HomeMy WebLinkAboutReport of the Auditor 127 pages 1N THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
,...,
ORPHANS COURT DIVISION ��:: '�
C `�`' ,,:� Y-a
�
� � _'" . . ��
K �
Q7 -,.7 r.� -.��
1N RE: ESTATE OF ROBERT M. : � � �-� � �
M UMMA, decease d : N O. 2 1-8 6-3 9 8 ;. t�, ;�' �~' - -
. .�_ : , . �::,
• �.� ,-, . --„ -
_.:
��, � �: _.:::� ,.
,:�; +: .
_,,., _ .
_ � , _. .
_., .}
..y� �
r t..�� �
REPORT OF AUDITOR
This report covers hearings held Apri121-23, 2009, June 17-19, 2009, August 3-6, 2009, October
26-29, 2009, October 30, 2009, December 14-18, 2009, April 19-23, 2010, Apri126-20, 2010, June
14-16, 2010, May 2-5, 201 l, May 24-25, 2011 and June 20-22, 2011.
This Honorable Court has Jurisdiction of this matter pursuant to Section 713 of the Probate, Est ates
and Fiduciary Code (20 Pa. C. S. Section 713).
BACKGROUND
On April 12, 1986, Robert M. Mumma died leaving a Last Will and Testament which was duly
presented for probate with the Register of Wills in and for the County of Cumberland,
Commonwealth of Pennsylvania. Following the filing of three (3) Interim Accounts to which
objections were filed, this Honorable Court through its Orphan's Court Division appointed Taylor
Andrews, Esquire as Auditor. Issues arose, a fourth Interim Account was filed and thereafter, in
2008, the undersigned was appointed Auditor.
Following the under sign's appointment as Auditor, I met with all parties and their counsel
and requested that each Objector set forth the issues which would be determined by the
undersigned. Objector Robert M. Mumma II (herein after sometimes called RMM II, Mumma II,
1
Bob, Robert, Objector and Objector Bob Mumma) presented forty two issues and Objector Barbara
M. Mumma (hereinafter sometimes called Babs, Barbara Mumma, Objector and Objector Babs
Mumma) presented seven issues. Objectar Bob Mumma's Objections are numbered one through
forty-two and Objector Barbara M. Mumma's issues are numbered forty-three through forty nine.
Over the course of several years, nearly forty days of hearing were held, thousands of pages of
transcripts produced, hundreds of exhibits presented, numerous ancillary legal actions, motions and
appeals filed by the parties, and a Fifth Account and Request for Distribution filed. Also during the
course of the hearings Barbara McK. Mumma, the widow of Robert M. Mumma and his executrice
and trustee, passed away.
During the course of the hearings, His Honor called upon the undersigned relative to a
number of matters which were handled as interim reports to His Honor.
This Report involves objections filed to the following accounts:
A. The First and Interim Account for the Estate of Robert M. Mumma (April 12, 1986
through March 31, 1991).
B. The Second and Interim Account for the Estate of Robert M. Mumma (April 1, 1991
through March 31, 1996).
C. The Third and Interim Account for the Estate of Robert M. Mumma (April 1, 1996
through March 31, 1999).
D. The Fourth and Final Account for the Estate of Robert M. Mumma (April l, 1999
through September 30, 2003).
2
E. The First and Interim Account for the Marital Trust established under the last Will and
Testament of Robert M. Mumma(November 19, 1986 through March 31, 1991).
F. The Second and Interim Account for the Marital Trust established under the last Will and
Testament of Robert M. Mumma(April l, 1991 through March 31, 1996).
G. The Third and Interim Account for the Marital Trust established under the last Will and
Testament of Robert M. Mumma(April 1, 1996 through March 31, 1999).
H. The Fourth and Interim Account for the Marital Trust established under the last Will and
Testament of Robert M. Mumma(April 1, 1999 through December 31, 2003).
I. The Fifth and Final Account and Proposed Distribution of Assets for the Marital Trust
established under the last Will and Testament of Robert M. Mumma (January 1, 2003 through July
17, 2010).
J. The First and Interim Account for the Residual Trust established under the last Will and
Testament of Robert M. Mumma(November 24, 1986 through March 31, 1991).
