HomeMy WebLinkAbout05-21-92
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
IN RE: TRANSCRIPT OF PROCEEDINGS
Proceedings held before the Honorable HAROLD E.
SHEELY, P.J., Cumberland County Courthouse, Carlisle,
Pennsylvania, on Monday, May 11, 1992, at 9:30 a.m. in
Courtroom Number One.
APPEARANCES:
MARC J. SONNENFELD, Esquire
For the Respondent
WILLIAM C. COSTOPOULOS, Esquire
For the Petitioners
CHARLES E. SHIELDS, III, Esquire
For Petitioners
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FOR THE RESPONDENT
Donald Eugene Eshelman
Ronald E. Nye
Lisa Mumma Morgan
INDEX TO WITNESSES
DIRECT
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CROSS
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INDEX TO EXHIBITS
FOR THE RESPONDENT
Ex. No. 1 - list of competitive
projects - Lebanon area
Ex. No. 2 - 3 pgs. from the yellow pages
Ex. No. 3 - not introduced
Ex. No. 4 - not introduced
ADMITTED
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Ex. No. 5 - two letters
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Ex. No. 6 - packet of info for Nine
Ninety Nine
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Ex. No. 7 - packet of info for Mumma
Realty Assiciates, Inc.
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Ex. No. 8 - packet of infor for
Hummelstown Quarries, Inc.
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Ex. No. 9 - list of documents and info
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Ex. No. 10 - rule to show cause
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** All exhibits pre-marked by attorney **
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1 standing to assert the instant demand for documents. He
2 lacks standing first because of his disclaimer, and despite
3 the revocation the exceptions to the order upholding that
4 revocation remain pending before the Court.
5 Those are exceptions which are awaiting
6 disposition by the Court so that until there is a final
7 disposition of Mr. Mumma's disclaimer, for that reason he
8 lacks standing.
9 Second, Mr. Mumma also purports to have
10 standing because of his appointment in York County as the
11 guardian ad litem of his minor children. We have filed a
12 petition in York County to restrain that guardianship, and a
13 hearing on our petition is scheduled for July -- excuse me.
14 For June 10th before Judge Miller.
15 Our second ground for opposing the petition
16 is that it's burdensome. He'd ask for the production of
17 thousands of pages of documents that Mr. Mumma has no
18 legitimate interest in seeking.
19 Our third reason is there's an improper
20 purpose. The discovery is not sought in good faith and
21 without due regard for the burden put on the estate and for
22 the rights of others in the estate, and I think the law is
23 clear that the respondents are not required to submit to
24 burdensome discovery requests.
25 And here I think it is pertinent, and we'll
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1 present testimony on this point, that Mr. Mumma is engaged
2 in direct competition with the businesses of the estate.
3 Fourth, disclosure of most of the information
4 sought by Mr. Mumma in the petition is protected by the work
5 product doctrine, and fifth, production of the material
6 would result in a breach of fiduciary duties by the
7 respondents to the estate and to other members of the
8 family.
9 Finally, and we'll present testimony on this
10 point as well, much of the information has been produced in
11 various forms, and I think the petition ignores the
12 voluminous production of information to Mr. Mumma that has
13 already occurred in this proceeding. With the Court's
14 permission I'd like to proceed and call our first witness.
15 THE COURT: Go ahead
16 MR. SONNENFELD: Our first witness is Mr.
17 Eshelman.
18 MR. COSTOPOULOS: Your Honor, for the purpose
19 of expediting this hearing may we have a proffer on this
20 witness? We may be able to agree to some of this.
21 MR. SONNENFELD: Your Honor, Mr. Eshelman
22 will testify that he is executive vice president of Pennsy
23 supply Company, which is the operating company owned by the
24 estate ultimately from Nine Ninety Nine, Incorporated.
25 He joined pennsy Supply in 1986. Before
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1 that he spent twenty years with the navy. He became
2 executive vice president in 1990. As such he is, in
3 essence, the chief manager in pennsy Supply, and he is
4 responsible for the day-to-day management of the company.
5 He will testify as to the lines of business
6 in which Pennsy Supply is engaged, that is that pennsy
7 Supply is primarily a supplier of free principle products,
8 aggregate concrete and asphalt for customers.
9 He will testify as to the area of the
10 business of pennsy Supply, which is Dauphin County,
11 Cumberland County, Perry County, and Lebanon County, and
12 also to a certain extent in Lancaster, York, and Berks
13 County.
14 He will testify as to the locations of
15 facilities operated by pennsy Supply, including a sandstone
16 quarry in Mount Holly springs, a limestone quarry in Silver
17 Springs, a limestone quarry from Hummelstown, and also a
18 limestone quarry in Newport.
19 He will further testify that Pennsy Supply
20 operates a concrete plant in Silver Spring and also a
21 concrete plant in Hummelstown and one in Harrisburg, and he
22 will testify that pennsy Supply operates a blacktop plant in
23 Silver Springs, in Hummelstown, and in Harrisburg.
24 Mr. Eshelman will testify that Elco is a
25 wholly owned subsidiary of Pennsy Supply. Elco sells
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1 crushed stone, concrete block, and concrete. It has a
2 concrete plant in Lebanon and a crushing plant in Lebanon
3 and also a quarry dolomite in Lebanon.
4 The third general area of Mr. Eshelman's
5 testimony will concern the competition with pennsy Supply
6 and Elco by the companies owned by Mr. Robert Mumma, II.
7 Those two companies are Adams County Asphalt and McDermitt,
8 Incorporated. Adams County Asphalt is in the crushed stone
9 and blacktop business. McDermitt, Incorporated, is in the
10 ready mix concrete business.
11 They both operate in the same geographic
12 areas as pennsy Supply and Elco, and the facilities operated
13 by Adams County Asphalt and McDermitt, Incorporated, are at
14 the Fiddler's Elbow Quarry near Middletown and also concrete
15 plants at Fiddler's Elbow, Gettysburg, and Western Maryland,
16 and a black top plant at Fiddler's Elbow.
17 Mr. Eshelman will testify as to the bidding
18 process engaged in by pennsy Supply and Elco, that is they
19 submit bids to customers for contracts. The bids are secret
20 bids although prices, the winning price to whom the contract
21 is awarded, may ultimately become public.
22 The costs that make up the bid and the profit
23 margin and the overhead and so forth are not pUblic, and it
24 would be a competitive disadvantage for pennsy Supply or
25 Elco to have to produce to a competitor knowledge of their
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1 costs or overhead or profits, and in particular it would be
2 a competitive disadvantage to disclose any of this
3 information to Mr. Mumma.
4 Finally Mr. Eshelman will testify that when
5 he came to pennsy Supply in 1986 Mr. Mumma was not then in
6 competition with pennsy Supply, and Mr. Mumma at that time
7 was strictly a paving contractor through his company, Adams
8 county Asphalt.
9 It was only subsequent to 1988 and subsequent
10 to these family disputes that Mr. Mumma went into direct
11 competition with pennsy Supply by opening up the quarry at
12 Fiddler's Elbow by putting a cement plant there operated by
13 McDermitt, Incorporated, and by putting a blacktop plant
14 there. And that would be the substance, Your Honor, of Mr.
15 Eshelman's testimony.
16 MR. COSTOPOULOS: May it please the Court, on
17 behalf of the petitioner, our position is this testimony is
18 totally irrelevant, Your Honor, to the very limited purpose
19 of this petition and the issue before the Court.
20 THE COURT: Are there any documents that
21 you're seeking that would be relevant to this particular
22 testimony?
23 MR. COSTOPOULOS: I don't see where the
24 documents we're seeking would be relevant to this particular
25 testimony, but even if the Court would determine that what
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this witness would testify is relevant, then I'm willing to
stipulate that the proffer is what this witness would
testify to without availing myself of any cross examination.
THE COURT: I hate to rule that someone can't
offer a witness. If it isn't relevant then we won't
consider it. I'm going to let him testify because I'm not
really sure at this point right now exactly what all
documents you're trying to compel them to produce. So I
would prefer to have his testimony on the record in the
event it would be helpful in rendering that decision
MR. SONNENFELD: Thank you, Your Honor.
Your Honor, do you prefer I proceed from counsel table or
the podium?
THE COURT: It doesn't matter. Whichever is
more convenient for you.
Whereupon,
DONALD EUGENE ESHELMAN
having been duly sworn, testified as follows:
DIRECT EXAMINATION
BY MR. SONNENFELD:
Q Mr. Eshelman, would you please tell us your
full name?
A My name is Donald Eugene Eshelman.
