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HomeMy WebLinkAbout01-13-89 (2) IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY BARBARA MeR. MUMMA and LISA M. MORGAN, Executors of and Trustees under the will of Robert M. Mumma, deceased, Plaintiffs, ORPHANS' COURT DIVISION vs. No. 21-86-398 ROBERT M. MUMMA, II, BARBARA M. McCLURE and LINDA M. ROTH, Defendants. ANSWER TO COMPLAINT FOR DECLARATORY JUDGMENT UNDER 42 Pa.C.S. ~ 7533 AND FOR OTHER RELIEF UNDER 20 Pa.C.S. Subch. 33C and ~ 7133 The averments contained in Paragraphs 1 through 27 of the Complaint are admitted. ~~...c_..?W" 2/.2- Li da M. Roth ..,.. ...J- /95 ....M filM 'tJ H..-I ID HI'- Ul fiI <tl P:;r,?l l/-j <tl ID 0-.-\ U P:;Cl <=: ID P:;fiIZ Ul <tl <=: Cl p:;fiI:l1<<: (1j :> 0 Cl8 ID..-I ..-\ "- OSOU ..-1:>1 tJl ~ .... M Il<Ul ..-1 P:;M <=: :> 00 880 <=: <=: ..-1 '" 0 ZZ~ . OID Cl M :<: HfiI ..c: . ~Il< I <<::<:ClU '.,A;.' +> 1.0 . Hl:!lZ.Q 'c' 0 "- 1-1 00 :;: Il<Cl<<:~ U:>1 ~ I :>:0 <J:l 'i> +> 0 ..-I 8 O,":>M l/-j<=: U N p:; U M . :z: O~ fiI ?<l!)<J:l --.. 0 . "" o p:; I'- . \l,; +lU Ul 0 ~ 80 U 1-1 <=: Z 8lQl . :t> ~'O (1j P:;~ <tl o <=: .c .... fiI 'Il< <Q U(1j A 0 ~<<:Ul ..-I 1-1 <J:lH .0 Q) H 0 fiI ZUUN .c Q) 8 <<: fiI . +>.0 <<: Cl(1jP:; <=: S 8 p.,fi1 <J:l Cl HU fiI NZ ","0 ...... ......_.~..... h. IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY BARBARA McK. MUMMA and LISA M. MORGAN, Executors of and Trustees under the will of Robert M. Mumma, deceased, Plaintiffs, ORPHAN'S COURT DIVISION v. 21-86-398 ROBERT M. MUMMA, II, BARBARA M. McCLURE and LINDA M. ROTH, Defendant. ORDER AND NOW, this ___ day of , 1989, having considered the motion of Robert M. Mumma, II to disqualify Morgan, Lewis & Bockius as counsel for the plaintiffs in this action and the response of the plaintiffs, it is hereby ORDERED that Morgan, Lewis & Bockius is disqualified from any further representation of the plaintiffs in connection with this action. Within 20 days Morgan, Lewis & Bockius shall withdraw their appearance, and plaintiffs shall cause new counsel to enter an appearance for them. Furthermore, Morgan, Lewis & Bockius shall have no contact with replacement counsel, and plaintiffs shall return to Morgan, Lewis & Bockius any work product of that firm created in preparation for bringing this action or in connection with this action and shall not pass any such work product along to replacement counsel. J. ,.I >' .J- IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY BARBARA McK. MUMMA and I,ISA M. MORGAN, Executors of and Trustees under the Will of Robert M. Mumma deceased, Plaintiffs, ORPHAN'S COURT DIVISION v. ROBERT M. MUMMA, II, BARBARA M. McCLURE and LINDA M. ROTH, dl- '6(,-398 Defendant. ORDER . r.l,!. AND NOW, this ~ day of January, 1989, defendant Robert M. Mumma, II having filed a motion to disqualify Morgan, Lewis & Bockius from any further representation of the plaintiffs in connection with this matter, it is hereby ORDERED that ~ proceedings in thiq mattgr ~rg STAYED PQnning a decision on this , l1:)otion except for r1i q,..""Qrr l3y ...i.Lh"L "lei" 1i:lllited~t;Qg 8ub~ect m~t.!,er of the motion, ~l:l.ich-~O~ry-may-c.u"uu"rrm;-i:mmedia'J~?;~.;;2..S-I%" A Hea,ring on this motion is scheduled for (!JP-C~)'\.Cs/~ 1~ / r at ~:oo ~.m. in Courtroom No. \ ~ \~'~.,0< .. , ler () f {-~, IN THE COURT OF COMMON PLEAS FOR CUMBERLAND COUNTY BARBARA McK. MUMMA and LISA M. MORGAN, Executors of and Trustees under the Will of Robert M. Mumma, deceased, Plaintiffs, ORPHANS' COURT DIVISION v. 21-86-398 ROBERT M. MUMMA, II, BARBARA M. McCLURE and LINDA M. ROTH, Defendants. MOTION OF ROBERT M. MUMMA, II FOR AN ORDER DISQUALIFYING MORGAN, LEWIS & BOCKIUS FROM REPRESENTATION OF PLAINTIFFS Robert M. Mumma, II ("Mr. Mumma") hereby moves for an order in the form attached hereto, disqualifying plaintiffs' counsel, Morgan, Lewis & Bockius ("ML&B"), from representing plaintiffs in this action, barring