K. The Second and Interim Account for the Residual Trust established under the last Will
and Testament of Robert M. Mumma(April 1, 1991 through March 31, 1996).
L. The Third and Interim Account for the Residual Trust established under the last Will and
Testament of Robert M. Mumma(April 1, 1996 through March 31, 1999).
M. The Fourth and Interim Account for the Residual Trust established under the last Will
and Testament of Robert M. Mumma(April 1, 1999 through December 31, 2003).
3
N. The Fifth and Final Account and Proposed Distribution of Assets for the Residual Trust
established under the last Will and Testament of Robert M. Mumma (January 1, 2003 through July
17, 2010).
During the hearings, the parties filed many motions some which were resolved during the
hearings, others which were not, but the findings and conclusions below shall either address or
render the motions moot. The parties had been before this Honorable Court, the other
Commonwealth Courts of Common Pleas, Florida County courts of record, and the appellate courts
of this Commonwealth and of the State of Florida during the administration of the estate and the
trusts created thereunder. Judges with greater wisdom and experience than the undersigned made
findings of fact relative to this estate and its administration. It is prudent to take official notice to the
relevant findings as they were made following hearings and trials when the information was fresh in
the minds of the witnesses. Also prior to those hearings the parties conducted extensive discovery
and were given the opportunity to cross examine witnesses and some of the witnesses at the time of
the hearings conducted by the undersigned were unavailable due to death, being outside the
jurisdiction of this Honorable Court or could not recall the particulars of past events.
The undersigned was appointed to make findings of fact and conclusions of law to the following
issues and I have added my own issues fifty and fifty-one, and the Estate has raised two additional
matters which are numbered fifty-two and fifty-three through fifty-two relative to all accounts filed
by the Executrices/trustees, Lisa Morgan and Barbara McK. Mumma, and the fifth account filed by
trustee Lisa Morgan:
4
1. Whether the Executrices/Trustees have grossly undervalued the assets of the Estate;
2. Whether the Executrices/Trustees have disproportionately allocated the assets of the Estate
into the Marital Trust;
3. Whether the Executrices/Trustees have incurred unnecessary capital gains taxes, fiduciary
income taxes, or inheritance taxes;
4. Whether the Executrix Barbara McK. Mumma is entitled to selectively withdraw individual
assets / assets-in-kind from the Marital Trust as opposed to receiving the designated dollar
amount or percentage;
5. Whether the Executrices/Trustees failed to properly account for the stock distributions to
Barbara McK. Mumma;
6. Whether the Executrices/Trustees failed to properly account for and/or distribute estate
income to Barbara McK. Mumma;
7. Whether the allocations of Decedent's corporate stock to the Marital Trust violated rights of
first refusal accruing to the undersigned;
8. Whether the Executrices/Trustees failed to allocate capital gains and increases in value of
estate assets during the administration to the Residuary Trust;
9. Whether the Executrices/Trustees failure to significantly fund the Residuary Trust until
2002, while the Marital Trust was funded in 1987, violated the intent of the Decedent's Will;
10. Whether the Executrices/Trustees improperly accounted for the Fulton Bank property in
Lemoyne, Pennsylvania;
11. Whether the Executrices/Trustees improperly accounted for the Leadville, Colorado
property;
5
12. Whether the Executrices/Trustees improperly accounted for the Bender property in Mount
Holly Springs, Pennsylvania;
13. Whether the Executrices/Trustees improperly accounted for the Grove property in Mount
Holly Springs Pennsylvania;
14. Whether the Executrices/Trustees undertook unilateral and unauthorized actions on behalf of
corporations and corporate enterprises and otherwise failed to comply with applicable state
law and regulations;
15. Whether the Executrices/Trustees have not recognized or have concealed shareholder
agreements that govern the ownership of corporate stock;
16. Whether the Executrices/Trustees' actions and omissions with respect to shareholder
agreements would have precluded the estate from acquiring stock in multiple corporations,
including, but not limited to, Pennsylvania Supply Company, Pennsy Supply Inc., Bobali
Corp., Lebanon Rock, Inc., High-Spec., Inc.,Nine-Ninety-Nine, Inc., and/or 999, Inc.;
17. Whether the Executrices/Trustees properly controlled the Decedent's shares in High-Spec,
Inc., Pennsylvania Supply Company, Pennsy Supply Inc., Bobali Corp., Lebanon Rock, Inc.,
Nine-Ninty-Nine, Inc., and/or 999, Inc.;
18. Whether the Executrices/Trustees violated the Share Restrictive Agreement applicable to
High-Spec, Inc. when they refused to offer to sell the Decedent's shares in High-Spec, Inc.
