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HomeMy WebLinkAbout04-10-89 . ~ ~ . BARBARA MeR. MUMMA AND LISA M. MORGAN, individually and as executrixes of the ESTATE OF ROBERT M. MUMMA, Deceased I IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION . . Plaintiffs V ROBERT M. MUMMA, II, BARBARA M. McCLURE, AND LINDA M. ROTH, Defendants I I NO. 21-86-398 IN REI DEFENDANT ROBERT M. MUMMA, II'S PRELIMINARY OBJECTIONS TO PLAINTIFFS' PETITION FOR DECLARATORY JUDGMENT BEFORE SREELY, P. J . AND NOW, this ORDER OF / /J l!t COURT day of April, 1989, in accordance with the opinion filed this date, Defendant Robert M. Mumma, II's preliminary objection to this court's subject matter jurisdiction pertaining to plaintiffs' petition for declaratory judgment is SUSTAINED and plaintiffs' petition for declaratory judgment regarding "voluntary judicial arbitration" for non- selling shareholders of Nine Ninety-Nine, Inc. and Humme1stown Quarries, Inc. is REFUSED. By the Court, lrb:i~: ~ f7!1 7. " '-- ll_ ~=..:..:..- c:.,(,~ W\~J ot;; "'- 0", Uw Wo:: ex: - c;:? " . . ~, - a: ?'--:, --0 f)u 70 ..,.(z :t:<( 0..-1 r::::a::: Ow -CO ><':E "'=> 'jc..> U o -- ~ ~ " Thomas M. Kittredge, Esquire William E. Zeiter, Esquire Joseph A. O'Connor, Jr., Esquire John F. Stillmun, III, Esquire William F. Martson, Esquire For the Plaintiffs James R. Ledwith, Esquire Jon A. Baughman, Esquire Anthony Vale, Esquire John B. Fowler, III, Esquire For the Defendants :pbf '/? " , "," L., '/.J BARBARA McK. MUMMA AND LISA M. MORGAN, individually and as executrixes of the ESTATE OF ROBERT M. MUMMA, Deceased IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION : . . Plaintiffs V : ROBERT M. MUMMA, II, BARBARA M. McCLURE, AND LINDA M. ROTH, Defendants : : NO. 21-86-398 : IN RE: DEFENDANT ROBERT M. MUMMA, II'S PRELIMINARY OBJECTIONS TO PLAINTIFFS' PETITION FOR DECLARATORY JUDGMENT BEFORE SHEELY, P.J. OPINION AND ORDER OF COURT On December 27, 1988, plaintiffs filed a petition for declaratory judgment in this court seeking two objectives. First, plaintiffs seek declaratory judgment regarding the construction of language used in Article THIRTEENTH of Robert M. Mumma's (the decedent's) Will. Second, plaintiffs seek a determination that the Estate may submit to .voluntary judicial arbitration" any issues non-selling shareholders of Nine Ninety- Nine, Inc. (999) and Hummelstown Quarries, Inc. (Hummelstown) may raise in connection with the sale of their interest in 999 and Hummelstown. Our opinion and order of March 8, 1989, concerned plaintiffs' declaratory relief regarding language construction of Article THIRTEENTH of the will. In rendering that decision, this court considered Mr. Mumma's preliminary objections regarding the ./ 9(~) NO. 21-86-398 Orphans' Court jurisdiction. Specifically, Mr. Mumma contended that this court lacked jurisdiction because (1) the petition failed to include "indispensable" parties; (2) the dispute was not "ripe" for declaratory relief; and (3) that an accounting was needed before this court could consider the declaratory relief sought by the plaintiffs. Ultimately, we discussed and denied Mr. Mumma's preliminary objections and rendered our opinion accord ing ly. Presently, Mr. Mumma once again challenges this court's jurisdiction by preliminary objections. More specifically, Mr. Mumma objects to a declaratory judgment in favor of "voluntary judicial arbitration" because (1) the petition fails to include indispensable parties; (2) the dispute is not "ripe" for declaratory relief; (3) an accounting is needed before this court could consider the petition for declaratory relief; (4) this court lacks sUbject matter jurisdiction because the relief sought concerns the determination of rights and liabilities of the shareholders of 999 and Hummelstown; and (5) the petition asks this court to define and search out a new legal doctrine (i.e., a "reverse split") which is relief beyond the proper scope of a declaratory judgment action. Mr. Mumma's first three objections to this court's jurisdiction are the same as those raised and discussed in our opinion and order, dated March 8, 1989. Therefore, it is unnecessary to re-discuss that reasoning and decision in this opinion. As such, we simply state that, as in our prior opinion, Mr. Mumma's first three objections to jurisdiction (as '-1'7 -2- NO. 21-86-398 numbered above) are denied. However, Mr. Mumma's two final objections were not discussed in our prior opinion and, thus, we will discuss them presently. Mr. Mumma challenges our jurisdiction contending that in petitioning for "voluntary judicial arbitration" for non- selling shareholders of 999 and Hummelstown, the plaintiffs seek relief which is beyond this court's subject matter jurisdiction. We note that the Orphans' Court is a court of limited jurisdiction. In re Watson's Estate, 314 Pa. 179, 170 A. 254 (1934); In re Jervis' Estate, 443 Pa. 226, 279 A.2d 151 (1971); In re Estate of Soupcoff, 329 Pa. Super. 130, 477 A.2d 1388 (1984). The Orphans' Court has only such power as is extended to it by Statute,l either expressly or by necessary implication. In re Watson's Estate, supra; In re Estate of McDavitt, Pa. Super. ___, 550 A.2d 1015 (1988). More specifically, the Statute provides, in part, that: the jurisdiction of the Court of Common Pleas over the following shall be exercised through its orphans' court divisions: (1) Decedents' estates. The administration and distribution of the real and personal property of decedents' estates and the control of the decedent's burial. (2) Testamentary trusts. The administra- tion and distribution of the real and personal property of testamentary trusts . . . * * * (3) Fiduciaries. The appointment, control, settlement of the accounts of, 142 Pa. C.S.A. S7ll (Probate, Estates and Fiduciaries Code). J,r -3- NO. 21-86-398 removal and discharge of, and allowance to and allocation of compensation among all fiduciaries of estates and trusts. . . . 