HomeMy WebLinkAbout02-03-89
IN THE COURT OF COMMON PLEAS
FOR CUMBERLAND COUNTY
BARBARA McK. MUMMA and
LISA M. MORGAN, in their own
right and as executrixes of
the Estate of Robert M.
Mumma, deceased,
CIVIL ACTION
EQUITY AND DECLARATORY
JUDGMENT
Plaintiffs,
NO. 66 EQUITY 1988
vs.
ROBERT M. MUMMA II
Defendant.
PLAINTIFFS' SUPPLEMENTAL MEMORANDUM
OF LAW IN OPPOSITION TO THE MOTION OF
ROBERT M. MUMMA II FOR AN ORDER
DISQUALIFYING MORGAN, LEWIS & BOCKIUS
AS COUNSEL IN THIS ACTION
Plaintiffs Barbara McK. Mumma and Lisa M. Morgan,
individually and as Executrixes of and Trustees under the will of
Robert M. Mumma, deceased ("the Estate") submit this Supplemental
Memorandum of Law in opposition to the Motion of Robert M. Mumma
II for an Order Disqualifying Morgan, Lewis & Bockius as Counsel
in this Action. Plaintiffs originally submitted a Memorandum of
Law prior to the Court hearing on January 25, 1989. This
Supplemental Memorandum of Law takes into account the testimony
and evidence presented at the January 25 hearing.
I. The Estate's Statement of the Evidence Before The Court.
The defendant, Bobby Mumma, was called as a witness by
his counsel, and testified that his first contact with Art Klein
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of Morgan, Lewis & Bockius occurred between two weeks and two
months after the death of his father. Klein had called a meeting
of the beneficiaries under the Will, who were Mrs. Mumma ("Kim"),
Mrs. Morgan ("Lisa"), Mrs. Roth ("Linda"), Mrs. McClure ("Babs")
and Bobby. Bobby was told that Klein would explain what was going
to happen. Klein went through the Will, explained its provisions,
answered the questions asked by those in the group, and told the
children about the option to disclaim and its tax ramifications.
Klein said nothing about whom he represented at the meeting. It
was Bobby's "understanding" that Klein was representing everybody,
i.e. all of the beneficiaries under the will.
After this first meeting Bobby engaged Klein to work on
his own estate planning. He went to Philadelphia to discuss this
with Klein and an associate, Pam wilford. Klein agreed to provide
these legal services to him.
The letter dated September 5, 1986 (Exhibit D-1), in
which Klein sets out to Bobby the terms of Morgan, Lewis &
Bockius' engagement by Bobby, is not something that was in
Bobby's file, nor does he recall it or not recall it. Bobby does
recall that they were discussing his purchase of pennsy Supply,
Inc. at the time, and that Klein was going to handle it, and if it
got to negotiations between the Estate and him, Morgan, Lewis &
Bockius would represent the Estate and Bobby would have to get
other counsel.
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There was another meeting with Klein in Harrisburg in
November, 1986, with all of the family present, and George
Hadley, the accountant, in which the liquidation of Kim Company
and Pennsylvania Supply Company was discussed in light of the Tax
Reform Act of 1986, and its disallowance of the General Utilities'
doctrine. Klein recommended the liquidations.
At this meeting Bobby raised a question as to whether the
formal dissolution of Pennsylvania Supply Company and Kim Company
were necessary for the liquidations and their tax consequences to
be effective, and Klein agreed that he'd have it researched.
Bobby thereafter received a letter dated November 11, 1986
(Exhibit 0-2) from Klein, in which Klein told him that the two
companies did not have to be dissolved in the liquidation. At the
November meeting in Harrisburg Bobby "assumed" that Klein was
representing all the shareholders.
By letter to Bobby dated December 3, 1986, an associate
of Morgan, Lewis & Bockius, Martha Manning, told Bobby she was
writing "at Lisa Morgan's request" to advise him that the
dissolution of the two corporations would not take place until
articles of dissolution were filed.
(Exhibit 0-3)
The next meeting with Morgan, Lewis & Bockius that Bobby
attended was in Harrisburg on December 19, 1986. Bill Skinner of
Morgan, Lewis & Bockius was there, together with George Hadley,
the accountant, Lisa and Kim. Klein was on the speakerphone.
