Loading...
HomeMy WebLinkAbout12-26-91 IN RE: ESTATE OF ROBERT M. MUMMA, LATE OF CUMBERLAND COUNTY, PENNSYLVANIA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS'COURT DIVISION NO. 21-86-398 CITATION 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, if any there be why the appointment of a temporary fiduciary should not be granted with regard to the administration of the above-referenced estate's interest in the Pennsylvania corporation known as Lebanon Rock,Inc. The time and place of hearing are fixed for 1:30 o'clock P.M. on the 17th day of January, 1992, in Courtroom No.1, Carlisle, Courthouse, Cumberland County, Pennsylvania. This citation is returnable sec. leg. witness my hand and official seal of office at Carlisle, pennsylvania this 27th day of December, 1991 'inaLuJ- c.. ~~ ,of. jJ tC~ Mary (t.Lew1s . Clerk of Orphans' Sourt D1vision Cumberland County Carlisle,Penna. 1.296 )( , PJP.~ C1 J D"'-< ~A 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 RULE TO SHOW CAUSE '-I/, AND NOW, this ~ day of?<1cOA}Lt\Lj'l-/ , 1991, upon consideration of the annexed PETITION FOR THE APPOINTMENT OF A TEMPORARY FIDUCIARY, it is hereby decreed that citations be awarded, directed to Barbara McK. Mumma and Lisa M. Morgan, Executrices under the will of Robert M. Mumma, to show cause, if any there be, why the appointment of a temporary fiduciary should not be granted with regard to the administration of the above- referenced estate's interest in the Pennsylvania corporation known as Lebanon Rock, Inc. The time and place of hearing are fixed /'7 'Ii /] on the I day of "JiJ-I(..vJ.A;r 1, Carlisle courth~e, Cumberland for /,' 3Z) , 199/ in o'clock f.m. Courtroom No. County, Pennsylvania. This citation is returnable sec. leg. J-' vtf , ,I" '\ ')..../ . .>~ l d' ,t .) ~,,' .' "/:r:J f ,~, 'li':.tL 1'-'0101 ""OJ ( 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 PETITION FOR THE APPOINTMENT OF A TEMPORARY FIDUCIARY PURSUANT TO CHAPTER 43 OF THE PROBATE, ESTATES AND FIDUCIARIES CODE (20 Pa. C.S.A. S 4301 et sea.) Robert M. Mumma, II, individually, and Robert M. Mumma, II and Gary M. Gilbert, Co-Guardians of the Estates of Susan Mann Mumma and Marguerite Mann Mumma, by their attorneys, Charles E. Shields, III of Mechanicsburg, and William C. Costopoulos, of Lemoyne, file the following Petition for the Appointment of a Temporary Fiduciary: 1. Robert M. Mumma, II is an adult individual currently residing in Bowmansdale, York County (Box 58), Pennsylvania, and he is a beneficiary under the will of his father, Robert M. Mumma, the Decedent herein. 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 the Order of the Honorable John T. Miller, of the Court of Common Pleas of York County, Pennsylvania, Orphans' Court Division, dated October 4, 1991. The said Susan Mann Mumma and Marguerite Mann Mumma are holders 1299 of shifting executory devises under the duly probated will of their grandfather, Robert M. Mumma, and are also interested parties in the administration of his estate. 3. Robert M. Mumma, the Decedent herein, died testate on April 12, 1986, a resident of Cumberland County, Pennsylvania. 4. The said Robert M. Mumma's will, dated May 19, 1982, and the codicil thereto, dated October 12, 1984, were duly probated by the Register of Wills for Cumberland County, Pennsylvania, and letters testamentary thereon were granted to Barbara McK. Mumma and Lisa M. Morgan, the executrices named therein. 5. At the time of the Decedent's death, he owned a fifty percent (50%) interest in a Pennsylvania corporation known as Lebanon Rock, Inc. ("Lebanon Rock"). This ownership interest was represented by 5,000 shares of common stock of such corporation, and it was valued for federal and state death tax purposes by the executrices of the Decedent's estate at $50,000.00. The remaining 5,000 shares of common stock of the said corporation are owned by Robert M. Mumma, II, one of your Petitioners herein. 