- serving actions taken by them, reconvene the previously filed petition for removal of executrices and trustees filed by Robert M. Mumma, II which is currently before your Honorable Court, and take such further action as the Court deems proper to preserve the Trust for the benefit of the residuary beneficiaries and any other persons in similar circumstances. Respectfully submitted, Charles E. Shields, III, Esquire Commonwealth National Bank Bldg. 2 West Main Street Mechanicsburg, P A 17055 (717) 766-0209 J.D. #38513 William C. Costopoulos 831 Market Street Lemoyne, P A 17043 (717) 761-2121 Byt%"E~2a Attorneys for Objectant, Robert M. Mumma, II 7 IN RE: ESTATE OF ROBERT M. MUMMA, late of Cumberland County, Pennsylvania IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA . . : NO. 21-86-398 : ORPHANS' COURT DIVISION AFFIDAVIT COMMONWEALTH OF PENNSYLVANIA COUNTY OF (\ au..p}u ~ ---' ) ) ) SS: Before me, the undersigned authority, personally appeared ROBERT M. MUMMA, II, who, being first duly sworn according to law, deposes and says that all of the averments set forth in the foregoing Objections are true and correct according to the best of his knowledge or as is informed and believes. 'J.J ~- ~L Robert M. Mumma, II Sworn to and subscribed before. me this .~ day of {)rl7JIJti( , 1991. KIMBE;:;,!OTARIAL SEA:--- - .'.~ rl. CROSTlEY '_.' . City of HarriSburg 0 . r,. .,-. . '-ubhc My Commission E : auonm Co. xplres Jan. 4. 1993 CERTIACA TE OF SERVICE I, Charles E. Shields, III, certify that a copy of the attached STATEMENT OF OBJECfIONS TO FIRST AND INTERIM ACCOUNT FOR THE MARITAL TRUST UNDER WILL OF ROBERT M. MUMMA, DECEASED was served by first class mail on t:7 d ,,-f'; / f?/ upon the following: John Hardin Young, Esquire Porter, Wright, Morris & Arthur 1233 20th Street, N.W. Washington, D.C. 20036-2395, for Linda M. Roth 5104 Wessling Lane Bethesda, MD 20814 Thomas M. Kittredge, Esquire Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993, for Barbara McK. Mumma and Lisa M. Morgan William F. Martson, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, PA 17013, for Barbara McK. Mumma and Lisa M. Morgan Richard W. Stevenson, Esquire McNees, Wallace & Nurick P.O. Box 1166 Harrisburg, PA 17108-1166, for Barbara M. McClure 129 S. Lewisberry Road Mechanicsburg, P A 17055 Attorney General Commonwealth of Pennsylvania Strawberry Square Harrisburg,PA 17120 (Courtesy Copy) Robert M. Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 ~ ;::~~:JJI Charles'E. Shields, III