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HomeMy WebLinkAbout02-10-89 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 ESTATE OF ROBERT M. MUMMA, Deceased PETITION FOR REMOVAL OF EXECUTORS AND TRUSTEES Robert M. Mumma, II, individually and as parent and natural guardian of Robert M. Mumma, III, and Susan Mann Mumma, by his attorneys, Pepper, Hamilton & Scheetz and Fowler, Addams, Shughart & Rundle, files the following Petition For Removal of Executors and Trustees pursuant to 20 Pa. C.S. ~3813 and 20 Pa. C.S. ~7121: 1. Robert M. Mumma (the "Decedent") died on April 12, 1986, a resident of Cumberland County, Pennsylvania. 2. Letters Testamentary were granted by the Register of Wills of Cumberland County to Barbara McK. Mumma ("Mrs. Mumma") and Lisa M. Morgan ("Mrs. Morgan") on June 5, 1986. 3. The Decedent's will dated May 19, 1982 and First Codicil dated October 12, 1984 leaves the bulk of his estate to a Marital Trust and a Residuary Trust under which the income is to be paid to the Decedent's wife, Mrs. Mumma, for life. At her death, the principal is paid to the Decedent's children with substitution of issue in the case of a deceased child's share. The Decedent was survived by four children. The Codicil appoints l.3 t.l Dauphin Deposit Bank and Trust Company successor Executor and Trustee in the event that none of the individually named Executors and Trustees are able to serve in their duties as fiduciaries. 4. Petitioner is the son of the Decedent and the parent and natural guardian of Robert M. Mumma, III (born 5/12/82) and Susan Mann Mumma (born 6/19/87) . 5. Under 20 Pa. C.S. ~3182 and ~7121, this Court may remove an executor or trustee if he "is wasting or mismanaging the estate [or trust] ...or has failed to perform any duty imposed by law," or "when for any other reason, the interests of the estate [or trust] are likely to be jeopardized by his continuance in office." 6. Paragraph THIRTEENTH of the Decedent's will sets forth his intent that his stock in "privately held corporations" owned by him at his death "be continued for the benefit of and under the management and control of my immediate family." 7. The Estate and/or Trusts under the Will hold shares in Nine Ninety-Nine, Inc. ("999") ~n,", ""-lIlele1<eo.m 12..W\ ~ 'OnRv",,;~- T........ IUUn----,...'st.Qu....,,}, private family companies managed by the Decedent during his lifetime, as well as interests in certain real estate associated with the family businesses. The Estate and/or Trusts hold interests in two other family businesses, Lebanon Rock, Inc. ("LRI") and Elco Concrete Products, Inc. ("Elco"). -2- 3;:,i..S 8. Mrs. Mumma and Mrs. Morgan, in their individual capacities, are shareholders of 999 and Hummelstown and hold interests in real estate associated with the family businesses. 9. Mrs. Mumma and Mrs. Morgan, in their individual capacities, are directors as well as shareholders in 999 and Hummelstown. 10. Mrs. Mumma's and Mrs. Morgan's individually owned interests in 999, Hummelstown and such real estate, when combined with the Estate's and/or Trusts' interests, give them a controlling interest in these properties. 11. Mrs. Mumma and Mrs. Morgan are employees of pennsy Supply, Inc. ("PSI"), a wholly owned subsidiary of 999. 12. Mrs. Mumma and Mrs. Morgan should be removed as Executors and Trustees because they are mismanaging the Estate, have failed to perform duties imposed on them by law, and because the interests of the Estate are likely to be jeopardized by their continuance in office, by reason of the actions taken by them as described below. 13. Since Decedent's death, using their position as Executors and Trustees, Mrs. Mumma and Mrs. Morgan, because of a deep-seated animosity against Petitioner and his family, have been engaged in a systematic effort to exclude Petitioner from any involvement in the family businesses in order to advance their own personal interests. Because of spiteful motives against Petitioner, they have exercised their fiduciary powers, in contravention of the intent of the Decedent and regardless of -3- J ',. ~.~ the best interests of the beneficiaries, to undermine the business interests of Petitioner. 14. Mrs. Mumma and Mrs. Morgan have used their voting power in Elco and in LRI, which they hold as Executors and Trustees, to undermine the profitability of LRI, which is owned one-half by Petitioner and one-half by the Estate and/or Trusts, and thereby have caused economic loss to the Estate and/or Trusts. 15. On December 19, 1988, Mrs. Mumma and Mrs. Morgan, both as Executors and Trustees and in their individual capacities, entered into a Letter of Intent (the "Letter of Intent") with a publicly traded foreign company (the "Foreign Company") to sell the shares of 999 and Hummelstown that they own individually and the shares in such companies that are held by the Estate and/or Trusts. The Letter of Intent also provides that Mrs. Mumma and Mrs. Morgan will sell, in their fiduciary capacities, certain real estate held by the Marital Trust and will also sell certain real estate interests owned by them in their individual capacities. 