6. In addition to his ownership interest in Lebanon Rock, the Decedent also owned at the time of his death 700 shares of the outstanding common stock of a Pennsylvania corporation known as Pennsylvania Supply Company. By reason of such shares, the Decedent held a 98.31461% ownership interest in Pennsylvania -2- 1300 Supply Company, which ownership interest was valued for federal and state death tax purposes by the executrices of the Decedent's estate at $9,144,473.00. The remaining shares of such corporation were owned, in equal portions, by the Decedent's four children, Linda M. Roth, Barbara M. McClure, Lisa M. Morgan (one of the executrices of the Decedent's estate), and Robert M. Mumma, II, a Petitioner herein. Attached hereto, made a part hereof and marked as Exhibit "A" is a chart which depicts the ownership structure of the Decedent's family enterprises at the time of his death. 7. Pennsylvania Supply Company was essentially the hOlding corporation for a number of subsidiary corporations and, in order to take advantage of certain favorable tax provisions which were due to expire at the end of 1986, this corporation, and one of its subsidiary corporations, was liquidated by the executrices of the Decedent's estate. The executrices have represented in their First and Partial Account filed herein that such liquidation occurred on December 19, 1986. By reason of such liquidation, the Decedent's estate received, in addition to various other assets, 709.4238 shares of the outstanding common stock of a Pennsylvania corporation known as Nine Ninety-Nine, Inc. ("Nine Ninety-Nine"), as well as 900.0761 shares of the 10% preferred stock of such corporation. These shares represented 33.511% of the outstanding common stock of Nine Ninety-Nine and 81.825% of the outstanding 10% preferred stock of such -3- :130:1 corporation. The remaining common and 10% preferred shares of Nine Ninety-Nine were held as follows: Shareholder Common 10% Preferred Barbara McK. Mumma Lisa M. Morgan Barbara M. McClure Linda M. Roth Robert M. Mumma II .5001% 16.472% 16.472% 16.472% 16.572% 1.22119% 4.23556% 4.23556% 4.23556% 4.24703% 8. Since the receipt of the aforementioned common and preferred stock, the executrices of the Decedent's estate have transferred the same to themselves, in their capacities as trustees of the marital trust created under Article Seven of the Decedent's will. Following this transfer, Barbara McK. Mumma and Lisa M. Morgan have used a substantial portion of the aforesaid shares to fund a withdrawal right granted under the Decedent's will to Barbara McK. Mumma. As set forth in the First and Partial Account filed by Barbara McK. Mumma and Lisa M. Morgan as Trustees of the Marital Trust, Barbara McK. Mumma has received, pursuant to her withdrawal right, 195.842 shares of common stock of Nine Ninety-Nine, and 118.268 shares of its 10% preferred stock. In addition, the trustees have paid to Barbara McK. Mumma, in her capacity as the income beneficiary of the marital trust, income distributions consisting of 55.58368 shares of common stock of Nine Ninety-Nine and 70.8421 shares of its 10% preferred stock. By reason of these aforesaid distributions, Barbara McK. Mumma has received from the Decedent's marital trust -4- 1302 251.6788 shares of common stock of Nine Ninety-Nine and 189.1101 shares of its 10% preferred stock. 9. Following the aforesaid distributions from the Decedent's marital trust, the ownership structure of Nine Ninety- Nine is now as follows: Shareholder Common 10% Preferred 21. 62234% 64.63327% 12.3886% 18.41302% 16.472% 4.23556% 16.472% 4.23556% 16.472% 4.23556% 16.572% 4.24703% Barbara McK. Mumma and Lisa M. Morgan, Trustees Barbara McK. Mumma, Individually Lisa M. Morgan, Individually Barbara M. McClure Linda M. Roth Robert M. Mumma II Accordingly, Barbara McK. Mumma and Lisa M. Morgan now own in their individual names 28.8606% of the common stock of Nine Ninety-Nine, and they vote as Trustees 21.62234% thereof, giving them more than 50% control of said corporation. 10. The Petitioners herein have filed objections to the distribution of the aforesaid shares to Barbara McK. Mumma, which objections are based, in part, upon your Petitioners' belief that Barbara McK. Mumma and Lisa M. Morgan intend to use Mrs. Mumma's withdrawal right over the Marital Trust to gain control over the Decedent's family enterprises in contravention of the Decedent's testamentary intent. Your Petitioners further believe that Barbara McK. Mumma ultimately intends to either transfer such shares by will or gift to her daughter, Lisa M. Morgan, so that -5- 1303 her daughter will eventually own a majority interest in such family enterprises, or Barbara McK. Mumma intends to exercise her controlling vote in order to cause the family business interests to be sold to third parties, further in contravention of decedent's testamentary intent. 