to the remaining shareholder at book value;
19. Whether the Executrices/Trustees violated Section 3 of the Share Restrictive Agreement
applicable to High-Spec, Inc. when it transferred the Decedent's shares in High-Spec, Inc. to
the Residuary Trust in January 2002 (See generally Objection#14 filed May 27, 2004);
6
20. Whether the Executrices/Trustees undervalued the stock of Pennsylvania Supply Company,
Pennsy Supply Inc., Bobali Corp., Lebanon Rock, Inc., High-Spec., Inc., Nine-Ninty-Nine,
Inc., and/or 999, Inc.;
21. Whether the Executrices/Trustees overstated the value of the Decedent's stock;
22. Whether the Executrices/Trustees have engaged in corporate transactions which conveyed
assets out of Pennsylvania Supply Company, Kim Company, Pennsy Supply Inc., Bobali
Corp., Middle Park, Inc., Nine-Ninty-Nine, Inc., and/or 999, Inc., and other unknown
transactions;
23. Whether the Executrices/Trustees fraudulently terminated the corporate existence of Middle
Park, Inc. via merger with another corporate entity;
24. Whether the Executrices/Trustees knowingly concealed corporate records that were known
to be altered in their effort to conceal the identity of true stock ownership;
25. Whether the Executrices/Trustees concealed their knowledge of the Decedent's activities
prior to April 12, 1986 which became known to them and their accounts, and which they
further concealed vial the Stradley Ronin law firm, without any explanation of same or
without otherwise disclosing same to the shareholders;
26. Whether the Executrices/Trustees fraudulently misappropriated life insurance proceeds
rightfully owned by Pennsylvania Supply Company and Pennsy Supply;
27. Whether the Executrices/Trustees individually assumed corporate designations which were
not set forth in any corporate by-laws;
28. Whether the Executrices/Trustees individually assumed corporate positions to which they
were not elected and which were not otherwise authorized;
7
29. Whether the Executrices/Trustees have awarded themselves salaries and health insurance
benefits that were never authorized;
30. Whether the Executrices/Trustees have failed to account for or document significant changes
in major investment holdings of the Estate;
31. Whether the Executrices/Trustees engaged in and/or have continued to engage in a
systematic pattern of self-dealing and personal enhancement;
32. Whether withdrawals from the Marital Trust have substantially diminished the interests of
the beneficiaries/remaindermen while greatly enhancing the interests of the
Executrices/Trustees;
33. Whether the Executrices/Trustees properly selected and retained Estate counsel;
34. Whether the Executrices/Trustees are paying duplicative, excessive, or unjustified counsel
fees to Estate counsel;
35. Whether the Executrices/Trustees are paying excessive or unjustified accountant fees to the
Estate accountant(s);
36. Whether the Executrices/Trustees have perpetuated and engaged in and continue to
perpetuate and engage in an enterprise and/or scheme of fraudulent conveyances of estate
assets;
37. Whether the Executrices/Trustees have failed to account for or document the contents of all
safe deposit boxes owned individually or jointly by the Decedent;
38. Whether the Executrices/Trustees have failed to account for or document the value of all
bank accounts owned individually or jointly by the Decedent;
39. Whether the Executrices/Trustees have failed to account for or document the Decedent's
documents, contracts, and other records throughout the administration of the Estate,
8
including the failure to account for their storage and record-keeping in Pennsylvania,
Florida, Europe, and elsewhere;
40. Whether the Executrices/Trustees refused to entertain the highest and best offers of purchase
of the Decedent's property and/or enterprises thereby failing to maximize the value of the
Estate;
41. Whether the Executrices/Trustees have failed to carry out the terms of the Decedent's Will
and/or acted in contravention of the Decedent's testamentary plan; and,
42. Whether the Executrices/Trustees are subject to surcharge attributable to their acts or
omission.