Q And by whom are you employed, sir?
A Pennsy Supply, Inc.
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Q Where is your office located?
A One thousand and one Paxton street in
Harrisburg, pennsylvania.
Q What is your position?
A Executive vice president.
Q When did you join Pennsy Supply?
A July 15th, 1986.
Q And where were you employed before that?
A United States Navy.
Q For how many years, sir?
A Twenty.
Q And could you tell us briefly your
educational background?
A I have a Bachelor of Science in engineering
from the naval academy, 1966, and a Master's degree in
mechanical engineering from the naval post-graduate school
in Monterey, California, 1980.
Q What was your rank in the navy at the time of
your retirement in 1986?
A Commander.
Q Now, when did you become executive vice
president of Pennsy Supply?
A January 1990.
Q What are your duties and responsibilities in
that position?
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1 A In general I'm responsible for the day-to-day
2 operation of pennsy Supply.
3 Q And to whom do you report, sir?
4 A President of Pennsy Supply, Mrs. Kim Mumma.
5 Q Thank you. Now, could you tell us briefly
6 the nature of the business of Pennsy Supply?
7 A We're engaged in providing building
8 materials, construction materials for the construction
9 industry.
10 Q What are the principle products that you
11 supply, that pennsy Supply provides to the construction
12 industry?
13 A primarily ready mix concrete, crushed stone,
14 blacktop, and various building materials.
15 Q And in what geographic area does Pennsy
16 Supply do business?
17 A Primarily in the Dauphin, Cumberland, Perry
18 and Lebanon County areas.
19 Q And to a limited extent in other counties?
20 A That's correct.
21 Q Which counties would that be, sir?
22 A Counties like Adams County, York County,
23 Lancaster County.
24 Q And are you familiar with the facilities
25 operated by pennsy Supply?
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A I am.
Q Could you describe briefly those facilities?
Begin perhaps with the quarries.
A The quarries. We have the sandstone quarry
located in Mount Holly springs, Pennsylvania. We have a
limestone quarry known as the Silver springs facility, which
really the mailing address is in Mechanicsburg. It's
located along the Carlisle Pike.
We have a quarry in Hummelstown, a limestone
quarry in Hummelstown, Pennsylvania, and one in Newport,
Pennsylvania.
Q And do you have a dolomite quarry in
Hummelstown?
A Yes. I use the term in general limestone,
but primarily there is dolomite there, and there's high
calcium stone and there is limestone there.
Q And where does Pennsy Supply have concrete
plants?
A At the Hummelstown facility, the Silver
Springs facility, and also at the Paxton Street location in
Harrisburg.
Q And where does Pennsy Supply have blacktop
plants?
A At the Hummelstown facility, the Paxton
Street facility, and the Silver Springs facility.
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1 Q Now, does Pennsy Supply have a wholly-owned
2 subsidiary named Eleo, E-l-e-o?
3 A Yes.
4 Q And in what business is Elco engaged?
5 A In crushed stone, dolomite, ready mix
6 concrete, out of two plants, one on Pres scott Road and one
7 in Annville, Pennsylvania, and also block plant at the
8 presscott Road facility.
9 Q And in what geographic area does Elco do
10 business?
11 A primarily in the Lebanon county area, but
12 occasionally into Lancaster, Berks county, the surrounding
13 counties.
14 Q Now, are you familiar with a company named
15 Adams County Asphalt?
16 A ram.
17 Q Who do you understand owns that company?
18 A Robert M. Mumma, II.
19 Q And in what business is Adams county Asphalt
20 engaged?
21 A I understand it would be engaged in the
22 paving, blacktop -- paving business and supplier of crushed
23 stone.
24 Q Now, are you familiar with the company named
25 McDermitt, Incorporated.
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A I am.
Q Who do you understand owns that?
A I understand that at least Robert M. Mumma,
II, is an owner.
Q And in what business do you understand
McDermitt Inc. to be engaged?
A providing ready mix concrete.
Q Now, where do you understand that Adams
county Asphalt maintains facilities?
A I know them to have a crushing plant and a
blacktop plant at the Fiddler's Elbow facilities in
Middletown, pennsylvania.
Q And where is that with respect to the
Hummelstown facilities of Pennsy Supply?
A I believe it to be within about a five mile
radius.
Q Are there any other facilities that Adams
county Asphalt maintains?
A I'm not familiar with other facilities that
Adams County has.
Q What about MCDermitt, Inc. Where does
McDermitt, Inc. maintain facilities?
A They have a ready mix concrete plant in
Gettysburg. They have one at the Fiddler's Elbow Quarry in
Middletown, Pennsylvania, and I understand they just put one
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in operation in Maryland.
Q And in what geographic area do you understand
that Adams County Asphalt and McDermitt Inc. sell their
products?
A In the basic same geographic area that I
described that pennsy Supply does, in those counties.
Q And Elco?
A And Elco.
Q All right. Now, could you describe for us
briefly the bidding procedure by which pennsy Supply and
Elco bid on jobs?
A Well, it depends on exactly what kind of bid
is being done, but in general, general contractors who are
bidding on a job that's open to the pUblic to bid for,
either they will buy or request quotations for materials
directly or perhaps subcontractors that are going to bid to
the general contractor will ask us for prices on our
materials to supply the job that they intend to do.
Q Now, when you supply these prices, do you
provide information as to your own costs?
A No.
Q All right. Do you supply information as to
your profits?
A No.
Q And do you ever provide competitors with
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1 information as to your costs or profits?
2 A No.
3 Q And do your competitors provide you with that
4 information?
5 A No.
6 Q And would pennsy supply and Elco be at a
7 competitive disadvantage if they had to provide internal
8 information such as costs and profit and so forth to a
9 competitor such as Adams County Asphalt or McDermitt?
10 A Absolutely.
11 Q And why is that?
12 A They would have inside information and would
13 know how to structure their bidding, and it would be to our
14 disadvantage.
15 Q Now, when you first came to pennsy Supply in
16 1986, in the summer of 1986, I believe that was shortly
17 after the date of Mr. Mumma, Senior?
18 A That's correct.
19 Q At that time was Mr. Mumma, II, in
20 competition with pennsy Supply or Elco?
21 A I don't believe so.
22 Q Okay. In what business was Mr. Mumma through
23 Adams County Asphalt or McDermitt then engaged?
24 A I understand -- understood him to be engaged
25 in the paving business and excavating business.
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1 Q He was a contractor not a supplier?
2 A That's correct.
3 Q And do you know when it was approximately
4 that Mr. Mumma became a supplier of materials in competition
5 with pennsy Supply and Elco?
6 A In the general vicinity of late 1988, early
7 1989.
8 Q Time period?
9 A Yes.
10 Q And what events occurred in that time period
11 that made him a competitor?
12 A Well, he opened up the -- and put a concrete
13 plant and blacktop plant and stone plant at the Fiddler's
14 Elbow Quarry location. There were no facilities like that
15 when I came to work for Pennsy Supply in '86, but in late
16 '88, early '89, in that general vicinity of time, those
17 three kinds of plants were installed at the Fiddler's Elbow
18 Quarry and began producing concrete, blacktop, and stone,
19 crushed stone.
20 Q Now, have you, at my request, caused to be
21 prepared a list of a representative samples of products in
22 which Pennsy Supply or Elco and either McDermitt or Adams
23 county Asphalt were competing?
24 A Yes.
25 MR. SONNENFELD: If I may approach the
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1 witness, Your Honor.
2 THE COURT: Sure.
3 BY MR. SONNENFELD:
4 Q Mr. Eshelman, what I placed before you is
5 what we've marked for identification as Respondent's Exhibit
6 No.1. Could you please identify that for us?
7 A Yes. This is a summary list, not an all
8 inclusive list, but a summary list of competitive projects
9 in the basic Harrisburg metropolitan and Lebanon areas that
10 I'm aware that we were in competition with Adams County
11 Asphalt or McDermitt, Inc.
12 Q Okay. Now, over what period does this list
13 include?
14 A Generally it's 1991, '92, approximately March
15 '90 through April '92.
16 Q And I don't want to take you through all of
17 these, but just looking at the first entry. Can you go
18 across it horizontally left to right to explain to us the
19 format of this exhibit?
20 A On the far left column is the date, and in
21 the first example it's March of 1990. In the second column
22 pennsy Supply Inc. is the company that's involved here.
23 Elco is not. The project was Double "M" Development
24 Warehouse.
25 The general contractor that was awarded that
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1 job was McCoy Brothers. The product that we were competing
2 there for was ready mix concrete 7,900 cubic squares, and
3 the supplier ultimately was McDermitt, Inc.