11. As indicated by the attached Exhibit "A", Nine Ninety-Nine is the sole owner of a Pennsylvania corporation known as pennsy supply, Inc., which in turn is the sole owner of a sUbsidiary corporation known as Elco Concrete Products, Inc. During the past three years Elco Concrete Products, Inc. ("Elco Concrete") has been involved in extensive litigation with Lebanon Rock which, as noted heretofore, is a corporation owned equally by the Estate of Robert M. Mumma and your petitioner, Robert M. Mumma, II. Given, as indicated above, the present ownership of Elco Concrete's parent corporation (Nine Ninety-Nine), the litigation represents a suit by one corporation (Elco Concrete) controlled by Barbara McK. Mumma and Lisa M. Morgan, both individually and as fiduciaries, and another corporation (Lebanon Rock) owned equally by the Decedent's estate and Robert M. Mumma, II. 12. The litigation between the aforesaid corporations is embodied in four separate actions in Dauphin county, Pennsylvania, and recently was the subject of litigation before the Pennsylvania Superior Court. Among the principal issues involved in such litigation is the right of Elco Concrete to mine -6- 130,1 dolomite in a quarry owned by Lebanon Rock under terms and conditions economically adverse to Lebanon Rock. ~3. Barbara McK. Mumma and Lisa M. Morgan, although executrices of the Decedent's estate, have consistently exercised their controlling interest in Elco in a manner designed to enhance its profits and value, while undermining the profitability of Lebanon Rock. This action constitutes a breach of their fiduciary duty to preserve and protect the value of the assets of the estate. The executrices have taken such action (i) because of their deep-seated personal animosity against Robert M. Mumma, II and the challenges he has raised whenever the executrices have failed to administer the Decedent's estate in accordance with the Decedent's testamentary intent, and (ii) in order to enhance their own individual financial interests in Elco Concrete even though such interests are directly in conflict with their fiduciary duties to Lebanon Rock as executrices of the Decedent's estate. Such financial interests include, but are not limited to, the 28.860% individual stock interest of Barbara McK. Mumma and Lisa M. Morgan in the parent corporation of Elco Concrete, and also the substantial salaries and other benefits that they have voted to themselves as officers and directors of Elco Concrete, Nine Ninety-Nine and its affiliated corporations. ~4. Lisa M. Morgan and Barbara McR. Mumma, in their capacities as executrices of the Estate of Robert M. Mumma, have further exercised estate's ownership interest in Lebanon Rock so -7- 1305 as to create a deadlock with regard to the management and operation of such corporation, thereby fostering their plan to undermine the value of this estate asset. This plan of the executrices, which is a matter of public record in the Dauphin County and Superior Court actions, has been, in sum, to seek the award of favorable mining rights to Elco Concrete of mineral deposits owned by and located on land of Lebanon Rock, all to the detriment and exclusion of Lebanon Rock. The executrices have also resisted all attempts by your Petitioner, Robert M. Mumma, II, to acquire the estate's interest in Lebanon Rock and thereby resolve the current deadlock, even though the acquisition price offered by your Petitioner is substantially in excess of the estate's carrying value for such stock. 15. The great lengths to which Lisa M. Morgan and Barbara McK. Mumma will go to undermine the profitability of Lebanon Rock and to create a deadlock with regard to its management and operation is evidenced by the petition they filed in the Court of Common Pleas of Dauphin County on October 1, 1991, requesting that Lebanon Rock be prohibited from mining dolomite in its own quarry and selling it to third parties. Lisa M. Morgan and Barbara McK. Mumma, as executrices of the Estate, which owns 50% of Lebanon Rock, have refused to attend any Board of Directors' meetings for Lebanon Rock or to engage in any dialogue as to whether such mining activity is likely to be profitable for Lebanon Rock and its -8- ~306 