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Bobby doesn't recall whether Linda or Babs were there. Skinner
had a stack of documents for execution. There was an agreement
among tenants in common. There was also a power of attorney,
which Bobby admits he signed. As to the agreements among tenants
in common, although Bobby wanted some changes made, there wasn't
time to redraft it by the end of the year, so it was agreed it
would be redrafted later.
In the course of this December 19 meeting, Klein said
nothing about whom he was representing at the meeting. Neither
did Bill Skinner. Bobby "understood" that Klein was advising and
protecting him, Bobby. Bobby believes that he was the only one
who signed a power of attorney at that time.
It is Bobby's signature which appears on Exhibit A to the
Complaint (Agreement Among Tenants-In-Common dated December 19,
1986), on the signature page which is page 19. The signature page
which Bobby signed was not attached to anything, and the page
that he signed was at a subsequent meeting in March or April,
1987, at which Gerry Brawner of Morgan, Lewis & Bockius was
present. By letter dated March 11, 1987 (Exhibit D-4) Brawner
sent drafts of new agreements to the family. The signature page
on the Brawner redraft is page 17.
with respect to the Disclaimer, Bobby did decide to
disclaim in favor of his children. He signed the Disclaimer, and
sent it to Klein. Bobby does not now recall receiving a copy of
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the letter dated January 9, 1987 from Klein to Bill Martson
directing Martson to file the disclaimer with the Orphans' Court
on January 12, "following confirmation by phone from me that Bobby
Mumma wishes to follow through with the disclaimer".
(Exhibit
Estate-I) Bobby also does not recall receiving a copy of the
letter dated January 12, 1987 from Klein to the Executrixes, in
which it is noted "Bill Martson in Carlisle is filing a signed
copy of the Disclaimer with the Clerk of the Orphans' Court
Division of Cumberland County." (Exhibit Estate-2) Bobby is
shown as a copy addressee on both Estate-l and Estate-2.
In late March, 1987 Bobby received a bill in the amount
of $20,000 from Morgan, Lewis & Bockius as a deposit on account of
fees and disbursements, which he had one of his companies pay.
(Exhibit 0-8) sometime later, he decided that it would be better
if he retained other counsel, and as a result Klein sent him a
check for $6,100, payable to Bobby, which was the amount left on
the $20,000 retainer after deducting Morgan, Lewis & Bockius' fees
and disbursements. Klein's letter (Exhibit 0-9) dated August 14,
1987 encloses the check for $6,100 "representing the difference
between the $20,000 paid on account and the charges recorded on
your matters."
Klein's letter goes on to state that the "time was about
equally divided between the disclaimer matter, which as you know
presented some very difficult issues, and tax and estate planning
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generally for you . . .
"
There is nothing in D-9 that suggests
that any part of the fee charged by Morgan, Lewis & Bockius had
anything whatever to do with legal services rendered to Bobby in
connection with the administration of the Estate, the liquidation
of Kim Company or Pennsylvania Supply Company, or the drafting of
the agreement among tenants in common and related documents.
Bobby never asked Klein to send him a bill for legal services
rendered in connection with the Estate administration or the
liquidations and related matters.
On July 7, 1987 Bobby met with the family and learned
that it was intended to sell some property in Lemoyne. Although
Bobby now says he was opposed to the sale, he executed a power of
attorney permitting it, allegedly in return for a right of first
refusal. Later, when he learned that the Estate would not give
him a right of first refusal to buy pennsy Supply, Inc. Bobby
asked that the power of attorney be returned to him and it was.
Art Klein testified that he first met with all of the
family in the summer of 1986. Klein told the meeting that he had
been asked by the Executrixes to explain to them what was going on
with the Estate. It was clear to all that Klein was at the
meeting as counsel to the Estate.
The purpose of the engagement letter (Exhibit D-1) he
sent to Bobby, after Bobby asked Klein to help him with his estate
planning, was to make it clear that Morgan, Lewis & Bockius would
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not be disabled to represent the Estate in dealings between the
Estate and Bobby. It was wfundamentalW to the understanding
between Klein and Bobby that Morgan, Lewis & Bockius could
represent the Estate in any dealings with him. Klein would not
have accepted the engagement had he known that Bobby would later
try to use it to disable Morgan, Lewis & Bockius from representing
the Estate.