4 Q And that formality would hold true for all of
5 the entries?
6 A That's correct.
7 Q And in addition to the entries appearing on
8 the Respondents' Exhibit No.1, were there other projects at
9 which either pennsy supply or Elco were in competition with
10 either McDermitt or Adams County Asphalt in bidding over
11 this time period?
12 A Yes.
13 Q And why were they not included?
14 A In an effort to just show a representative
15 number over a two year period. There could have been many
16 more.
17 Q Thank you. Now, next I'd like to hand you
18 what we have marked for identification as Respondents'
19 Exhibit No.2. It's a three page document, and could you
20 identify this, please?
21 A Yes. These are three pages that were removed
22 from a 1991 yellow pages book in my office.
23 Q For what area?
24 A Would you repeat the question?
25 Q From what area, the yellow pages? The
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1 Harrisburg area?
2 A Yes.
3 Q And looking at the first page of exhibit 2,
4 could you tell us or direct our attention to what that
5 shows?
6 A Well, the first page, the one that's on top
7 in my exhibit here is page 676. Under the heading in bold
8 print of crushed stone there are two in the center that are
9 advertised as suppliers of crushed stone, and the one on top
10 is an advertisement for Adams County Asphalt at the
11 Fiddler's Quarry. It indicates that they have crushed stone
12 available there as well as blacktop, it's phone number and
13 address.
14 Right below that is a similar one for Pennsy
15 Supply, Incorporated, indicating that we supply crushed
16 stone from four counties and our telephone number.
17 Q Which ad is bigger?
18 A Adams County Asphalt is slightly bigger.
19 Q And they're right next to each other?
20 A Well, Adams County is on top of Pennsy's.
21 Q If you would turn, please, to the next page
22 of Respondents' Exhibit No.2. Could you tell us what that
23 is?
24 A Next page is 216 under concrete, ready mix
25 concrete. On the far left-hand side there are two
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advertisements, one for McDermitt, Inc., saying the kinds of
ready mix concrete that they will provide for residential
commercial, et cetera, and their telephone number and what
counties they service.
Q And what counties do they show that
MCDermitt, Inc., services for ready mix concrete?
A Dauphin, Cumberland, Lancaster, and Lebanon
counties.
Q And what is below the McDermitt, Inc., ad on
that page?
A There's our ad, Pennsy Supply ad, for ready
mix concrete with our telephone number and address of the
main headquarters.
Q And, again, does Pennsy Supply furnish ready
mix concrete in those same counties that are referenced in
the McDermitt, Inc. ad?
A We do.
Q And finally on the third page, what does that
show?
A This is page 498, and this shows four
advertisements for paving contractors. And the one on the
top right-hand corner is for Adams County Asphalt Company
excavating, paving, contractors, and it indicates that they
provide crushed stone, asphalt, concrete, and their
telephone number and their address, Front Street and
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Harrisburg.
MR. SONNENFELD: Thank you, Mr. Eshelman. I
have nothing further of this witness, Your Honor.
THE COURT: Cross-examine.
MR. COSTOPOULOS: No questions, Your Honor.
THE COURT: I have none. Thank you.
MR. SONNENFELD: Your Honor, I have copies of
these exhibits, if you would care to have them.
THE COURT: I don't need copies. I'll have
the originals.
MR. SONNENFELD: I would move these exhibits
at this time.
THE COURT: They're admitted.
(Whereupon, Respondents' Exhibits 1 and 2
were admitted into evidence.)
MR. SONNENFELD: Your Honor, I next call Mr.
Nye.
Whereupon,
RONALD E. NYE
having been duly sworn, testified as follows:
DIRECT EXAMINATION
BY MR. SONNENFELD:
Q Mr. Nye, you're retired; is that correct,
sir?
A Yes, that's correct.
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Q And by whom were you employed prior?
THE COURT: I don't believe he gave us his
full name.
MR. SONNENFELD: Oh, I'm sorry, Your Honor.
BY MR. SONNENFELD:
Q Can you tell us your full name?
A Ronald E. Nye.
THE COURT: Can you spell that?
THE WITNESS: N-y-e.
BY MR. SONNENFELD:
Q Can you tell us your address, Mr. Nye?
A 707 Alison Avenue, Mechanicsburg,
pennsylvania.
Q Thank you, sir. Is that correct that your
retired, Mr. Nye?
A That's correct.
Q By whom were you employed at the time of your
retirement?
A Pennsy Supply, Incorporated.
Q When did you retire from Pennsy Supply,
Incorporated?
A The end of December, 1991.
Q For how long were you employed by pennsy
supply?
A Forty years.
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1 Q And what was your position at the time of
2 your retirement in 1991?
3 A Vice president of sales for aggregates
4 crushed stone, blacktop.
5 Q What were your duties and responsibilities?
6 A Duties were to be responsible for sales of
7 those materials, for filling out and taking care of the
8 bidding process to various municipalities and the state and
9 according prices to the contractors who requested them.
10 Q Now, you heard Mr. Eshelman's testimony in
11 court this morning?
12 A Yes.
13 Q And rather than have you repeat that do you
14 agree with what he said and adopt that as your testimony?
15 A Yes.
16 Q Now, at sometime -- up to sometime is that
17 correct that Pennsy Supply sold materials to Adams County
18 Asphalt?
19 A That's correct.
20 Q And have you reviewed the records of pennsy
21 Supply and determined when Adams County Asphalt stopped
22 buying materials from Pennsy supply?
23 A Yes, I did. We stopped selling them
24 materials sometime in the latter part of 1988.
25 Q And would it be correct to say that prior to
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that time Adams County Asphalt was a contractor buying its
materials from pennsy Supply?
A That's correct.
Q Now, have you determined when Mr. Mumma, II,
applied for a quarrying permit for the Fiddler's Elbow
location?
A I recall, I believe it was sometime in June
of 1988 when he applied for a permit.
Q And when did he apply for a permit to operate
a blacktop plant at Fiddler's Elbow?
A I believe that was in September of '88.
Q And when did McDermitt, Inc., get a permit to
manufacture concrete at Fiddler's Elbow?
A I believe that was sometime in November of
1989.
Q And to the best of your recollection, when
did Mr. Mumma, II, first begin publicly bidding on blacktop
for state materials, contracts?
A For state materials, contracts, he started
bidding on those materials against pennsy Supply in December
of 1989 and January of 1990.
Q And when did he begin the bidding on crushed
stone for such contracts?
A For state contracts?
Q Yes, sir.
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1 A okay. I'm sorry. The first one was in
2 December of 1989. I believe that was a blacktop, and I
3 believe the crushed stone was in January of 1990.
4 Q And when did Mr. Mumma, II, begin bidding to
5 supply materials to municipalities?
6 A He began bidding against us on municipality
7 bids in the early spring, which normally doesn't start until
8 sometime around March of 1990.
9 Q And was Mr. Mumma still bidding against
10 pennsy Supply for those materials for those kinds of jobs
11 as of the time of your retirement in December of 1991?
12 A Yes.
13 Q And do you recall any specific jObs where Mr.
14 Mumma was bidding against Pennsy Supply?
15 A Well, I remember one specific jOb when he was
16 aggressively bidding against us. He was bidding as a
17 contractor for an overlay job in a silver Springs Company
18 and pennsy Supply was bidding against them.
19 And he came in and hit that one pretty hard
20 and took it from pennsy Supply. And it was kind of
21 disgusting because it was, you know -- he's about fifteen or
22 twenty miles on the other side of the river from us and
23 we're sitting right in the Silver Springs Township. So I
24 was a little disappointed with that.
25 Q When you say he was aggressively bidding,
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what do you mean by that?
A Well, if I recall he was probably in excess
of ten percent under us.
Q And are there other jobs where that has
occurred as well?
A Yes.
MR. SONNENFELD: Your Honor, I have nothing
further of Mr. Nye.
THE COURT: Cross-examine.
MR. COSTOPOULOS: No questions, Your Honor
THE COURT: I have none. Thank you.
MR. SONNENFELD: Your Honor, might we at this
time excuse Mr. Eshelman and Mr. Nye?
MR. COSTOPOULOS: No objections.
THE COURT: They may be excused.
MR. SONNENFELD: Your Honor, I'd just like to
read very briefly a few admissions into the record. This
won't take very long.
THE COURT: Is this admissions now from the
rule?
MR. SONNENFELD: These are admissions that
pertain to Mr. Mumma's competition with pennsy Supply.
These will be very brief, Your Honor.