shareholders, and yet they maintain in their petition that the mining and selling of dolomite by Lebanon Rock would jeopardize the continuing viability of Lebanon Rock. On the contrary, the mining and selling of dolomite by Lebanon Rock has been shown to be very profitable for Lebanon Rock, and if the executrices would have attended any Directors' meeting, they would have clearly seen that to be the case. Instead, however, Lisa M. Morgan and Barbara McK. Mumma have deadlocked the management and operation of Lebanon Rock by refusing to attend Board of Directors' meetings and have sought to undermine the profitability of Lebanon Rock by filing a petition to prohibit Lebanon Rock from engaging in a very profitable business venture. This has been done not out of any concern for the profitability of Lebanon Rock, as the executrices maintain in their petition of October 1, but rather to advance the interests of Elco Concrete, which claims the right to mine dolomite in the quarry owned by Lebanon Rock. The Superior Court has ruled that no evidence has been shown of the existence of such a right, and has remanded the case to the trial court for hearings on that issue. The advancement of Elco Concrete's interests at the expense of those of Lebanon Rock represents a conflict of interest for Lisa M. Morgan and Barbara McK. Mumma as executrices of the Estate. 16. section 4301 of the Probate, Estates and Fiduciaries Code empowers the orphans' Court Division of the -9- 1307 Court of Common Pleas to appoint a temporary fiduciary whenever the existing fiduciary is "in a position of conflicting interest or in any situation where his functioning as a fiduciary for a temporary period may not be in the best interests of the estate." Given the present litigation between Elco Concrete and Lebanon Rock, the fact that Lisa M. Morgan and Barbara McK. Mumma, as fiduciaries, hold substantial ownership interests in both litigants is a clear case of conflicting interests. Furthermore, the conflict is all the more egregious in the present instance since Lisa M. Morgan and Barbara McK. Mumma have used their fiduciary interest in Lebanon Rock to undermine such corporation and to enhance their own 28.8606% individual interest in Elco Concrete. 17. In accordance with the provisions of Chapter 43 of the pennsylvania Probate, Estates and Fiduciaries Code, your Petitioners respectfully request that, during the pendency of the litigation between Elco Concrete and Lebanon Rock, a temporary fiduciary be appointed in place of Barbara McK. Mumma and Lisa M. Morgan with respect to the 5,000 shares of Lebanon Rock held by the Decedent's estate. This temporary fiduciary should be vested with the same fiduciary powers that Barbara McK. Mumma and Lisa M. Morgan now hold with respect to such stock, including the power to sell the same at a price that is fair to the estate and that reflects the current fair market value of such stock. -10- 1308 18. Your Petitioners respectfully request that Barbara M. McClure and Dauphin Deposit Bank and Trust Company, the substitute fiduciaries under the Decedent's will, be appointed as the temporary fiduciaries of the Decedent's interest in Lebanon Rock. In the event that such parties are unwilling to serve, your Petitioners request this Honorable Court to appoint such persons or corporations as this Court may deem appropriate. WHEREFORE, your Petitioners respectfully request this Honorable Court to issue a citation against Lisa M. Morgan and Barbara McK. Mumma, the executrices of the Estate of Robert M. Mumma, to show cause why, in accordance with Chapter 43 of the Probate, Estates and Fiduciaries Code, temporary fiduciaries should not be appointed in their place with regard to the administration of the Decedent's interest in Lebanon Rock. Respectfully submitted, /!!!;~ f.~ Charles E. Shields, III Commonwealth National Bank Building 2 West Main Street Mechanicsburg, PA 17055 (717) 766-0209 1.D. #38513 William C. Costopoulos 831 Market street Lemoyne, PA 17043 (717) 761-2121 Attorneys for Petitioner, Robert M. Mumma, II -11- 1309 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 Jja II jJ ~;,n, 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 Petition are true and correct according to the best of his knowledge or as he is informed and believes. ~~1Vt Robert M. Mumma, II Sworn to and subscribed before me this ~ day of () OM>elL-- , 1991. IOTARIAL SEAL KIMBER~ I A. CROSTLEY, No!