43. Whether the selection of assets to be distributed by the Marital Trust and to the Residuary
Trust was appropriate. In order to resolve this objection and several others, it will be
necessary to understand the justification for what appeared to be a counterproductive asset
distribution strategy. Assets for which rapid appreciation could be expected were placed in
the Marital trust, not the Residuary Trust, thereby creating the potential for unnecessary
estate tax liability upon the death of Barbara McKimmie Mumma.
44. Whether assets distributed to Barbara McKimmie Mumma as income distributions,
including the Fulton Bank property, were undervalued thereby prejudicing the interests of
other beneficiaries. In order to resolve this objection, it will be necessary to determine the
method by which various non-liquid assets were valued and the appropriateness of the
valuations.
45. Whether assets distributed to Barbara McKimmie Mumma pursuant to her power to receive
an annual distribution of 5% of the value of the Marital Trust, were undervalued thereby
9
prejudicing the interests of the other beneficiaries. In order to resolve this objection, it will
be necessary to determine the method by which various non-liquid assets were valued.
46. Whether discretionary distributions were made to Barbara McKimmie Mumma from the
Marital Trust despite her indication that she did not want distributions unless required for
her immediate expenses. In order to resolve this objection, it will be necessary to determine
the advice and strategy, as well as the nature of the input from Mrs. Mumma, that resulted in
substantial distributions being made to Mrs. Mumma in years when she did not have any
need for funds and in circumstances which appeared to run counter to her expressed family
financial and tax strategy.
47. Whether estate assets, including entities in which estate had an interest, were managed
efficiently. In order to resolve this objection, it will be necessary to determine why the
estate adopted a strategy of allowing real estate assets of the estate and of Bobali to remain
unproductive for extended periods of time and, in some cases, of not even pay8ing the real
estate taxes due on properties, thereby risking that they would be sold at tax sale and their
future value lost to the estate permanently.
48. Whether the estate was wound up promptly and efficiently, without incurring unnecessary
legal and other expenses and prejudicing the interests of beneficiaries. In order to resolve
this objection, it will be necessary to determine why the estate remained open for over
twenty-two years and why some assets have remained unsold and unproductive for that
period of time. It is evident that there have been various legal proceedings related to the
estate, but it is far from clear why the estate could not have been wound up more quickly
and without the attendant legal expense.
10
49. Whether the Estate was administered in a manner that exacerbated friction among family
members thereby delaying the administration of the estate and increasing legal and other
expenses. In particular, Ms. Mumma is concerned that the approach adopted by counsel to
the estate — whatever the legal merit of any particular position on any particular issue — has
led to unnecessary friction among family members. It was the intent of the Testator that his
assets be utilized in a manner that would allow, to the greatest extent possible, for all family
members to benefit jointly and engage in joint efforts to make the best and most productive
use of family assets and to solidify rather than undermine family bonds. Particularly in light
of that intention, means could have been pursued to resolve some or all of these matters by
an amicable process which would have lessened rather than increased tensions and
ultimately would have benefited all family members.
50. What amount of auditor fee and costs, if any are due the previously appointed auditor,
Taylor Andrews, Esquire?
51. Whether Barbara McK. Mumma's decisions regarding the handling of her personal estate is
relative to her role as executrice/trustee of the Estate of her husband Robert M. Mumma.
52. Whether the Estate, the trusts or the Objectors should bear the costs and fees associated with
the Auditor's hearings, and if any apportionment among and between the parties is fair,
equitable and appropriate, how is it to be calculated.
53. Whether additional attorney fees should be awarded to the Estate and the trusts.
11
Findings of Fact
The following facts were determined by Judge Sheeley in the matter of BARBARA McK.
MUMMA AND LISA M. MORGAN, individually and as executrixes of the ESTATE OF
ROBERT M. MUMMA, deceased, and LINDA M. ROTH, Plaintiffs v. ROBERT M. MUMMA, II,
and BARBARA M. McCLURE, Defendants, Cumberland County Court of Common Pleas,
docketed at NO. 66 EQUITY 1988, of which official notice is taken
1. On April 12, 1986, Robert M. Mumma died testate.
2. Plaintiffs, Barbara McK. Mumma (Mrs. Mumma) and Lisa M. Morgan (Lisa) are
executrices of the Estate of Robert M. Mumma(the Estate).