The meeting in Harrisburg in November, 1986, regarding
the proposed liquidation of Kim Company and Pennsylvania Supply
Company, was held so that Klein could explain what the Executrixes
were going to do. At this meeting Klein did not tell Bobby, Linda
and Babs that he was not representing them, but there was no
occasion to do so, because they all knew that Morgan, Lewis &
Bockius represented the Estate and was recommending the
liquidations as counsel for the Estate, which controlled 98% of
Pennsylvania Supply Company and 82% of Kim Company. The children,
on the other hand, each held only 4.23% of Kim Company, and less
than 1/2 of 1% of Pennsylvania Supply Company.
(Exhibits D-4 and
5; Complaint Exhibits A and B)
The only points Bobby raised with respect to the
proposed agreements among tenants in common were technical
issues, and did not go to the substance of what was proposed.
Bobby wanted the corporate shells of Kim Company and Pennsylvania
Supply Company kept in existence. He also wanted provisions in
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the agreements relating to gifts and permitting the pledging of an
interest. The legal services rendered to Bobby by Klein related
to estate planning, tax analyses and the disclaimer. The Morgan,
Lewis & Bockius computer print-out showing the services rendered
to Bobby (Exhibit Estate-J) reflects only these services, and does
not reflect any legal services rendered to Bobby in connection
with the Estate administration or the liquidations. The last
legal services rendered to Bobby were on April 1, 1987. No part
of the fee paid by Bobby for Morgan, Lewis & Bockius' services had
anything to do with anything other than the Disclaimer and Bobby's
estate planning.
Mrs. Morgan testified that, at the time of her father's
death, she was an associate in the Litigation section at Morgan,
Lewis & Bockius. Her father had already commenced to consult with
Klein with respect to a redrafting of his will, but died before
this could be accomplished. Since Klein already had some
familiarity with the family and the family business, he was asked
to undertake the representation of the Estate.
When Bobby asked Klein to advise him with respect to his
estate planning, Art called Lisa and secured the consent of the
Executrixes to his representation of Bobby. Art assured Lisa
that his services would be restricted to the estate planning area,
and all question of a conflict would be avoided. Based on this
assurance the Executrixes consented to the representation.
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Morgan, Lewis & Bockius was at all times the Estate's
counsel, and this was clear to all members of the family. The
first meeting of the family in the summer of 1986 was called
because the other children were complaining to the Executrixes
that they were being kept in the dark with respect to the
administration of the Estate, and the meeting was scheduled so
that Klein as counsel to the Executrixes could explain what was
going on.
As to the liquidation of Kim Company and Pennsylvania
Supply Company, this was recommended by Morgan, Lewis & Bockius to
the Executrixes for tax reasons. This was done at a meeting with
Klein, the Executrixes and George Hadley, the accountant, and the
Executrixes asked Klein to meet with all the family to explain for
the Executrixes what was going to be done by the Estate. At this
meeting with the family in November, and later on December 19,
1986, when the documents relating to the liquidation were
executed, it was clear to all members of the family that Morgan,
Lewis & Bockius was acting as counsel to the Estate. In
connection with this, in fact, Babs consulted with another lawyer
who suggested a number of questions which Babs posed, and were
answered to her satisfaction.
In January, 1987, Lisa received from Klein, in her
capacity as an Executrix of the Estate, a Disclaimer signed by
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Bobby. Another signed Disclaimer was sent certified mail to the
Executrixes in Harrisburg.
Thus with the two Disclaimers signed by Bobby sent to
Bill Martson (Exhibit Estate-l), one signed Disclaimer handed to
Lisa by Klein, and one Disclaimer signed by Bobby sent certified
mail to the Executrixes in Harrisburg (Exhibit Estate-2), there
were a total of four Disclaimers signed by Bobby.
At the meeting of the family held on December 27, 1988,
with representatives of Morgan, Lewis & Bockius present, Bobby
stated to all that the proposed sale of the business would take
place only Hover his dead body* and that he would do anything to
stop the sale. Since then, in these proceedings, Bobby has filed
(1) a Motion to Disqualify Morgan, Lewis & Bockius, (2)
Preliminary Objections to the Complaint, (3) a Petition to Remove
his mother and sister as Executrixes, and (4) a Petition to Compel
an Accounting.