&,V' Public City oi Harrisburg. Dauphin Co. My Commlssien Expires Jan. 4. 1993 1310 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 D{lJAf'~J:". ) ) 55. ) Before me, the undersigned authority, personally appeared ROBERT M. MUMMA, II, aHa GARY M. CILBERT, Co-Guardians of the Estates of Susan Mann Mumma and Marguerite Mann Mumma, who, being first duly sworn according to law, depose and say that all of the averments set forth in the foregoing Petition are true and correct according to the best of their knowledge or as they are informed and believe. 1MM.~ Robert M. umma, II, Guard~an xxxxxxxxxxxxxxxxxxxxxxxxx ~yr}Qllxxa~~J<:~U~~ Sworn to and subscribed before me this ~" day of b C'ipitl A... , 1991. ~ m1~~tPpu~{;)iP€u- NOTARIAL SEAc KIMBERLY A. CROSTLEY. Notdlv f)ubffc City of Harrisburg, Dauphin Co. My Commission Expires Jan. 4. 1993 :1311 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 (jORK..- ) ) SS. ) Before me, the undersigned authority, personally appeared GARY M. GILBERT, Co-Guardian of the Estates of Susan Mann Mumma and Marguerite Mann Mumma, who, being first duly sworn according to law, depose and say that all of the averments set forth in the foregoing Petition are true and correct according to the best of his knowledge or as he is informed and believes. ~~ ilIA Cif. 02x. 9- G Y M.\Gilbert, Guardian NOTARIAL SEAL LORI A PODGERS, Notary Public City of YJik. York County ~.Y.9q!'0T:!_~~LQ.r.:...f:::Qi:.-~~~J.O, 1994 1312 CERTIFICATE OF SERVICE I, Charles E. Shield$ III, certify that a copy of the attached PETITION FOR THE APPOINTMENT OF A TEMPORARY FIDUCIARY upon the was served by first class mail on 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, PA 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 Attorney General Commonwealth of Pennsylvania Strawberry Square Harrisburg, PA 17120 Thomas M. Kittredge, Esquire Morgan, Lewis & Beckius 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 (Courtesy Copy) Robert M. Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 Charles E. Shields, III j.313 Donr,<::vjv~ni~ :;r1nnlv ~ilmn;:'l"\/ ~......... AS portrayec bv figures from P A I nher tax rewrn filed 7/20/87 (::igures as existing on d.o.d. 4/12/86) (Fiegship of the Mumme Family Enterorlses) Rente I , Reel Estate (Inc. 6/21/21 - PAl Total 712 Shares 700 est Robt Mumme 3 eeen child 1--------------------1-------------** I I I I I -----t---------------------------------------t---------------------------- I I I I k:"tr" r.,..., Cp"tpl C..I I'~~ (I~~ R f"S 1"'7 - DA \ Tote! 8,680 Sheres PA Supply Co RMM, II Sisters, ea. Widow 7,241 (83%) 334 !-- 333 106 RMM, II Vice President Director * llnif"llj ,,.,...,...;~ (\1"1'" '7/?/F-,1 _ OA' 000 In!"" (lr'1r' I liS/SF< - DA \ I4nlMiM r:~ Quar ry, er-ushed stone Total 100 Shares Kim Co, SO Hempt Trustes SO Total Com. 2,117 Kim Co, 867 RMM, II 314 Bar-bare 312 8% pJ. 267 10% p.L x x 103 *( OPERATING COMPANIES) Linda Lisa 312 312 61 103 Do Blog materials, concrete, asphalt Total 2,500 Shares 999 2,500 (100%) 1'1 im (I I I/?I - 1'1 A \ - DA \ Mfg, concrete blocks, ready-mix concrete Total 5,000 Shares Pennsy Supply 5,000 ( I OO~) Renta I, equipt, rea J estate Total 500 Shares Pennsy Supply 500 ( 100%) 1,100 l,100 x x RMM, II !-- Vice PreSident DIrector M' c C~"'k Inr- (I Rental, real estate oevelooment Total 700,COO Shares Pennsylvanie SupOly Co. Each eh ild 100.000 Shares 150,000 ( These two were later merged. ) R . ;:l1; rnr."" (Ihr 7,1Q;f:.C - PAl Land oevelopment and rental T ota I 1 0 Shares Middle Park Inc. 10 ( 100%) x x **( RE.t.,L ESiATE COMPANIES) According to Robt Mllmma's will-- eact, child was to receive an MIISl ~ share of Penna SUDDlv and ~,1 shares in the real estate ,...t M M m ?Qj7C _ OA) Rental, PUC hauling (RMM. II - V.P.) Total I .000 Shares Pennsy Supply 1,000 ( 100%) ..; ~ '" ~ Cl ~ ~ ~ ~ ~ II !21 ~ ~ I~ 0 0 '"'J Gl ~ ;: H ~ ~ () ~ '" m z ::t f-' " :;; )> ~ ::1~ l?fIl I i= I\:l ~ ):>:u ~ CO z:::~ ~r- ~ ~ '" ~ o. :I: om ~~ I cnS:z :0(1) w OJ~:!:j ~m CIl~ '" ~~ cz- . a~ co :0000 ""f.UJ ~ 0 $i):d~ ~% ~ ~ ,- II ~ffi~ ~~ ~ - S - z:Ec CIl '1:1.. ~ ; l'J) ~ H ". . en c ~ ~ en - - :2 ~ CI. 0 z :s: ~ " :j~ i :t' , - [',-, ~ _. \C N c::.1 = ~ P' /'777 (.j7?/ J-- ' r 7?rrFY-(; Il""''1U'J..rJ t/ ~r I /' ~ -'/~-'-'/' ) - , - ,/ ~, . ~> ~ j