3. At the time of Mr. Mumma's death the following conditions existed with respect to
the family owned business, Pennsylvania Supply Co. (Pennsy Supply):
a) The Estate owned approximately 98 percent of the stock of Pennsy Supply.
b) Pennsy Supply owned more than 82 percent of the outstanding stock of Kim
Company, the second tier holding company.
c) Kim Company was the largest shareholder of Nine Ninety-Nine, Inc. (999).
d) The Estate controlled, through its majority stock holings, both Pennsy Supply and
Kim Company.
12
e) Pennsy Supply was a wholly-owned subsidiary of 999.
� The Estate, Mrs. Mumma, Lisa, Linda M. Roth(Linda), Robert M. Mumma II (Bob),
and Barbara M. McClure (Barbara) were the shareholders of Kim Company.
g) The Estate, Mrs. Mumma, Lisa, Linda, Bob and Barbara were also the shareholders
of 999.
4. At a meeting at the offices of Pennsy Supply of November 5, 1986,Arthur L. Klein, a
tax specialist at Morgan, Lewis and Bockius, brought to the attention of the shareholders of Pennsy
Supply and Kim Company, the unfavorable changes in the federal tax laws caused by the passage of
the 1986 Tax Reform Act.
5. The 1986 Tax Reform Act overruled the General Utilities doctrine which had
previously permitted corporations to liquidate and pay only one tax on the appreciation in the value
of corporate assets rather than two taxes; one at the corporate and the other at the shareholder level.
6. The November 5, 1986 meeting at Pennsy Supply was attended by Mr. Klein, Mrs.
Mumma, Lisa, Bob, Linda, Barbara, and George W. Hadley.
7. Mr. Hadley is a partner in the accounting firm of Lucker, Kennedy and Felmeden in
Buffalo,New York and is the accountant for the Mumma family businesses.
8. At the November 5 meeting, the shareholders, Mr. Klein and Mr. Hadley discussed
the desirability of liquidating Pennsy Supply and Kim Company prior to December 31, 1986, in
order to take advantage of the grace period allowed by the 1986 Tax Reform Act.
9. Mr. Klein advised Mrs. Mumma and Lisa that they could avoid the unfavorable
consequences of double taxation if the assets of Pennsy Supply and Kim Company were transferred
to the shareholders as tenants-in-common.
13
10. If the assets of Kim Company and Pennsy Supply had been transferred to the family
members as a partnership, both the transferors and the recipients would have been required to pay
real estate transfer taxes to the Commonwealth of Pennsylvania.
11. It was the understanding of Mr. Hadley that the tenancies-in-common which were
formed to receive the assets of the dissolved corporations would function similar to partnerships.
12. The tenancy-in-common agreements were drafted to include provisions for majority-in-
interest control over the management of the properties and voting control of the tenants-in-common
based upon their percentage holdings in Pennsy Supply and Kim Company.
13. Following the November 5, 1986, meeting, Mr. Klein sent Bob a letter explaining
that complete liquidation of the corporation could take place and the charter of Pennsy Supply
would not be terminated as long as no corporate actions were taken for a sufficient length of time
following the dissolution.
14. Lisa circulated a single draft agreement among tenants-in-common (Exhibit R-10) to
Mrs. Mumma, Bob, Linda, and Barbara along with a cover letter dated December 11, 1986.
15. Following the circulation of the single draft agreement among the tenants-in-
common, it was decided that because Kim Company was not a wholly-owned subsidiary of Pennsy
Supply, it would be preferable to have two separate agreements among the tenants-in-common due
to the different shareholding percentages for the two companies.
16. One tenancy-in-common agreement would govern the properties formerly owned by
Kim Company (agreement commonly referred to as MRA I) and the other tenancy-in-common
agreement would control the properties formerly held by Pennsy Supply (agreement commonly
referred to as MRA II).
14
17. As of December 18, 1986, the two separate tenancy-in-common agreements (MRA I
and II) concerning the liquidation of Pennsy Supply and Kim Company had been prepared.