THE COURT: Go ahead
MR. SONNENFELD: Thank you, Your Honor.
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1 First I'd like to read from the transcript of the hearing
2 before this Court on January 25th, 1989, page 78 line 21,
3 question, And you're the sole shareholder of Adams County
4 Asphalt? Answer, That's correct. And that was by Mr.
5 Mumma.
6 Next I'd like to read very briefly from the
7 transcript of the proceeding before Judge Schaffner in the
8 Dauphin County hearing on January 23rd, 1992, beginning at
9 page 236. Excuse me. Beginning at page 216, lines 10 to
10 14.
11 Question, Let's speak about CACO 3 for a
12 minute. Does that company -- you own that 100 percent now,
13 is that correct? Answer by Mr. Mumma, Yes. Question, And
14 what employees are there? Answer, I'm president. Mike
15 Shenk's vice president.
16 Turning to page 221, lines 7 to 8, question
17 by Judge Schnaffer, Well, the question is ask the
18 question. What's the other income that CACO 3 gets? And
19 after some colloquy by counsel the answer begins at page 222
20 line 16 to 19, or again that -- actually the Court piCks up.
21 The Court, All right. So the other sources would be what,
22 Adams County is one? Answer by Mr. Mumma, And other
23 competitors of Nine Ninety Nine, and I really --
24 Then going to page 225, lines 5 to 25,
25 Question by Judge Schnaffer. All right. Well, would you
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1 divulge, sir, the vendors, whether it's Union Quarries or
2 Fiddler's Elbow Quarry, that have used CACO as an
3 instrumentality to market their products in 1991? The
4 witness, In 1991? The Court, Yes. The Witness, In 1991 I
5 think they may have sold some sand for Cecil Sand and
6 Gravel.
7 THE COURT: The witness here again is who?
8 MR. SONNENFELD: Mr. Mumma, sir. And I have
9 to -- regardless of what he says, they would be -- that
10 sand -- they were a direct competitor of Nine Ninety Nine.
11 And that's why this is so critical.
12 The court, I don't think we're understanding
13 each other. The Cecil Sand, did they buy the sand? The
14 witness, They sold the sand. The Court, to someone else
15 through CACO? The Witness, to someone else through CACO.
16 And that sand sale was a sand sale that Nine Ninety Nine did
17 not get, okay. So if he wants to get into all this, what he
18 is getting into is the blood of CACO 3, the very reason for
19 being.
20 The court, Who else did CACO 3 represent as a
21 salesman in 1991? And going to page 226 lines 4 to 8. The
22 witness, Lebanon Rock, Adams county Asphalt, and they were
23 attempting to sell products that would compete with Nine
24 Ninety Nine or some other entities. If you want me to
25 enumerate those, I will, but again -- I'll do what you want
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1 me to do, but it's going to hurt us.
2 Finally, Your Honor, I'd like to read two
3 brief admissions from an affidavit submitted by Mr. Mumma in
4 this proceeding. This is an affidavit dated December 18th,
5 1991, submitted by Mr. Mumma.
6 Paragraph four reads, quote, I own the stock
7 of Adams county Asphalt Company, which he defines as ACA.
8 ACA competes with pennsy only with respect to annual
9 contracts with governmental entities for the supply of
10 paving materials.
11 Then paragraph six of that affidavit reads,
12 quote, I own 66 percent of McDermitt Inc. McDermitt
13 competes with pennsy only in the supply of concrete in the
14 Harrisburg market, northern Adams and in southern Cumberland
15 Counties. McDermitt does not compete with Elco. Thank you,
16 Your Honor. Your Honor, next I'd like it call Mrs. Morgan.
17 Whereupon,
18 LISA MUMMA MORGAN
19 having been duly sworn, testified as follows:
20 DIRECT EXAMINATION
21 BY MR. SONNENFELD:
22 Q Mrs. Morgan, would you please state your full
23 name for the record?
24 A Lisa Mumma Morgan.
25 Q And is it correct that you are a co-executrix
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Supply?
A
Q
A
secretary.
Q
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1 necessary to complete his tax returns?
2 A No, we have not.
3 Q And, in fact, have you caused materials to be
4 supplied to Mr. Mumma either directly from the company or
5 from the company's accountants that are necessary for his
6 tax returns?
7 A Every year.
8 Q Let me show you what we have marked for
9 identification as Respondents' Exhibit No.5, and could you
10 please identify this document?
11 A It's a letter from George Hadley, who's with
12 the firm of Lucker, Kennedy & Felmeden, who are the
13 accountants and auditors for pennsy Supply, Nine Ninety Nine
14 MRA and all of the various entities to a Mr. John B. Stein,
15 who's a tax partner at Price Waterhouse & Company, who is
16 the person I understand that Bobby engaged to do his tax
17 returns after he left the firm of Lucker, Kennedy &
18 Felmeden.
19 Q And what documents were enclosed with Mr.
20 Hadley's letter of February 20th, 1992, to Mr. Stein, which
21 we've marked as the first page of Respondents' Exhibit No.
22 5?
23 A The documents that he would have needed from
24 the various entities to complete his tax returns, which
25 would have included Schedule K-1 from Hummelstown Quarries,
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1 a 1040 regarding the income and or loss from Mumma Realty
2 Associates I and II, Schedule B and schedule E, and a form
3 6251 showing the MRA I depreciation adjustment for the
4 alternative minimum tax, were all sent to his tax person
5 with a comment that if he had any questions to let us know,
6 we would be glad to answer them.
7 Q And would you tell us what the second page of
8 Respondents' Exhibit No. 5 is?
9 A It's a copy almost identical of the same
10 letter, but it's for the year before.
11 Q And it encloses the same documents?
12 A Yes.
13 Q And to the best of your knowledge, were the
14 documents enumerated in Exhibit 5 sent to Mr. Mumma on those
15 dates or to Mr. Mumma's accountant on those dates?
16 A Yes, and he -- Bobby, himself, was carbon
17 copied on the letter so that we would know that we had
18 forwarded those documents to his tax people.
19 Q And did either Mr. Mumma, Mr. Robert Mumma,
20 II, or Mr. stein ever complain to you that he had not
21 received those documents?
22 A To my knowledge there was never any
23 complaint.
24 THE COURT: What's the date of that? I'll
25 see it later on. What's the date of that?
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1 THE WITNESS: The top letter is mailed
2 February 20th, 1992, and it's regarding tax information for
3 the year ended December of '91. And the second letter is
4 dated February 16, 1991, and it's regarding tax information
5 for the year ended December 31, 1990. Prior to that George
6 Hadley was Bobby's accountant, and he was also the person
7 generating this stuff.
8 BY MR. SONNENFELD:
9 Q At what point in time did Mr. Hadley cease to
10 be Bobby's accountant?
11 A Somewhere during the year 1990, is my
12 understanding, '89 or '90.
13 Q And he continues to be the accountant for
14 Nine Ninety Nine and Pennsy Supply?
15 A Yes.
16 Q And for the estate?
17 A Yes.
18 Q Next I'd like to hand you a collection of
19 documents pertaining to Nine Ninety Nine, which we have
20 marked collectively as Respondents' Exhibit No.6. Perhaps
21 you can walk us through those and tell us what those
22 documents are?
23 A The top page is a sample of the letter that
24 normally comes annually, again, from George Hadley, but it
25 comes to my mother as President of Nine Ninety Nine, and it
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1 encloses the annual tax return for the company. And along
2 with it he sends 1099s for each of the shareholders with
3 mailing labels that we then turn around and send out to each
4 of the shareholders.
5 A sample of the 1099s is on the second page,
6 and it happens to be the one that would have been sent to
7 Bobby indicating what his income out of that corporation
8 would have been for the year for him to attach to his tax
9 return.
10 Q Now, since that is blurred, do you actually
11 show what that income was on the third page?
12 A Right. The third page is something that we
13 just keep on our records for the corporation for Nine Ninety
14 Nine, which shows the dividends annually, and the number is
15 there. It's close to $73,000.
16 Q And the second page, the 1099 for Nine Ninety
17 Nine for 1991 was sent to Mr. Mumma; is that correct?
18 A Yes, it is.
19 Q Now, can you tell us what the fourth page of
20 Respondents' Exhibit No. 6 is?
21 A It's basically back up information which we
22 sent annually every year when the board of directors
23 declares a dividend, and we send that dividend.
24 We attach a cover letter telling the
25 shareholders the amount per share that we declared, and this
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1 is the copy of the letter that went to Bobby signed by my
2 mother, and you'll see at the bottom in my secretary's
3 handwriting letting me know that she sent similar copies to
4 Linda and Barb, my sisters.
5 Q Can you tell us what the fifth page is?
6 A Certified mail receipts showing that Bobby
7 did, in fact, get copies of these documents.