42 Pa. C.S.A. S7ll (1975). However, it is clear that the Orphans' Court does not have authority to regulate the affairs of a corporation. In re Watson's Estate, 314 Pa. 179, 181, 170 A.2d 254, 255 (1934). In the present case, Mr. Mumma contends that the plaintiffs' petition for declaratory judgment for "voluntary judicial arbitration" infringes upon minority interests in corporations in which the decedent's estate is a shareholder. The plaintiffs, however, contend that the petition for declaratory judgment does not seek to limit or infringe upon minority shareholders' rights or interests. Rather, plaintiffs contend that the petition contemplates that any issue which a non-selling shareholder wishes to raise in connection with a "reverse stock split" and the sale of his or her interest in 999 or Hummelstown be submitted to the Court of Common Pleas of this county or Dauphin County. Pennsylvania courts have specifically stated that the Orphans' Court will not become involved in managing corporations. In Mintz Trust, 444 Pa. 189, 282 A.2d 295, (1971), the Supreme Court held that whether to pay annual dividends is an internal decision of the corporation and, thus, is not subject to the general supervisory power of the Orphans' Court. Id. Pa. at 200. It is also well-established that the Orphans' Court does not have authority to regulate the affairs of any corporation. In Watson's Estate, supra, the Pennsylvania Supreme Court held that ~~q , ." -4- NO. 21-86-398 the Orphans' Court had no power to remove the directors of a corporation established under a Will, stating that it had no jurisdiction over the "internal management" of a corporation. The court went on to state that even where the executors of an estate held a dominant interest in the corporation, the Orphans' Court had no jurisdiction. Id. Pa. at 182. The holding in Watson's Estate was relied upon in the more recent case of Newcomer Estate, 7 D.&C.3d 475, 28 Fid. 590 (O.C. Westmoreland 1978). There, the Orphans' Court refused to issue a subpoena duces tecum for corporate records upon the petition of a beneficiary who was objecting to the executors' handling of the shares of stock owned by the estate. Citing Watson's Estate, the court ruled that it had no subject matter jurisdiction over an action grounded in corporate law and facts. Newcomer Estate, 7 D.&C.3d at 462. In the present case, the plaintiffs argue that because the Estate is a major shareholder in 999 and Hummelstown and that because the plaintiffs' individual votes in combination with the Estate's votes comprise a majority interest. they may properly submit the issue of the "reverse stock split" and "voluntary judicial arbitration" to this court. We do not agree. It is quite clear that the limited sUbject matter jurisdiction of the Orphans' Court does not encompass issues pertaining to the selection of means by which non-selling shareholders of a corporation must submit their dispute. Thus the declaratory relief sought by the plaintiff is beyond our limited jurisdiction. Moreover, because plaintiffs seek relief ",'" ""'.."'-, ...,,/' '-_.1 -5- ", '. NO. 21-86-398 by way of declaratory judgment we note that 42 Pa. C.S.A. S7537 provides in part that: The court may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding . . . . Id. Therefore, since declaratory relief is a discretionary remedy which this court may properly refuse to render, In re Menqel, 287 Pa. Super. 186, 429 A.2d 1162 (1981), we find it appropriate to refuse plaintiffs' petition in this matter. In conclusion, we find that plaintiffs' petition for declaratory judgment with regard to the "reverse stock split" doctrine and "voluntary judicial arbitration" requires this court to grant relief in furtherance of an essentially corporate transaction, i.e., the sale of corporate stock owned by minority shareholders. Such relief is outside of this court's limited subject matter jurisdiction. Accordingly, Mr. Mumma's preliminary objection to this court's jurisdiction pertaining to the petition for declaratory judgment is sustained. In conclusion, since we have determined that the Orphans' Court lacks subject matter jursidiction to consider plaintiffs' petition for declaratory relief, it is now unnecessary to discuss Mr. Mumma's final objection that the relief sought is beyond the proper scope of a declaratory judgment action. OJ -6- ..' . ' .... NO. 21-86-398 ORDER OF COURT AND NOW, this /Crrl day of April, 1989, in accordance with the opinion filed this date, Defendant Robert M. Mumma, II's preliminary objection to this court's subject matter jurisdiction pertaining to plaintiffs' petition for declaratory judgment is SUSTAINED and plaintiffs' petition for declaratory judgment regarding "voluntary judicial arbitration" for non- selling shareholders of Nine Ninety-Nine, Inc. and Hummelstown Quarries, Inc. is REFUSED. By the Court, /s/ Harold E. Sheely P.J. Thomas M. Kittredge, Esquire William E. Zeiter, Esquire 'Q..,.n (I~, t./ ) Joseph A. O'Connor, Jr., Esquire {Y}Q<. V--r{j - o-O"! John F. Stillmun, III, Esquir William F. Martson, Esquire ~1~().,.A 'I-IO-€CI. For the Plaintiffs James R. Ledwith, ESqUire~ ' Jon A. Baughman, Esquire mcu.Q...~~ .</;-Io-I?? Anthony Vale, Esquire ~-.v ~ John B. Fowler, III, Esquire ,,~ Y~O(fJ For the Defendants :pbf ,^ {~):,} -7-