18. Both MRA I and MRA II contained additional language under Section 14 that had
not been included when the single draft agreement among tenants-in-common was circulated on
December 11, 1986.
19. On the evening of December 18, 1986, language was added to Section 14, entitled
"Further Assurances, " which provided that each tenant would execute a power of attorney to
facilitate any transactions to be made pursuant to the agreement.
20. MRA I and MRA II were completed by the morning of December 19, 1986.
21. The signature pages of MRA I and MRA II agreements differed because each
agreement set forth the percentage interest of each tenant-in-common. The percentages used
corresponded with the percentage interests of the tenants-in-common as shareholders of Pennsy
Supply and Kim Company.
22. The other difference between the two agreements was that MRA I contained
language referring to the Union Quarries stock owned by Kim Company which language did not
appear in MRA II.
23. Mr. Skinner inserted additional language into Section 2 of MRA I after speaking to
Mr. Klein and Mr. Hadley on the morning of December 19, 1986.
24. The inserted language in Section 2 stated: "except for $272,617.95 being distributed
to the individual owners (of Kim Company) in lieu of Union Quarries, Inc. stock, which shall be
held by Manage for distribution to them in 1987.
25. Prior to December 19, 1986, Kim Company owned fifty percent of the stock of
Union Quarries and the Hempt family owned the remaining fifty percent of the stock.
15
26. The language was inserted into Section 2 upon the advice of Mr. Hadley that the
Union Quarries shares should be held in a block. This would preclude the possibility that one or
more of the Kim Company shares might be transferred to the Hempts, giving the Hempts voting
control over the corporation.
27. Bob and the other shareholders of Kim Company agreed that the Union Quarries'
shares should be held in a block.
28. As a result of the Estate owning more that eighty percent of the Kim Company stock,
the Estate would hold the block of Union Quarries' shares.
29. The figure of $272,617.95 inserted into Section 2 of MRA I represented the
proportional value of the individual holding of Mrs. Mumma, Lisa, Linda, Bob, and Barbara,
through their respective interests in Kim Company, in Union Quarries at the time of the liquidation
of Kim Company.
30. On the morning of December 19, 1986, William S. Skinner, an associate at Morgan,
Lewis & Bockius's Philadelphia office brought the two tenant-in-common agreements in addition to
several deeds and document to Harrisburg.
31. On the afternoon of December 19, 1986, a meeting was held at the offices of Pennsy
Supply in Harrisburg to execute the two tenancy-in-common agreements and other documents
concerning the liquidations of Kim Company and Pennsy Supply. Another purpose of the meeting
was to take the necessary steps to create the two new corporations, Mumma Realty Associates, Inc.
and Hummelstown Quarries, Inc.
32. Mrs. Mumma, Bob, and Mr. Skinner attended the December 19, 1986 meeting in
person. Lisa and Mr. Klein were present by telephone from the offices of Morgan, Lewis &
16
Bockius in Philadelphia and Linda was present by telephone from St. Louis. Barbara was not
present at the meeting.
33. Mr. Hadley was also present in Harrisburg for portions of the December 19, 1986
meeting which pertained to the valuation figure used for the Union Quarries' shares in Section 2 of
MRA I.
34. Mr. Skinner provided Mrs. Mumma and Bob with copies of the two tenancy-in-
common agreements. During the course of the meeting Mrs. Mumma and Bob reviewed the
agreements with Lisa, Linda, Mr. Klein and Mr. Skinner.
35. At the meeting, Bob had some concerns about whether the agreements would affect
his ability to pledge his interest as collateral and transfer his interest in the properties in trust for the
benefit of his children.
36. During the meeting, Bob also had questions about Section 2 of MRA I and was told
that the provision was inserted to maintain the Union Quarries' stock as a block.
37. Mrs. Mumma and Bob signed the two tenancy-in-common agreements (MRA I and
II) at the December 19, 1986 meeting. The signature pages were attached to the original
agreements when Mrs. Mumma and Bob signed them.
38. In addition, Mrs. Mumma and Bob signed several additional loose signature pages
identical to those attached to the agreements.
39. Bob admits that his signature appears on Exhibit P-1 and Exhibit P-2. (MRA I and
MRA II agreements).