ML&B from communicating with plaintiffs' new counsel concerning this action and staying all proceedings until this motion is decided. In support of this motion, Mr. Mumma avers as follows: Introductory Facts 1. Robert M. Mumma ("decedent") died on April 12, 1986. He was a resident of Cumberland County, Pennsylvania, and left a Last Will and Testament dated May 19, 1982, and a Codicil thereto dated October 12, 1984. Letters testamentary on decedent's estate were granted to plaintiffs by the Register of Wills of Cumberland County on June 5, 1986. /9/ 2. Plaintiffs are Barbara MeR. Mumma ("Mrs. Mumma"), decedent's widow, and Lisa M. Morgan ("Mrs. Morgan"), one of his daughters. The decedent had three other children, Barbara M. McClure ("Mrs. McClure"), Linda M. Roth ("Mrs. Roth") and Mr. Mumma. 3. One of the principal corporations controlled by the Mumma family is known as Nine Ninety Nine, Inc., which is a holding company that controls a number of other operating companies. Mr. Mumma, Mrs. Morgan, Mrs. McClure and Mrs. Roth are all shareholders of Nine Ninety Nine, Inc. At the time of decedent's death the only other shareholder of Nine Ninety Nine, Inc. was Kim Company, another Mumma family company, which has since been dissolved. There is a dispute between Mr. Mumma and plaintiffs as to who now owns or has the right to vote the Nine Ninety Nine, Inc. shares formerly owned by Kim Company. 4. Plaip"iffs, purporting to act as executors of decedent's will, as trustees under the decedent's will and individually, have entered into a letter of intent with a publicly-traded, foreign company to sell all the issued and outstanding shares of Nine Ninety Nine, Inc. and certain other assets. 5. Plaintiffs, asserting that they and the estate own a majority of the outstanding and issued stock of Nine Ninety Nine, Inc., have stated that they intend to cause Nine Ninety Nine, Inc. to make a reverse stock split, which is a corporate trick which, if allowed to proceed as envisaged by plaintiffs, will have the effect of a compulsory purchase of the -2- Iii i ,-;. Nine Ninety Nine, Inc. shares owned by Mr. Mumma and any of his sisters who do not want to sell their shares to the proposed buyer. 6. Plaintiffs, represented by ML&B, have brought two related lawsuits in this County against Mr. Mumma. In the instant action, plaintiffs seek the following relief: a. a declaration that the estate's shares in Nine Ninety Nine, Inc. and Hummelstown should be sold to a foreign, publicly-traded corporation notwithstanding Article Thirteenth of decedent's will, which provides in part that "it is my desire that if expedient and possible, the businesses which I have personally directed during my lifetime and in which I have had an interest be continued for the benefit of and under the management and control of my immediate family"; and b. an order that plaintiffs, as executors, may submit to "voluntarily judicial arbitration" any issues a non- selling shareholder raises in connection with the sale of his or her interest in Nine Ninety Nine, Inc. and Hummelstown Quarries, Inc. 7. In the second action, No. 66 Equity 1988, filed by plaintiffs and ML&B against Mr. Mumma, plaintiffs seek: a. a declaration that Mr. Mumma's right of first refusal to purchase pennsy Supply, Inc., a wholly-owned subsidiary of Nine Ninety Nine, Inc., is "invalid"; b. a declaration that a power of attorney, drafted by ML&B, is, notwithstanding its revocation by Mr. Mumma, valid and enforceable, and entitles plaintiffs to act as -3- /'13 Mr. Mumma's attorney-in-fact to execute various documents alleged to be necessary to complete the sale of properties held by members of the Mumma family as tenants-in-common; and c. a declaration that two agreements drafted by ML&B supposedly for the benefit of the tenants-in-common, including Mr. Mumma, which agreements constitute the stated basis for the aforementioned power