16. The Letter of Intent provides that as consideration for the sale, the Foreign Company will offer employment to the management of PSI (which includes Mrs. Mumma and Mrs. Morgan) "equal to their current responsibilities and compensation." This offer of professional gain clouds the ability of Mrs. Mumma and Mrs. Morgan to act solely on behalf of the Estate and its beneficiaries. The conflict between Mrs. -4- J;..? Mumma's and Mrs. Morgan's professional interests and their duties as Executor and Trustee poses a significant danger to the interests of the beneficiaries of the Estate and Trusts. 17. Mrs. Mumma and Mrs. Morgan, as Executors and Trustees, have filed a Petition and Complaint in this Court, both served upon Petitioner, alleging that it is not "expedient and possible" to retain shares of 999, shares of Hummelstown and the related real estate, and which seeks: (a) a Declaratory Judgment that the Estate's shares in 999 and Hummelstown may be sold to the Foreign Company notwithstanding the directions of Paragraph THIRTEENTH of the will to retain the family businesses for the benefit of the decedent's family. (b) an order that Mrs. Mumma and Mrs. Morgan, as Executors and Trustees, may submit "to voluntary arbitration" any issues a non-selling shareholder raises in connection with the sale of his or her interest in 999 and Hummelstown. 18. Mrs. Mumma and Mrs. Morgan, in both their individual and fiduciary capacities, have filed a Complaint in an equity action against Petitioner. In their complaint they seek a declaratory judgment that certain alleged agreements allow them to sell Petitioner's interests in certain business-related real estate without Petitioner's consent. 19. In order to increase Mrs. Mumma's individual interests at the expense of the Estate and to wrest total control of Decedent's businesses for her personal gain, thereby -5- 3';;8" undermining the Decedent's intent to keep the businesses within the family, Mrs. Mumma and Mrs. Morgan deliberately allocated 999 shares and Hummelstown shares to the Marital Trust in order to permit those shares to be withdrawn under the five percent principal withdrawal power by Mrs. Mumma individually. Consistent with this allocation, Mrs. Mumma has abused the five percent principal withdrawal scheme by placing such shares in her own name, in order to favor herself over other beneficiaries. Mrs. Mumma and Mrs. Morgan are now attempting to allocate another family business, Union Quarries, Inc., to the Martial Trust in order to obtain personal control for Mrs. Mumma over this company. 20. Under the proposed sale of the family businesses, undertaken for spiteful motives against Petitioner and in direct contravention of the Decedent's intent, Mrs. Mumma and Mrs. Morgan, in their individual capacities, will benefit regardless of the effect of the sale on other beneficiaries of the Estate and Trusts. In proposing the sale, they have breached the high duty of loyalty they owe to the beneficiaries by allowing considerations of their own personal gain to take precedence over that of the beneficiaries. 21. Because the transactions contemplated in the Letter of Intent will so significantly benefit Mrs. Mumma and Mrs. Morgan in their individual capacities, it is impossible for them as fiduciaries to divorce their personal interests from those of the beneficiaries of the Estate and Trusts. -6- J~9 22. Mrs. Mumma and Mrs. Morgan, as Executors and Trustees, wasted and mismanaged the Estate by significantly undervaluing the estate on the estate tax return. This artificially low value resulted in the property receiving an unreasonably low tax basis, with the result that when the assets held by the Estate are sold, the income tax on the capital gain realized through the sale will be significantly higher than necessary. This will cause the loss of a significant amount of principal in order to pay unnecessary income taxes. WHEREFORE, Petitioner respectfully requests this Court, pursuant to 20 Pa. C.S. ~3182 and ~7121, to direct Barbara McK. Mumma and Lisa M. Morgan, to show cause why this Court should not: (a) Revoke the Letters Testamentary granted to Barbara McK. Mumma and Lisa M. Morgan on June 5, 1986, remove them as Executors of the Estate of Robert M. Mumma, deceased, and direct them to deliver to their successor immediately upon appointment all property, books, accounts, papers and moneys belonging and relating to the Estate. (b) Remove Barbara McK. Mumma and Lisa M. Morgan as Trustees of the Trusts under Paragraphs SEVENTH and EIGHTH of the Will of Robert M. Mumma, deceased, and direct them to deliver to their successor immediately upon appointment all property, books, accounts, papers and moneys belonging and relating to such Trusts. . . -7- ~3o v (c) Enjoin Barbara McK. Mumma and Lisa M. Morgan from selling, disposing of or in any way encumbering any assets of such Estate and Trusts. (d) Appoint Dauphin Deposit Bank and Trust Company Executor and Trustee of the Trusts under Paragraphs SEVENTH and EIGHTH of the will of Robert M. Mumma, deceased. (e) Or, in the alternative to (a), (b) and (d) above, enter