II. The Evidence Before the Court Does Not Establish
Anv Basis for the Disaualification of ML&B
The Motion for Disqualification should be denied because
the evidence before the Court does not establish any attorney-
client relationship between Bobby and ML&B that is *substantially
related,* Pa. R. Prof. Conduct 1.9, to any of the present
lawsuits. Bobby's testimony fails as a matter of law to establish
that he entered into an attorney-client relationship with ML&B in
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the matters relating to the liquidations of Pennsylvania Supply
Company and Kim Company and the formation of the tenancies in
common. To the contrary, the testimony of Art Klein and Lisa
Morgan affirmatively demonstrates that ML&B represented the Estate
and not Bobby with respect to those matters. Although Bobby's
testimony does establish an attorney client relationship with
respect to the disclaimer, Bobby has failed to articulate how
that relationship is substantially related to any of the present
lawsuits.
The evidence of record also establishes that Bobby's goal
has been and continues to be to acquire the family business and
related properties for himself. Bobby has consistently taken
positions in his dealings with the Estate that are designed to
achieve this goal, including the actions that precipitated this
litigation. Bobby, however, has also waived any objection to
ML&B's representation of the Estate in matters relating to his
efforts to purchase the family business and related properties.
Because this litigation is part of the Estate's dealings with
Bobby regarding the disposition of the family business and related
properties, ML&B should not be disqualified from participating on
behalf of the Estate.
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A. Bobby's testimony fails as a matter
of law to establish the existence
of an attorney-client relationship
in connection with the liquidations
and the tenancies in common.
As the party seeking disqualification, Bobby bears the
burden of proving that (1) a prior attorney-client relationship
existed between himself and ML&B, and (2) the matters involved in
ML&B's present representation of the plaintiffs are substantially
related to the subject matter of ML&B's former representation of
Bobby. pennsvlvania Power & Liqht Co. v. Gulf oil Corp., 74
D.&C.2d 431, 433 (1975). As a threshold issue, therefore, Bobby
must establish that an attorney-client relationship existed
between himself and ML&B as to each of the matters for which he
now seeks ML&B's disqualification. Even if this Court were to
credit all of Bobby's testimony at the January 25 hearing, Bobby
has failed as a matter of law to establish an attorney-client
relationship with ML&B in connection with the liquidation of
Pennsylvania Supply Company and Kim Company and the formation of
the tenancy-in-common.
A party seeking to demonstrate an attorney-client
relationship under Pennsylvania law must establish the existence
of "a request by the client for legal services and an acceptance
of the offer by the attorney." stainton v. Tarantino, 637 F.
Supp. 1051, 1066 (E.D. Pa. 1986). See also Mursau Corp. v.
Florida Penn oil & Gas. Inc., 638 F. Supp. 259, 262 (W.A. Pa.
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1986); Connellv v. Wolf. Block. Schorr & SOlis-Cohen, 463 F. Supp.
914, 919 (E.D. Pa. 1978); pennsvlvania Power & Liaht Co. v. Gulf
oil Corp., 74 D. & C. 2d 431 (C.P. Lehigh 1975). In addressing a
motion for disqualification, the Court of Common Pleas of Lehigh
County in pennsvlvania Power & Liaht succinctly summarized the law
of Pennsylvania regarding the existence of an attorney-client
relationship:
Although the relationship of attorney and client
may be implied from the conduct of the parties,
such conduct must evidence an offer or request
by the client for legal services and an
acceptance of the offer by the attorney. It is
clear that an attorney-client relationship
exists only with the consent of both parties.
[SJuch relationship is "personal, reciprocal,
and confidential" and "lilt must be entered into
freely, fairly and advisedly by the attorney and
client."
pennsvlvania Power & Liaht, 74 D. & C. 2d at 437 (quoting In re
Felix's Estate, 52 D. & C. 37 (D.C. Allegheny 1945)).
"Pennsylvania courts have often stressed the consensual nature of
the attorneY-Client relationship." Connellv, 463 F. Supp. at 919.
Bobby's testimony falls woefully short of meeting the
test of a mutually agreed-upon attorney-client relationship. His
testimony at best establishes only his subjective state of mind.