of attorney, are valid and grant a valid and enforceable power of attorney to plaintiffs to sign such deeds and other documents as necessary to carry out the purposes of the two agreements, including the sale of property. ML&B Representation of Mr. Mumma 8. After the death of decedent, ML&B undertook the representation of the estate and the primary beneficiaries, including Mrs. Mumma, Mr. Mumma, and his sisters. In Mayor June, 1986, all of these individuals met with Arthur L. Klein, a partner of ML&B, at the ML&B offices in Philadelphia. At this time, the will was read, and there were extensive discussions concerning estate matters. 9. At this meeting, Mr. Klein gave legal advice to Mr. Mumma and his two sisters having children concerning certain tax advantages available if they chose to disclaim their interests under the Will of the decedent in favor of their children. 10. Also, during the course of this meeting, Mr. Klein advised Mr. Mumma and the others present that it was the intention to keep the Mumma family businesses within the family -4- J~~ and that Mr. Mumma would have an opportunity to negotiate for the purchase of the businesses. 11. During this meeting, Mr. Mumma told Mr. Klein that he needed estate planning advice and set up with Mr. Klein a second meeting in Philadelphia at which he met with Mr. Klein, gave him a copy of his personal financial statement, and privately discussed with Mr. Klein his personal estate planning concerns. This was followed by drafts of documents and further meetings and discussions. The Disclaimer 12. Mr. Mumma also pursued further with Mr. Klein the disclaiming of his interests under the Will in favor of his children. Because of a deadline for taking such action, Mr. Mumma and Mr. Klein discussed this matter extensively by telephone in early January 1987 while Mr. Mumma was in Colorado. Among the issues which were critical to Mr. Mumma's decision regarding this issue and on which Mr. Klein advised Mr. Mumma were the potential value of the estate and his interest in the estate, the tax implications of such a disclaimer, the effect such a disclaimer would have on Mr. Mumma's standing to participate on behalf of his children in the administration of the decedent's estate, and the timing of any public filing and therefore public notice of the disclaimer. 13. Mr. Mumma relied upon the advice of Mr. Klein, and, on or about January 6, 1987, Mr. Mumma e::ecuted a Disclaimer, drafted by ML&B, under which Mr. Mumma disclaimed his interest in decedent's estate in favor of his children. -5- /95 14. Mr. Klein advised Mr. Mumma that the approximate value of the decedent's estate was $12 million and that the approximate value of his interest was $2 million. Mr. Mumma relied on this statement to his detriment in connection with his decision to disclaim. 15. Mr. Klein also advised Mr. Mumma that his execution of a disclaimer of his interest under the will would not reduce Mr. Mumma's ability to participate on behalf of his children in the review of the administration of decedent's estate. Mr. Mumma relied on this statement in connection with his decision to disclaim. 16. On or about December 27, 1988, ML&B, on behalf of plaintiffs and without any prior consultation with Mr. Mumma, filed in this Court a Petition For Appointment of Guardian Ad Litem for Mr. Mumma's children, the intended purpose of which is to attempt to preclude Mr. Mumma to the greatest extent possible from participation on behalf of his children in the administration of decedent's estate. 