8 Q And what is the next page?
9 A It's a similar letter regarding a dividend on
10 Nine Ninety Nine, only it regards the ten percent preferred
11 stock of the corporation.
12 Q And a letter like that was sent to Bobby?
13 A Yes.
14 Q And what's the date of that letter?
15 A July 30, 1991.
16 Q And could you tell us what the next page is
17 of Exhibit No.6?
18 A The next page is a letter dated February 18,
19 1991, and it's the same or similar letter to the one that
20 was the first page of this pack only it regards -- it's for
21 1991 instead of 1992, and it encloses the tax returns for
22 Nine Ninety Nine for that year and also copies of the
23 individual 1099s with mailing labels to go to each of the
24 shareholders, which we then in turn sent to each of the
25 shareholders, including Bobby.
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Q And that letter is dated February 18th, 1991?
A Yes.
Q And did you at or about that time cause to be
sent to Bobby his copy of his 1099 form, for Nine Ninety
Nine for the year 1990?
A Yes, a copy of that 1099 is on the next page
following showing his 1099 that he was sent.
Q And could you go back the page after that and
tell us what that is?
A That's similar to prior letters for 1991 only
this one is for 1990 showing the annual dividend declared on
the 10 percent preferred stock and his check on that
dividend. It's a letter sent to him, and following it are
the certified mail receipts showing, again, that he received
this information.
Q And the date of that letter is July 30th,
1990?
A Yes.
Q And next after that is a two page letter
dated November 20th, 1989?
A Yes.
Q And could you identify that letter for us?
A Yes. This was a letter sent by my mother,
but authored by me subsequent to a request by Bobby's
counsel, who at that time was Pepper, Hamilton and Scheetz,
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1 to inspect records.
2 As secretary of the corporation I made those
3 records available, and Mike Finio, who is a lawyer with a
4 firm of Goldberg, Katzman, and Shipman, sat in the room
5 while the inspection went on and made a list during the time
6 of the information that we provided to Bobby and furnished
7 me with that list.
8 I sent a letter to Bobby confirming that that
9 information, in fact, had been provided to him and his
10 lawyers, actually his lawyers on that date, and this is the
11 letter detailing all of the information that we provided.
12 Q And that information was, in fact, provided
13 on that date, that is November 20th, 1989?
14 A Yes.
15 Q And that was provided to which lawyers for
16 Mr. Mumma?
17 A Pepper, Hamilton, and Scheetz.
18 Q Thank you. And can you identify the next
19 letter in Exhibit No.6?
20 A Yes. I might add that it's my recollection
21 that Bobby was also there with his counsel this day. The
22 next letter is a letter dated November 17th, 1989,
23 responding to a letter that he had sent us on November 16th
24 aSking to inspect financial records, and it was a letter
25 back from us saying, fine, here's the date and time and
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1 place. We will have all of the records available and you
2 and your counsel can come look at them.
3 Q And can you identify for us, please, the next
4 document in Exhibit No.6?
5 A The next letter is a letter from Bobby to my
6 mother. It's regarding Lebanon Rock, Inc., but in it in the
7 second paragraph he makes some statement that he's been
8 trying to review the books and records of Nine Ninety Nine,
9 BObali, High-Spec, Robert M. Mumma, Inc., Mumma Reality
10 Associates, and Hummelstown Quarries.
11 Q And is there then a response to that letter?
12 A Yes. The next --
13 Q That's the last two pages of Exhibit 6?
14 A Yes. The last two pages are a letter from
15 mom to Bobby, again, authored by me, basically saying that
16 this is hogwash. We've given you documents on numerous
17 occasions, and to the extent that there is anything else you
18 wish to see, if you would let us know we would be happy to
19 get the stuff together.
20 Q And that last letter, that two page letter is
21 dated April 20th, 1989; is that correct?
22 A Yes.
23 Q Okay. Let me next hand you a document which
24 we have marked for identification as Respondents' Exhibit
25 No.7. And for the record, I believe these documents
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collectively relate to Mumma Realty Associates, Inc., which
we referred to from time to time as MRAi is that correct?
A Yes.
Q And can you take us through Respondents'
Exhibit No. 7 and tell us what this consists of?
A As you said, this is basically the documents
related to MRA. There are basically, Your Honor, three
entities that Bobby needs to know about for his tax returns.
The first is Nine Ninety Nine, and we already went through
that packet of documents showing that we sent him dividend
information and 1099s for his tax returns. The second one
is Hummelstown Quarries.
Q We'll get to that.
A okay. We have a specific pack for that, I
guess, but that's also shown on the letters to Mr. stein
that we sent him that. And the third is MRA, which is also
reflected on the letters to Mr. stein that that was sent,
and then there's a packet here, this Exhibit No.7, that
shows that during the course of the year I sent him and my
mother sent him various information on MRA that he would
need.
Q By him you mean Mr. Mumma, your brother?
A Yes.
Q And can you tell us what the first page of
Respondents' Exhibit No. 7 is?
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A On the first page is a letter dated February
26, 1992, enclosing the audited financial statements for MRA
I and II.
Q For what year?
A For 1991.
Q And to whom was this letter and the
enclosures sent?
A To Bobby by certified mail, and the next page
are the certified mail receipts showing that he, in fact,
did receive them.
Q And the date of this letter was February 26,
1992?
A Correct.
Q And can you tell us what the third page is of
Respondents' Exhibit No.7?
A It's a similar letter, but it's showing that
we sent them in '91 to him.
Q Financial statements for the year 1990?
A Right.
Q Are for MRA I and II?
A And again the certified mail receipts showing
that they were sent and received.
Q And that's the fourth page?
A Yes.
Q What is the fifth page of Exhibit No.7?
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A Every year we try to make a distribution out
of MRA if there's excess cash to the tenants in common, and
this is the one showing the 1991, his check going to him
from MRA I, again, sent certified mail. The page following
shows the certified mail receipts.
Q And that fifth page is a letter dated
February 20th, 1991?
A Yes.
Q And the sixth page are the receipts signed by
Mr. Mumma for that?
A Yes.
Q And can you tell us, please, what the 7th
page of Respondents' Exhibit No. 7 is?
A That is a similar letter enclosing a tenants
in common distribution.
Q And what's the date of that 7th page?
A February 12th, 1991.
Q And that's a letter dated -- addressed to Mr.
Mumma again?
A Yes.
Q And the 8th page?
A The 8th page is a letter inVOlving
information that Bobby had requested regarding MRA back in
1989. He had actually sent a request saying, I would like
the following information on MRA, and I took all of the
~G76
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1 questions that he had delineated and did the digging to get
2 the answers and sent him back a detailed letter that
3 responded line by line to his inquiries on MRA.
4 Q So this page, this June 21st, 1989, is your
5 cover letter?
6 A This is the cover letter to my mom. What I
7 did is since I did all of the work I figured that the other
8 tenants in common -- as I recall, Bobby had sent a carbon
9 copy of his letter and his inquiries to the other tenants
10 common.
11 So I figured they might like to see the
12 responses. So I sent a cover letter enclosing my responses
13 to Bobby's questions to all of the tenants in common so that
14 they would have the information too.
15 Q And what are the next four pages then of
16 Exhibit No.7?
17 A The next four pages is my letter dated June
18 20, 1989, answering line by line all his inquiries about MRA
19 I and II.
20 Q And by his you mean Mr. Mumma, your brother?
21 A Yes.
22 Q And these four pages are a letter from you
23 addressed to and sent to your brother?
24 A Yes.
25 Q And what is the page that comes after that?
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A The certified mail receipt showing that this
was sent to him.
Q And moving on could you tell us what the next
letter is?
A This is the statement that we sent in 1989,
the financial accounting for MRA I and II, and at the time
that this was sent there was something else going on which
really isn't totally relevant to this proceeding, but we
were in the midst of litigation here where Bobby was
challenging the MRA agreements.
And we had a pending land sale and the title
company wouldn't accept title because of the litigation over
the validity of the MRA agreements unless all of the tenants
in common signed off.
So in order to close the deal Jerry Duffie,
who is the attorney handling the real estate closing for us,
escrowed the money pending determination, whether the
agreements were valid and incident to that escrow agreement
among the tenants in common, if the tenants in common had
any questions regarding the financial statements we agreed
that they should submit them in writing in 15 days and then
we would answer them.