Bobby testified that it was his "understanding" that Klein was
representing the Estate and the beneficiaries during the meeting
to discuss his father's will. He conceded, however, that Klein
said nothing about whom he represented. Bobby thereafter
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"assumed" that Klein was representing the shareholders of Kim
Company and Pennsylvania Supply Company at the November, 1986
meeting to discuss the liquidation of the two companies. He
"understood" that Klein was advising and protecting him at the
December 19 meeting regarding the agreements among tenants in
common. Bobby did not, however, testify to any statements or
conduct of Klein that gave rise to his "assumptions" or
"understandings."
These unilateral "assumptions" and "understandings" do
not establish an offer and acceptance. Bobby can point to no
contract, written or oral, engaging the services of ML&B in
connection with the administration of the Estate, the liquidations
of Pennsylvania Supply Company and Kim Company or the creation of
the tenancies in common. Bobby's testimony contains nothing from
which this Court can conclude that ML&B ever consented to
represent Bobby with respect to any of these matters.
Rather, Bobby's theory appears to be that ML&B was acting
as his attorney whenever ML&B:
(al discussed transactions to
which both he and the Estate would be a party; (bl drafted
documents to which both he and the Estate were a party; or
(cl performed legal work for the Estate that benefited him as a
beneficiary or fellow shareholder or tenant-in-common. The
Pennsylvania cases do not support this theory.
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One of the leading cases in Pennsylvania involved the law
firm of Pepper, Hamilton & Scheetz. In pennsvlvania Power &
Liqht, Pepper successfully defeated a motion for disqualification
where the moving party had been a co-joint venturer with a
corporation that Pepper represented. The Court of Common Pleas
for Lehigh County found that no attorney-client relationship had
existed between Pepper and the party seeking disqualification even
though Pepper had drafted and submitted to the Department of
Justice a report on the antitrust implications of the joint
venture, had received information and comments from the party
seeking disqualification in drafting the report, and had received
a portion of its fees from the party seeking disqualification.
pennsvlvania Power & Liqht, 74 D. & C. 2d at 433-34. The Court
stressed that the mere reliance upon legal work performed for
another person that happened to also benefit the party seeking
disqualification is not sufficient to establish an attorney-client
relationship. Id. at 437-438
In addressing an analogous situation of a tort claim
under Pennsylvania law for breach of an attorney's fiduciary duty,
the United States District Court for the Eastern District of
Pennsylvania held in Stainton that an attorney-client relationship
did not arise between the attorney and his partners in a real
estate partnership even though the attorney had drafted documents
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for real estate transactions from which the other partners derived
a benefit. The Court stated:
Although [the attorney] prepared some of the
legal documents in the real estate transactions
in question, he was performing such work for
himself and for the partnership. He was not
performing personal legal services in connection
with these real estate deals for the [partners],
although as his partners in the transactions,
they benefited from [the attorney's] work.
Stainton, 637 F. Supp. at 1066. In rejecting a similar claim for
breach of an attorney's fiduciary duty, the united states District
Court for the Western District of Pennsylvania found in Mursau
that no attorney-client relationship arose between a limited
partner and the attorneys for the partnership where the limited
partner paid no fees to the attorneys and received only limited
legal advice regarding the tax consequences of the partnership's
drilling plan. The Court held that the legal advice provided to
the limited partner did not give rise to an attorney-client
relationship because it was "a service provided to and paid for by
the partnership as part of its efforts to secure a limited partner
for its venture." Mursau, 638 F. Supp. at 263.
These cases amply demonstrate why Bobby has not
established sufficient grounds for disqualification. Like the
joint venturer in pennsvlvania Power & Liaht, Bobby's role was
limited to reviewing and commenting upon documents prepared for
the Estate by ML&B. Like the real estate partners in stainton,
Bobby's testimony demonstrates only that he sought to benefit from
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the real estate documents prepared for the Estate by ML&B. Like
the limited partner in Mursau, there is no evidence that Bobby
paid any fees to ML&B for work in connection with the
liquidations, and any "advice" he may have received was provided
as a service by the Estate in an effort to persuade him to
participate voluntarily in these transactions. Bobby's testimony,
therefore, fails as a matter of law to establish the existence of
an attorney client relationship with respect to the liquidations
and the tenancies in common.
B. The testimony of Art Klein and Lisa Morgan
clearly shows that an attorney client
relationship did not arise between Bobby
and ML&B in connection with the liquidation
and the tenancies in common.