17. Although Mr. Mumma specifically directed Mr. Klein not to file the disclaimer with the Cumberland County Court at the time the disclaimer was executed, he has recently ascertained that the disclaimer was so filed on January 12, 1987, by ML&B's corresponding counsel in Cumberland County. He was led to the discovery of this fact by the complaint filed by ML&B in the this action, which specifically recited that the disclaimer was filed with this Court on January 12, 1987. The Tenants In Common Agreement -6- /9~ 18. In December 1986, ML&B gave legal advice to the shareholders of Kim Company and Pennsylvania Supply Company, two Mumma family companies, which shareholders included the plaintiffs and Mr. Mumma, as to the advisability for tax purposes of dissolving these companies and distributing their assets to the shareholders prior to the end of 1986. 19. Although the shareholders of Kim Company and pennsylvania Supply Company agreed to the dissolution and distribution prior to the end of 1986 and although draft agreements among tenants in common were prepared by ML&B during December 1986, these agreements were not finalized in December. At a meeting that month in Harrisburg at which ML&B representatives were present, including Mr. Klein by telephone, Mr. Mumma requested extensive changes to the drafts which were presented to him. Among the many subjects discussed was insistence by Mr. Mumma upon provisions whereby, if any of the individual Owners wanted to sell any of the properties, any or all of the other Owners would have an absolute right of first refusal to buy such property. 20. Since Mr. Mumma intended to be away most of the month of January, he told Mr. Klein that he would go ahead and sign a power of attorney in connection with the dissolutions but that it was essential that the draft agreement be rewritten to accommodate the changes discussed and that he was signing based upon this express understanding. Mr. Klein agreed. Mr. Mumma does not believe that any unattached signature pages were signed -7- /97 at this time. It is his recollection that his one sister was not present and that another simply participated by telephone. 21. In February or March 1987, there was at least one meeting held in Harrisburg at which a new draft was presented and discussed and further changes were made. At this time or shortly thereafter, signature pages were circulated. Mr. Mumma instructed ML&B at the meeting that the signature pages should be affixed to the final agreement when prepared, and that he wanted to receive copies. Mr. Mumma was never furnished with copies of these final documents. 22. Plaintiffs have attached to their Equity complaint in this action against Mr. Mumma two documents entitled Mumma Realty Associates, Agreement Among Tenants In Common, both allegedly made as of December 19, 1986. One document purports to refer to Kim Company and the other to Pennsylvania Supply Company. Plaintiffs rely on these documents (the "Purported Agreements") to support their prayers for declarations respecting (a) Mr. Mumma's right of first refusal to purchase pennsy Supply, Inc., which is the principal operating company controlled by Nine Ninety Nine, Inc., and (b) plaintiffs' alleged right to act as Mr. Mumma's attorney-in-fact to sell certain assets. 23. The Purported Agreements are not the final agreements to which Mr. Mumma agreed, and he never agreed to the terms set forth in the Purported Agreements. In fact, Mr. Mumma knows that, until the Purported Agreements were filed with this Court, he had never seen some of the language in the Purported Agreement dealing with the assets of Kim Company. This language -8- )q~ consists of a paragraph (obviously typed with a different typewriter) running from page 7 to page 8 of the Purported Agreement, which paragraph provides, inter alia, that the "individual Owners" will receive cash instead of Union Quarries, Inc. stock. By implication, this provided that the estate would receive 100 percent of the Union Quarries stock held by Kim Company. The Union Quarries stock is quite valuable, and Mr. Mumma never agreed to this provision. 