And it was a way for us to accomplish the
closing that Bobby was -- didn't want to go along with, and
that is, in fact, the scenario that generated the list of
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1 questions that I referred to, the previous page is my
2 response to those questions.
3 Q Okay. And finally, you can you tell us what
4 the last two pages of Exhibit No. 6 -- excuse me, exhibit
5 No. 7 are?
6 A Okay. The last two copies of the exhibit
7 shows for 1988 the compensation to Bobby for MRA Inc. And
8 the other one shows compensation to Morgan and Morgan,
9 which, I guess, is something that he had asked for.
10 Q Now, at any time has your brother ever
11 complained to you that he was lacking in information
12 concerning MRA I or II or MRA, Inc., that he needed to
13 prepare his tax returns?
14 A I have heard him -- like in his brief I have
15 seen him make general allegations with respect to -- with
16 specifics. Every time he said he needed information we have
17 copies of those requests that we have just gone over and our
18 response.
19 Other than those I have no knowledge of any
20 requests to me or to George Hadley, our accountant, because
21 he would then furnish them to me, requests for any specific
22 information that he needed for tax returns or anything else
23 for that matter.
24 Q Thank you. Okay. Next I'd like to show you
25 the final collection of these documents, which we have
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marked collectively as Respondents' Exhibit No.8. And this
collection of documents pertains to Hummelstown Quarries,
does it not?
A Yes.
Q And could you tell us, please -- let's begin
with the first page -- of what the first page of
Respondents' Exhibit No. 8 is?
A This is a similar pack as the others showing
that we gave him the information for Hummelstown Quarries,
which is the third entity that the estate needs to give him
information on so that he can do his tax returns.
And the first page is a letter sent to him
declaring the Hummelstown Quarry's dividend. We also try to
declare if there's excess cash, and it's on the cover letter
check and that also was sent certified mail.
And the next page is the certified mail
enclosing his
Q
receipt?
A
Q
receipt?
A
Yes.
As well as a copy of both sides of the
Yes.
Q And what's the third page of Respondents'
Exhibit No.8?
A The third page is the letter from Lucker
Kennedy, and Felmeden, enclosing the income tax returns for
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the company and also enclosing copies of 1120s and form
K-1s, which is what needs to go to the stockholders so they
can attach them to their income tax returns.
Those things would have been then given to me
and I would have, with the aid of my secretary, we would
have sent them out to the shareholders every year.
Q What are the next two pages of exhibit 8?
A Those are actually the physical copies of the
K-ls, Bobby's copies that we sent to him.
Q For 1991?
A This one is for 1991, but as I say, we have
done it every year.
Q Going passed 1991. K-l, is two pages. Can
you tell us what the next document is in Exhibit No.8?
A It's the letter declaring the dividend for
Hummelstown Quarries for 1991. The first one was for 1992.
Q Okay. And what's date that letter?
A April 15th, 1991.
Q And that's a letter to whom?
A To Bobby.
Q And what comes after that?
A The Schedule K-l for the year ending December
1990 for Hummelstown Quarry that we sent to him for his 1990
tax returns.
Q And that was by letter dated March 12th,
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A Yes.
Q And what follows that is the certified mail
receipt signed by your brother?
A Actually it's signed by his cleaning lady, I
think.
Q And what follows that? That's Mr. Mumma's
1990 schedule?
A Right. That's the physical copy of the
schedule that we sent him.
Q For 1990?
A Yes.
Q And after those two pages what is next with
Exhibit No.8?
A The financial statements that we sent March
1991 for the year ended December 31, 1990.
Q For Hummelstown Quarries?
A For Hummelstown Quarries.
Q And that is a cover letter sent March 6,
1991?
A Right, followed by the certified mail
receipts showing that we sent it and he got it.
Q Okay. And moving on, what comes next in this
packet?
A The final statement for the year ended
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1 December 31, 1989, also sent certified mail.
2 Q And what follows then is the receipt?
3 A Yes.
4 Q Okay. And what is the next cover letter,
5 which, I believe, is the last cover letter in this pack?
6 No, not the last. The next to the last cover letter.
7 A That's a similar letter to the ones before it
8 regarding the annual tax information sent from George Hadley
9 to us and then disseminated by us to the shareholders, only
10 this one is for the tax year ended December 31, 1989.
11 And this one has my little notes on it, one
12 saying, make sure mom signs the tax return and telling my
13 secretary that my cover letter, the one that we've seen that
14 usually goes out every year is on tape to accompany this
15 schedule.
16 Q So the handwriting on this letter dated
17 February 7th, 1990, to Mr. Hadley is your handwriting?
18 A Right. In the margin there's a little
19 notation on the bottom of my secretary's letting me know she
20 mailed the items by certified mail on whatever date. I
21 can't read it. March something of '90.
22 Q And what are the next two pages of Exhibit
23 No.8?
24 A That is the physical K-l for Bobby for the
25 year 1989 that we sent him.
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Q For Hummelstown Quarries?
A For Hummelstown Quarries.
Q And finally, what is the last cover letter in
this packet?
A This is the one for 1988, the information
from Lucker, Kennedy & Felmeden sent to us from Hummelstown
Quarry enclosing the tax information for the company and the
shareholders for the year ended 1988.
Q And the last two pages then are Bobby's
schedule K-1?
A Bobby's copy I then sent him for 1988.
Q And, to your knowledge, have you failed to
provide anything to Bobby concerning Hummelstown Quarries
that he would need in order to complete his tax returns?
A To my knowledge we are sending him everything
that we are that he needs to do his tax returns. I'll
put it this way, lIve been getting the same information and
I haven't had trouble filing mine.
Q Thank you. Now, over the course of the
litigation before this court, have you from time to time
caused the documents and information to be supplied to Mr.
Mumma, II?
A Numerous occasions.
Q And who have you called to supply such
information?
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1 A A substantial majority, as I recall, most of
2 it went via Pepper, Hamilton, & Scheetz. There may have
3 been a time or two when another one of his attorneys got
4 involved, but it's largely been Pepper, Hamilton & Scheetz.
5 Q And have attorneys from Pepper, Hamilton &
6 Scheetz come to your office to inspect documents?
7 A yes.
8 Q And have you caused us to prepare a list of
9 the documents and information supplied to Mr. Mumma over the
10 course of this litigation?
11 A Yes, but I don't think that this is an all
12 inclusive list.
13 Q Okay. A partial list?
14 A A partial list.
15 Q Let me hand you what we've marked for
16 identification as Respondents' Exhibit No.9, and could you
17 identify that for us?
18 A It's the list that Morgan Lewis prepared at
19 my request of the information that was given to Bobby.
20 Basically after we got into this litigation, we would
21 provide stuff and there would be claims that they never got
22 it or they haven't seen it.
23 And so I finally asked for someone to start
24 making lists so that when they started saying this stuff we
25 would have a physical list of what they had been given. So
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1 this was created after the litigation had already started.
2 Q And there is attached to the list a schedule
3 A. What is that?
4 A Schedule A is, not only did we produce
5 documents, the stuff that was at the corporations, but we
6 also had our accountants, George Hadley from Lucker, Kennedy
7 & Felmeden produce documents. And schedule A are the
8 documents that came from his office, or a partial list of
9 the documents that came from his office.
10 Q And what is Schedule B?
11 A Schedule B, we also have had Stradley, Ronon,
12 Stevens & Young, who was a law firm working with us, as you
13 may remember, when we were involved in the Irish company.
14 They also produced substantial documents to Bobby's counsel,
15 and Schedule B is the documents that came from their files
16 to him.
17 Q Now, on this multi-page list, how many
18 different categories of documents and information are
19 listed?
20 A Well, on the list, not counting the
21 schedules, there are 148 items and then the schedules,
22 they're not enumerated.
23 Q Schedule A is not. Schedule B is.
24 A Schedule B has forty-two to add to the
25 hundred and forty-eight.
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Q And is it also your belief there was other
information which didn't make it's way into the schedule
that was furnished?
A Yes. For example, I know that the
information that I personally provided to his counsel
regarding the stock ledgers and items like that are not on
this list, and certain information that was provided in
prior production requests before I asked for the list to be
generated aren't on here.
Q Moving on, Mrs. Morgan, did you in February
of this year cause to be filed in a Court of Common Pleas of
York County, a petition to restrain Mr. Mumma and his
lawyer, Mr. Gilbert, as guardians of the estates of Susan
Mumma and Marge Mumma from acting on behalf their awards and
litigation involving the stay or the trusts under the estate
of Robert M. Mumma?
A Yes.
Q I'd like to show what you we have marked for
identification as Respondents' Exhibit No. 10 and ask you if
this is the petition that was filed?