While Bobby relies on vague "assumptions" and
"understandings" in support of his assertion that ML&B was acting
as his counsel in connection with the liquidations and the
tenancies in common, the testimony of Art Klein and Lisa Morgan
affirmatively demonstrates that no attorney client relationship
came into existence between ML&B and Bobby regarding these
matters. Based on this testimony, the motion for disqualification
should be denied.
Klein and Lisa testified that Klein represented only the
Estate when he first met with the other family members in the
summer of 1986. Both testified that it was clear to all that
Klein represented only the Estate. Indeed, both Klein and Lisa
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testified that the meeting was called by the Executrixes in order
to inform the family, who had no knowledge about what was
happening with the Estate. This meeting, called at the request of
the Estate, did not give rise to an attorney-client relationship
as to the beneficiaries. Cf. Mursau, 638 F. Supp. at 623;
Stainton, 637 F. Supp. at 1066.
Klein and Lisa also testified that Klein advised the
Estate regarding the tax benefits of liquidating Pennsylvania
Supply Company and Kim Company. When Klein met with the other
family members, who were relatively small shareholders of these
companies, he was performing a service for the Estate, which
controlled 98% of Pennsylvania Supply Company and 82% of Kim
Company. At these meetings, Klein was acting on behalf of the
Estate to persuade the family members to participate in the
liquidations. ML&B drafted the documents in connection with the
liquidations at the request of the Estate. Klein permitted the
other family members, including Bobby, to comment.
These meetings with the family members in their capacity
as shareholders of Pennsylvania Supply Company and Kim Company did
not give rise to an attorney-client relationship between ML&B and
the family members. Id. Indeed, at least one family member,
Babs, consulted her own attorney. The legal work performed by
ML&B on behalf of the Estate, including the drafting of documents
and the solicitation of comments from the family members,
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provided a benefit to the family members. This, however, did not
give rise to an attorney client relationship between ML&B and the
family members. See PennsYlvania Power & Liaht, 74 D. & C. 2d at
433-34; Mursau, 638 F. Supp. at 623; stainton, 637 F. Supp. at
1066. ML&B did not act as counsel to Bobby in these matters.
Because no attorney-client relationship was ever formed between
ML&B and Bobby regarding these matters, ML&B's actions do not
provide a basis for disqualifying ML&B as counsel for the Estate.
C. Bobby's testimony regarding the
disclaimer does not provide a basis
for disaualifvina ML&B.
Although Bobby's testimony establishes that an attorney-
client relationship existed between Bobby and ML&B with respect to
the disclaimer, Bobby has never articulated a rationale as to why
this prior representation now disqualifies ML&B. No basis for
disqualification is apparent.
Bobby admits that he signed the disclaimer. He testified
that he sent the signed disclaimer to Klein with the intention
that it be forwarded to the Executrixes and with the intention
that it be effective. The only apparent dispute is whether Bobby
authorized the filing of the disclaimer with the Court.
Art Klein and Lisa Morgan have testified that Bobby
signed and forwarded four disclaimers and that Bobby authorized
the filing of the disclaimer with the Court. Exhibit Estate 2 is
a letter stating that the disclaimer was being filed with the
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Court. Bobby is shown as an addressee on this letter. This
evidence tends to negate Bobby's testimony that he did not
authorize the filing of the disclaimer and was not aware of its
filing. Even if Bobby's testimony is credited, however, this
testimony has no impact on the issue of disqualification.
Bobby has demonstrated no damage or prejudice resulting
from the filing of the disclaimer with the Court. More
importantly, the issue of whether the disclaimer should or should
not have been filed has nothing to do with any matters at issue in
this litigation or the Orphan's Court proceeding. See
Plaintiff's Memorandum of Law, pp. 7-10. Although a guardian ad
litem has been appointed in the Orphan'S Court proceeding, this
procedural step has not prevented Bobby from participating in that
proceeding because he has been joined as a party.
Because the issue of the disclaimer is not "substantially
related" to the issues raised in either of the present legal
proceedings, ML&B's prior representation of Bobby with regard to
the disclaimer is not a basis for disqualification of ML&B.
D. Bobby's dealings with the Estate involve ongoing
negotiations to purchase the family business and
related properties and he has consented to ML&B's
reoresentation of the Estate in these matters.