24. Mr. Mumma also did not agree to the other terms set forth in the Purported Agreements, which apparently were authored by ML&B, who represented him with regard to this transaction, and which Purported Agreements ML&B is now attempting to use against him in these proceedings. ML&B Withdrawal from Representation 25. In late March 1987, Mr. Mumma told Mr. Klein that the family situation was deteriorating and that he thought it best that he obtain separate counsel. He asked Mr. Klein for a bill, which was submitted and paid. 26. In June 1987, at a family meeting at Mrs. McClure's house, Mr. Mumma was asked by plaintiffs to execute and deliver a power of attorney to allow a parcel of land to be sold by Mumma Realty Associates I. Mr. Mumma did not want the lot to be sold and so informed plaintiffs, but Mr. Mumma was prevailed upon to deliver the power on being offered a right of first refusal to purchase pennsy Supply, Inc. 27. Shortly after this meeting, Mrs. Morgan spoke to Mr. Klein about the right of first refusal that the family had -9- /q~ granted Mr. Mumma, and Mr. Klein advised Mrs. Morgan negatively concerning the giving of this right. A month or two later, Mr. Mumma asked Mrs. Mumma when he would receive a letter setting forth his right of first refusal, and she informed him that ML&B had advised the estate not to issue such a letter. Disqualification 28. ML&B must be disqualified from representing the plaintiffs in these two related actions. a. Mr. Mumma is a former client of ML&B. b. The subject matter of ML&B's prior representation of Mr. Mumma is substantially related to the subject matter of this action and the related Equity action. In fact, in several instances, as set forth above, ML&B is attempting to take action against Mr. Mumma which is contrary to the very legal advice which it rendered to him and the directions which he gave to ML&B as his attorneys. c. The plaintiffs' interests with regard to these lawsuits are materially adverse to the interests of Mr. Mumma. d. ML&B never advised Mr. Mumma of its proposed representation of plaintiffs in this action, and certainly did not ask his consent to such representation, which consent would have been, in any event, refused. e. ML&B's representation of plaintiffs in these lawsuits violates its duty of loyalty to Mr. Mumma as well as its duty to preserve his confidences even after the termination -10- ,;(Cr:'J of its employment. The representation also violates its duty to avoid even the appearance of impropriety. WHEREFORE, Mr. Mumma respectfully requests that ML&B be disqualified from representing plaintiffs in this action and ordered not to communicate with replacement counsel concerning the subject matter of this action and further requests that all proceedings be stayed pending resolution of this Motion. Further reasons in support of this motion are set forth in the accompanying memorandum. Respectfully submitted, James R. Ledwith Jon A. Baughman Anthony Vale PEPPER, HAMILTON & SCHEETZ 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 (215) 981-4000 John B. Fowler, III FOWLER, ADDAMS, SHUGHART & RUNDLE 28 South Pitt Street Carlisle, PA 17013 (717) 249-8300 BY: .~C.. ~ At I V for Robert M. Mumma, II -11- ;)0 I ," . VERIFICATION I, Robert M. Mumma, II, hereby state: 1. I am a defendant in this action; 2. I verify that the statements made in the foregoing Motion are true and correct to the best of my knowledge, information and belief; and 3. I understand that the statements in said Motion are made subject to the penalties of 18 Pa. C.S. ~4904 relating to unsworn falsification to authorities. iW)Jf ~2L Robert M. Mumma II Dated: ~ / :$ /183 () t",~O ::; CERTIFICATE OF SERVICE I, Jon A. Baughman, certify that a copy of the attached Motion of Robert M. Mumma, II for an Order Disqualifying Morgan, Lewis & Bockius From Representation of Plaintiffs, and a copy of the supporting memorandum were served upon plaintiffs' counsel, William E. Zeiter, 2000 One Logan Square, Philadelphia, PA 19103, by hand delivery on January 12, 1988. ~ . . dO'-! (Yu-