an Order (i) disqualifying Barbara McK. Mumma and Lisa M. Morgan, as Executors of the Estate of Robert M. Mumma, deceased, and as Trustees of the Trusts under Paragraphs SEVENTH and EIGHTH, from participating in any manner whatsoever in any decision relating to any transaction between said Estate and Trusts and any other entity with respect to the sale of any property associated with the privately held business interests of the decedent held by the Estate or Trusts and any other decision regarding such businesses and (ii) appointing Dauphin Deposit Bank and Trust Company Executor and Trustee to render all decisions with respect to the above. -8- 33/ (f) Grant such further relief as this Honorable Court determines to be appropriate. Respectfully submitted, James R. Ledwith Jon A. Baughman Anthony Vale PEPPER, HAMILTON & SCHEETZ 3000 Two Logan Square Philadelphia, PA 19103 (215) 981-4000 John B. Fowler, III FOWLER, ADDAMS, SHUGHART & RUNDLE 28 South Pitt Street Carlisle, PA 17013 ~::7)(I:00 ;{i' (At rneys for Petltloner -9- "'".i;': .... ../1./..,.4 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 ESTATE OF ROBERT M. MUMMA, Deceased VERIFICATION I, Robert M. Mumma, II, verify that the statements made in the foregoing Petition are true and correct to the best of my knowledge, information and belief and I understand that the statements herein are subject to the penalties of 18 Pa. C.S. ~4904, relating to unsworn falsification to authorities. ~~~ obert M. Mumma, II DATED: January 25, 1989 . -;> ., ~ l'l.?- CERTIFICATE OF SERVICE I, JOHN B. FOWLER, III, certify that a copy of the attached Petition to Remove Executors and Trustees of Robert M. Mumma, II was served by first class mail on January 25, 1989 upon the following: Barbara M. McClure 129 S. Lewisberry Road Mechanicsburg, PA 17055 Linda M. Roth 5104 Wessling Bethesda, MD Lane 20814 Attorney General Commonwealth of Pennsylvania Strawberry Square Harrisburg, PA 17120 And a copy was served by hand delivery on January 25, 1989 upon: William E. Zeiter 2000 One Logan Square Philadelphia, PA 19103 ':) :jd l...'~' 7 "'11II RECORDED.OFFiCE r'" REGISTER or ',H' : "89 FES 10 P3 :02 CLERK-OHPHM'i'S eli'" CUMBERLAND co.. f'A IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 ESTATE OF ROBERT M. MUMMA, DECEASED PETITION FOR REMOVAL OF EXECUTORS AND TRUSTEES OF ROBERT M. MUMMA, II James R. Ledwith, #04484 Jon A. Baughman Anthony Vale Pepper, Hamilton & Scheetz 3000 Two Logan Square Philadelphia, PA 19103 (215) 981-4000 John B. Fowler, III Fowler, Addams, Shughart & Rundle 28 South Pitt Street Carlisle, PA 17013 (717) 249-8300 IN RE: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ESTATE CF ROBERT M. tlUMMA DECEASED. ORPHANS' COURT DIVISION NO. 21-86-398 RULE WE COMMAND, you that laying aside all business and excuses whatsoever, you be and appear in your proper person before the Honorable Judges of the Common Pleas Court, Orphans' Court Division, at a session of the said Court there to be held, for the County of Cumberland to show cause why in this Court at Courtroom No.1, Cumberland County Courthouse, Carlisle, pennsylvania, on March 15, 1989, at 9:30 o'clock, A.M., why this Court should not (a) Revoke the Letters Testamentary granted to Barbara McK. Mumma and Lisa M.Morgan on June 5, 1986, remove them as Executors of the estate of Robert M. Mumma, deceased, and direct them to deliver to their successor immediately upon appointment all property, books, accounts, papers and moneys belonging and relating to the Estate. (b) Remove Barbara McK. Mumma and Lisa M. Morgan as Trustees of the Trusts under Paragraphs SEVENTH and EIGHTH of the Will of Robert M. Mumma, deceased, and direct them to deliver to their successor immediately upon appointment all property, books, accounts, papers and moneys belonging and relating to such Trusts. ., .,.."", " ,-~;5 (c) Enjoin Barbara McK. Mumma and Lisa M.Morgan from selling, disposing of or in any way encumbering any assets of such Estate and/or Trusts. (d) Appoint Dauphin Deposit Bank and Trust Company as Executor and Trustee of the Trusts under paragraphs SEVENTH and EIGHTH of the Will of Robert M. Mumma, deceased. (e) Or, in t.he alt.ernative to (a), (b) and (d) above, enter an Order (i) disqualifying Barbara McK. Mumma and Lisa M.Morgan, as Execut.ors of the Estate of Robert M. Mumma, deceased, and as Trustees of the Trusts under Paragraphs SEVENTH and EIGHTH, from participatinq in any manner whatsoever in any decision relating to any transaction between said Estate and/or Trust.s and any other entity with respect to the sale of any property associated with the privately held business interests of the Decedent held by the Estate or Trusts and any other decision regarding such businesses and (ii) appointing Dauphin Deposit Bank and Trust Comapany Executor and Trustee t.o render all decisions wit.h respect. to t.he above. Witness my hand and official seal of office at Carlisle, pennsylvania this 10th day of February, 1989. 7n0.lU.l C.. fi.,/,~" r.. PB.CJ'f"h Mary<t. Lewis i Clerk of Orphans' Court Division Cumberland County Carlisle,Penna. " ~. ",.'j,..~:. ~