A Yes.
Q And is it your understanding that Judge
Miller has set a hearing on that petition for June the 10th
of 1992?
A
Yes.
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1 Q And are the averments made by you in that
2 petition true, to your knowledge?
3 A Yes.
4 Q Now, this morning you were in court and heard
5 Mr. Eshelman and Mr. Nye testify about the business of
6 Pennsy Supply and Elco and the competition between Pennsy
7 Supply and Elco on the one hand and McDermitt and Adams
8 County Asphalt on the other hand. You heard that testimony?
9 A Yes, I did.
10 Q And do you adopt that as your own testimony?
11 A Yes, I do.
12 Q And for the record, Pennsy Supply is a
13 wholly-owned sUbsidiary to Nine Ninety Nine, Inc.
14 A Right.
15 MR. SONNENFELD: Your Honor, at this time I
16 would like to move into evidence Exhibits 5 through 10,
17 which were marked during Mrs. Morgan's testimony.
18 MR. COSTOPOULOS: No objection, Your Honor.
19 THE COURT: They're admitted.
20 (Whereupon, Respondents' EXhibits 5 through
21 10 were admitted into evidence.)
22 MR. SONNENFELD: I have no further questions.
23 THE COURT: Cross-examine.
24 MR. COSTOPOULOS: May we have a five minute
25 recess, Your Honor?
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THE COURT: Sure. We'll stand in recess for
about ten minutes.
(Whereupon, a recess was taken.)
AFTER RECESS
MR. SONNENFELD: If I may proceed, Your
Honor, I had two other brief points I'd like to cover with
Mrs. Morgan, and Mr. Costopoulos has no Objection to my
covering those two points.
THE COURT: Go ahead.
MR. SONNENFELD: Thank you, Your Honor.
DIRECT EXAMINATION (cont'd.)
BY MR. SONNENFELD:
Q Mrs. Morgan, with respect to stock
certificates of the various companies, have the originals of
the stocks certificates been made available for Mr. Mumma's
inspection?
A Mr. Mumma and or his counsel, yes.
Q And when did that occur?
A I know for certain in January of '89, because
there was a meeting that took place at Pennsy Supply, Nine
Ninety Nine shareholders meeting, where Bobby participated
by conference call, and his attorney, Pepper Hamilton &
Scheetz was physically at the meeting.
And during the meeting Attorney Veil
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requested me for the stock certificates. I gave them to him
and sat with him while he looked through them and then he
said, can I have copies? And I personally went out to the
copy machine and made him copies.
In fact, I remember him asking -- he not only
wanted the fronts, he wanted the backs. So I made him
copies of both sides and gave them to him.
Q That was at a meeting in January of 1989 at
the offices of pennsy Supply on Paxton street in Harrisburg?
A Yes. Subsequent to that, but I can't
remember the date, we also provided the stock books to his
counsel again because they wanted to see them, what had
happened since January of 1989; and I believe that that was
somewhere toward the end of 1990 or the beginning of 1991,
around in there, but I can't recall a specific date.
Q Now moving on in the transcript there was
reference to Union Quarry's?
A Yes.
Q And have you furnished Bobby information with
respect to Union Quarry's.
THE COURT: You say in the transcript. Now
what transcript are you referring to?
MR. SONNENFELD: Thank you, Your Honor. The
transcript of the hearing on this issue on December 18th of
1991.
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THE WITNESS: Right. At that hearing Bobby
made in reference that one of the reasons he couldn't file
his tax return was because he couldn't find out what his
dividends or something were with respect to Union Quarry's,
and we weren't giving him the information.
BY MR. SONNENFELD:
Q What is the situation with respect to Union
Quarry's?
A Well, as Your Honor may recall, Union
Quarry's was an asset of Kim company. So in 1986 when the
liquidations occurred of Kim company and Pennsy Supply
Company, the stock of Union Quarry's went to the estate of
my father, and in lieu of stock the children all got a cash
credit because at the time -- during the liquidations there
wasn't enough cash to physically give all of the cash to the
kids. So we got a credit.
And since that date in December of '86 Bobby
has not -- Bobby never was a direct shareholder of Union
Quarry's. He was a shareholder in Kim Company, and Kim
Company, in turn, held stock of Union Quarry's.
So he never was a shareholder of Union
Quarry's, and since the liquidations in 1986 we have been
giving him, as we showed here, all of the MRA K-1s that he
needs for his tax return, plus the final statements of MRA I
and MRA II.
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1 MRA I is the successor to the Kim Company,
2 and on their financial statements on the liability side of
3 the balance sheet it shows the credit that was given to the
4 kids, the amount.
5 In addition, I also know, and I believe it's
6 on the sheet, the list, which was Exhibit 9, that both
7 Morgan, Lewis, and Bockius and George Hadley turned over to
8 Pepper, Hamilton all their records on the liquidations of
9 Kim Company and pennsy Supply Company, which records
10 included all the calculating or whatever that was done
11 incident to those liquidations, including the Union Quarry's
12 liquidations.
13 In fact, I remember one of the hearings where
14 Mr. Bachman cross-examined me and George Hadley on how we
15 came to those numbers. So Bobby's claim that he hasn't seen
16 those numbers or doesn't know about them is totally false.
17 Q Is it correct that since the liquidation and
18 to the present Union Quarry's has been owned by the estate?
19 A Well, subsequently it was funded into the
20 marital trust, but same thing.
21 Q By the stay and then the marital trust?
22 A Yes. So there's been no information to send
23 Bobby because he doesn't have anything to do with it.
24 Q okay. He's never been a shareholder?
25 A No.
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8 letters on Exhibit 7, show me sending him, and mom sending
9 him every year the financial statements for MRA I and MRA
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11 MR. SONNENFELD: All right. Okay. Thank
12 you, Mrs. Morgan. I have nothing further, Your Honor.
13 THE COURT: Now, cross-examine.
14 CROSS EXAMINATION
15 BY MR. COSTOPOULOS:
16 Q Mrs. Morgan, as executrix of the estate of
17 your father you do admit that the estate is largely complex?
18 A I guess it depends on your opinion.
19 Q All right. So you're not willing to admit
20 that. It depends on one's opinion as to whether it's large
21 and complex?
22 A I mean I understand it so I would think that
23 someone of average IQ could understand it too. I don't
24 know.
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Q
And the financial statements of MRA I Showing
the credit, that was given back in 1986?
A Yes.
Q Have they been produced?
A Yes, every year.
Q And that's shown on Exhibit 9?
A It may be but also those cover letters, the
Q
So your answer to my question is, to the
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estate being large and complex, depends on one that would
have an average IQ? That's your answer?
A Well, I don't mean it to sound derogatory. I
don't think it cannot be understood. It is a sizable
estate. There are several corporations involved, but it is
not beyond the grasp of understanding.
Q And that is your answer to my question?
A Yes.
Q All right. Now, would you agree that its
administration has been characterized by its lack of free
flowing information and conflict?
A conflict, yes. Lack of information, no.
Q All right. So your answer to it being
characterized by a lack of free flowing information, that's
not true either?
A Correct.
Q Incidentally, has the federal estate tax
return form 706 been turned over?
A I don't know specifically what 706 is.
Q Has the federal tax return been provided to
Mr. Mumma or his counsel?
A I'll have to look through this list.
Q Assuming it's not on the list would it be
someplace else?
A It may be one of the documents that have been
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produced. As a matter of fact, I'm pretty sure he does have
it, Mr. Costopoulos, and I'll tell you why. I believe Mr.
Bachman cross-examined me with that in the Lebanon Rock
hearings about two years.
Q Well, whether you're right or whether you're
not, you do agree that if it hasn't been provided, and I'm
talking about the federal estate tax returns, that if it
hasn't been provided in the past it certainly will be
forthwith?
A I don't know. You'll have to speak with my
counsel.
Q We'll have to speak with counsel as to
whether it will be turned over at all?
A And whether it has been turned over, yes.
Q But if it hasn't, your answer as to whether
it's going to be you're deferring to your counsel?
A Absolutely.
Q Now, any information since the last
accounting -- and I'm talking about March of 1991. Has any
of that information been turned over?
A I'm sorry. I'm not following you. What
information?
Q Was there an accounting in March of 1991?
A Yes.
Q Has there been any information since
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whatever's happened since March of 1991, that has been
turned over to Mr. Mumma or his legal counsel?
A Yes.
Q Is it fair to say -- you say yes, that
information has been turned over?