From Bobby's testimony it is readily apparent that his
primary goal is and has always been to acquire the Mumma family
business and related properties. This goal has influenced all of
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his dealings with the Estate, including everything involved in the
present proceedings. Throughout his dealings with the Estate,
Bobby either has attempted to negotiate directly a purchase of the
family business, or has attempted to negotiate for himself a
right of first refusal to purchase the family business. Because
all Bobby's dealings with the Estate (except for his disclaimer)
have been in relation to his attempts to position himself to
purchase the family business, the present litigation falls
squarely within the scope of Bobby's consent to ML&B's
representation of the Estate.
Bobby's testimony shows that his efforts to purchase the
family business began even before his father died. According to
Bobby, he was in negotiations with his father that were broken off
with his father's death. After his father's death, Bobby
commenced negotiations with the Executrixes in an attempt to
purchase the family business. These efforts prompted Klein, when
asked by Bobby to provide estate planning counsel to him, to
discuss with Bobby and to include in ML&B's engagement letter with
Bobby the understanding that ML&B would continue to represent the
Estate "in negotiations with [the] Estate to buy the operating
company (or anything else for that matter)" and that Bobby "would
obtain other counsel." (Exhibit 0-1).
If Bobby's testimony is to be credited, he thereafter
sought a right of first refusal to purchase the family properties
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in connection with the agreements among tenants in common during
the meeting on December 19, 1986, and also sought a right of first
refusal to purchase Pennsy Supply Inc. (the main operating
company) during a meeting in July, 1987. When Bobby discovered
that the Executrixes were discussing the sale of the family
business and related properties to a third person, he claimed the
right of first refusal by letter dated November 1, 1988. The
validity of this asserted right of first refusal and the power of
the Estate to make a sale to another person are the issues in the
proceedings presently before the Court.
Since the filing of the present legal proceedings, Bobby
has continued his quest for the family business. He has demanded
financial information concerning the family business to enable
himself to secure the financing necessary to purchase them.
Moreover, at a family meeting held on December 27, 1988, with
representatives of ML&B present as counsel for the Executrixes,
Bobby stated that the proposed sale of the business would take
place "over his dead body" and that he would do anything to stop
the sale. Since then, in these proceedings, Bobby has filed (1)
the present Motion to Disqualify ML&B, (2) Preliminary Objection
to the Complaint, (3) a Petition to Remove his mother and sister
as Executrixes, and (4) a Petition to Compel an Accounting.
Bobby's testimony clearly establishes that his dealings
with the Estate are inseparable from his attempts to position
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himself to obtain the family business and related properties.
Bobby has engaged in constant negotiation and agitation to buy the
family business. If this were not the case, then the present
legal proceedings would be unnecessary. In light of the
understanding Bobby had with ML&B, as reflected in the engagement
letter (Exhibit 0-1), Bobby has no right to challenge ML&B's role
as counsel to the Estate in matters involving his efforts to
purchase the family business and related properties.
III. CONCLUSION
For the reasons stated above, and for those stated in
Plaintiff's Memorandum of Law, this Court should deny the Motion
of Robert M. Mumma II for an Order Disqualifying Morgan, Lewis &
Bockius as Counsel in this Action.
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(~O~S-'M. KITTREDGE, 1.0.# 04471
JOHN F. STILLMUN III, 1.0.# 40144
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
(n(~~~,~36, -5771
lJdfLLIAM I'. Y?k~1i
Martson, Deardorff, Williams & otto
10 East High Street
carlisle, PA 17013
(717) 243-3341
Attorneys for Plaintiffs
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CERTIFICATE OF SERVICE
I hereby certify this 3rd day of February, 1989, that
the foregoing Plaintiffs' Memorandum of Law in Opposition to the
Motion of Robert M. Mumma II for an Order Disqualifying Morgan,
Lewis & Bockius as Counsel in this Action was served by hand
delivery upon the fOllowing counsel:
Jon A. Baughman
Anthony Vale
PEPPER, HAMILTON & SCHEETZ
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
and by u.S. mail, postage prepaid to the following counsel:
John B. Fowler, III
FOWLER, ADDAMS, SCHUGHART & RUNDLE
28 South pitt Street
Carlisle, PA 17013
~?~
Jo n F. Stillmun
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RECEIVED
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