A I'm saying I don't know about that
information, but, yes, information in which the estate and
the entities are involved has been turned over to Bobby and
or his counsel. I don't know if there's something specific
you're asking me about. I can answer that.
Q Have there been any stock withdrawals by
members of your family since 1990?
A stock withdrawals from what?
Q From the estate.
A stock withdrawals from the estate. Of what?
Q From the marital trust.
A But of what stock withdrawals of what marital
trust?
Q Have there been any stock withdrawals? Do
you understand?
A I'm not trying to be difficult. I'm just
confused. The marital trust is not a corporation. It owns
various assets which may be stock, but it owns varied
things, and I'm trying to find out what you're asking me.
Q You don't understand the question as to
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whether there were any stock withdrawals from the estate
since 1990, is your answer to that?
A Of the assets owned by the estate of the
marital trust?
Q Yes.
A Yes, there have been.
Q All right. Now, has that information -- now,
I'm talking about the withdrawals that you now acknowledge
have been made.
A Um-hum.
Q Has that information been turned over to Mr.
Mumma?
A I believe it has because I believe that
Pepper, Hamilton and Scheetz saw the stock books. The stock
books are made available whenever they ask for them.
Q Let me ask you --
A And I believe one of those occasions had been
somewhere, I think I said, in '90 or '91.
Q All right. Well, assuming that it has not?
A Um-hum.
Q Are you willing to turn over that information
forthwith so we don't have to bother the Court to draft an
order particularizing that particular item?
MR. SONNENFELD: Your Honor, I object because
Mrs. Morgan has testified that the stock certificates have
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1 been made available on at least two occasions for inspection
2 by counsel for Mr. Mumma, and she shouldn't be asked to
3 assume the contrary.
4 THE COURT: She said she believes it has been
5 turned over. I'm not certain she's positively said it was.
6 So I think the question is proper. Overrule your objection.
7 THE WITNESS: I'm sorry. You'll have to say
8 it again.
9 BY MR. COSTOPOULOS:
10 Q You believe that information was turned over.
11 My question was, if it wasn't, are you willing to agree to
12 have it turned over without the necessity of a court order?
13 A There's never been any necessity. Every time
14 that Bobby or his counsel has made a request to see those
15 stock books, and we have shown through these exhibits, we
16 have let them see the stock books.
17 Q All right. Well, maybe, Mrs. Morgan, we can
18 go right to the heart of this matter and the purpose of the
19 petition and avoid the necessity of any further testimony.
20 Avoid the necessity of any further hearings. Avoid the
21 necessity of laying this on the lap of Judge Sheely. As
22 executrix of the estate it's your testimony that the
23 information that has been requested has been free flowing?
24 A No. I think what you asked me is did I
25 characterize the administration of the estate as one lacking
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1 free flowing information, and I said no, I did not.
2 Q All right.
3 A We have provided the information to which we
4 believe the beneficiaries are entitled and need.
5 Q All right. Do you still believe that?
6 A Yes.
7 Q All right. And are you willing, therefore,
8 in the spirit of that to agree on the record that we defer
9 any ruling from Judge Sheely regarding this petition, that
10 we simply defer it and try one more time by having you as
11 the executrix with your counsel sit down with counsel for
12 Bobby Mumma to see what documents we can agree to obtain
13 without the necessity of further hearings and a court order?
14 Would you agree to do that?
15 A I'm sorry, Mr. Costopoulos, but I think
16 you're asking me to do stuff that you should be doing with
17 my counsel because I know there have been discussions
18 between counsel that I'm really not privy to, and I
19 understand that that's why we're here, because the
20 discussions have reached a dead end.
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Q Well, you are the executrix?
A Um-hum.
Q You're aware of the history of this case?
A Yes, I sure am.
Q And I think you understand the spirit and the
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1 intent of what I'm asking you now, do you not?
2 A Sure. But I'm just saying I'm also
3 represented by counsel, and I think that that's appropriate.
4 Q True, but you're going to defer any legal
5 determination to your lawyers?
6 A Sure. That's what we hired them for.
7 Q But my question of you is, as the executrix,
8 all right, and I understand ultimately the decision may have
9 to come in through your lawyers, but I'm not convinced
10 that's the case.
11 My question to you is, can we put everything
12 on hold and try to resolve this thing between counsel and
13 yourself as the executrix to see what we can agree to so we
14 can spare the Court any further hearings or another court
15 order, and if we can't resolve it then we'll just put it on
16 Judge Sheely's lap. Would you agree to do that?
17 MR. SONNENFELD: Your Honor, I don't believe
18 that's a proper question to ask the witness. If counsel
19 wants to engage in some kind of an effort to settle or
20 resolve the pending motion, I'd be happy to discuss it with
21 him, but I think to ask the witness and negotiate it as part
22 of testimony, I don't think is a proper way to proceed.
23 MR. COSTOPOULOS: Even assuming the objection
24 is correct, Your Honor, which I disagree with, then I would
25 like to go on the record right now with counsel to see if
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1 maybe we can set up a date, time, and place to see what
2 agreements we can come to because, as I understand it, Your
3 Honor, their position is we aren't going to give them
4 anything that might interfere with fair competition. Their
5 position is, we've already given you everything you've asked
6 for, but we respectfully disagree with that.
7 THE COURT: I'm just thinking from all of
8 this it certainly would be much easier for me if I had some
9 specific requests for certain information that the estate
10 refused to give you. It would be easier for me to rule on
11 something specific rather than on a generality of the rule.
12 MR. COSTOPOULOS: And I agree with you. It's
13 just impossible for you.
14 THE COURT: Why don't we do that then. I can
15 certainly see that there -- since there is competition from
16 the businesses that there might be certain information maybe
17 that you want that they're not going give you, but it's
18 difficult for me to rule on that until I would know
19 specifically what information you might need, that he would
20 need for the estate purposes or for income tax purposes.
21 If I had some specific info, and they won't
22 give it to you, then it would be much easier, as I
23 mentioned, to rule on specifics rather than a lot of
24 generalities.
25 MR. COSTOPOULOS: I agree with you, Judge,
1.701.
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1 and here's what I suggest in the spirit of trying to resolve
2 this documents question, defer everything. Let's close the
3 testimony out and then just defer everything to give counsel
4 an opportunity to sit down at a convenient date, time, and
5 place to determine what documents we can exchange that we
6 feel we're entitled to that they may be willing to give us,
7 according to the testimony as I understand it from today.
8 And we may not have to bother you, and then
9 if we can't get certain documents we feel we're entitled to
10 then we will particularize for the Court in our brief, which
11 wouldn't be filed within 30 or 60 days, exactly, exactly
12 what we want.
13 THE COURT: That seems to me to make a lot
14 more sense than for me to rule on some generalities here
15 that I'm not really sure what I'm doing.
16 MR. COSTOPOULOS: And let's try it that way,
17 and that's all of the questioning that I have of Mrs.
18 Morgan.
19 THE COURT: Any redirect?
20 MR. SONNENFELD: No, Your Honor.
21 THE COURT: I have no questions. Thank you.
22 Would you see that all of the exhibits are present, please,
23 and we'll mark them accordingly. Is there any further
24 testimony then to be offered this morning by the Respondent?
25 MR. SONNENFELD: We have nothing further,
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1 Your Honor. Respondents rest.
2 THE COURT: Any rebuttal testimony?
3 MR. COSTOPOULOS: No, Your Honor.
4 THE COURT: I'm going to do this order then.
5 (Whereupon, the following Order of Court was
6 entered:)
7 AND NOW, this 11th day of May, 1992, for the
8 Court's information I direct that a record of today's
9 hearing be transcribed. I will not be making any decision
10 on the issues raised on the rule to show cause in the
11 testimony presented at these two hearings until a more
12 specific request is presented to the Court by counsel for
13 the petitioners.
14 Mr. Costopoulos agreed to that method this
15 morning. Therefore, the Court would direct that counsel try
16 and resolve any specific information requested, and that if
17 this specific information requested will not be turned over
18 to counsel for petitioners, then upon a request being made
19 to the Court a decision will be made on those specific
20 requests. Therefore, no opinion will be rendered by the
21 Court on the testimony presented as of today at this time.
22 (Whereupon, the Proceedings concluded at
23 11:05 a.m.)
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CERTIFICATION
I hereby certify that the proceedings are
contained fully and accurately in the notes taken by me in
the proceedings of the above cause and that this copy is a
correct transcript of the same.
mz~~ ';(~I/
Michele A. Lippy
Official Court Reporter l
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The foregoing record of the proceedings of
the above cause is hereby approved and directed to be filed.
{~/7-b! r G
Date' f
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