40. Lisa signed the MRA agreements on the evening of December 18, 1986, at Morgan,
Lewis & Bockius in Philadelphia.
17
41. Mr. Skinner and Lisa attest that Exhibits P-1 and P-2 are exact copies of the MRA
agreements as signed by Mrs. Mumma and Bob.
42. Following the December 18, 1986 meeting, both Mr. Skinner and Lisa saw the
executed originals of MRA I and MRA IL
43. At the end of the December 19, 1986 meeting, Pam Smeltzer, an employee of Pennsy
Supply, was given the MRA agreements and extra signature pages signed by Mrs. Mumma, Lisa,
and Bob.
44. Linda signed both MRA agreements around Christmas, 1986.
45. Barbara signed both MRA agreements and remembers signing some documents prior
to December 31, 1986, in connection with the liquidations.
46. Mrs. Mumma explained that she would not have gone forward with the liquidation of
Pennsy Supply and Kim Company if Bob had refused to sign the two tenancy-in-common
agreements on December 19 1986.
47. Section 3(e) of each of the MRA agreements provides in part as follows:
Except as hereinafter provided in this Section, no owner shall
dispose of, sell, transfer, assign, convey, mortgage,pledge,
grant a security interest in, hypothecate, or encumber part or
all of his or her undivided interest in the Premises without
the prior consent of the owners.
48. Section 4 of each of the MRA agreements provides as follows:
General, overall management of the Premises and of all
matters arising out of or in connection with the Premises,
18
including a sale or mortgage of the entire Premises or
any part thereof, shall be vested in the Owners jointly and
each Owner shall abide by the policies and decisions in
respect thereof. Any agreement, approval, decision,
consent, request or other action of the Owners shall be
by majority (in interest) vote and in writing unless
otherwise indicated.
49. Section 3(b) applies to the situation where a co-owner desires to independently sell
his or her interest. In this situation the other family members possess a right of first refusal to buy
the interest and preclude the entry of a stranger into the ownership of the properties.
50. In contrast, Section 4 was meant to govern situations where a majority-in-interest of
the tenants-in-common desire to sell one or more pieces of property owned by the tenancies-in-
common. Under this section, the will of the majority prevails.
51. Section 14 of the MRA agreements requires that the individual tenants-in-common
execute documents or perform other necessary actions to carry out the intent of the agreement or to
effectuate decisions of the majority in interest.
52. In addition to the execution of the MRA agreements on December 19, 1986, the
shareholders of Kim Company and Pennsy Supply, including Bob, executed a bill of sale
transferring certain real and personal property of Kim Company and Pennsy Supply to themselves
in proportion to their respective shareholdings in the two corporations.
53. On December 19, 1986, Bob in his capacity as Vice-President of Kim Company and
Pennsy Supply, also executed a joint deed transferring all real estate owned by Kim Company and
19
Pennsy Supply to their shareholders as tenants-in-common under the MRA I and MRA II
agreements.
54. In addition to the master deed, Bob, in his capacity as Vice-President of Pennsy
Supply, also executed on December 19, 1986, four deed transferring various rights and interests
from Pennsy Supply to Hummelstown Quarries, Inc.
55. The shareholders took possession of the transferred property as tenants-in-common
under the fictitious name of Mumma Realty Associates.
56. A fictitious name certificate and a certificate of incorporation for Mumma Realty
Associates, Inc. was filed with the Secretary of State on December 19, 1986.
57. A certificate of incorporation for Hummelstown Quarries, Inc. was also filed with
the Secretary on December 19, 1986.
58. Pursuant to Section 1 of the MRA agreement, Mumma Realty Associates, Inc. was
appointed manager of both of the properties governed by MRA I and MRA II.
59. Mrs. Mumma and Lisa are the officers and directors of Mumma Realty Associates,
Inc.
60. Mrs. Mumma is the sole shareholder of Mumma Realty Associates, Inc.
61. On December 19, 1986, Bob executed a power of attorney (the MRA power of
attorney)pursuant to Section 14 of the MRA agreements.
62. The MRA power of attorney named the other tenants-in-common, including the
Estate, Mrs. Mumina and Lisa, as Bob's attorneys in fact to execute on his behalf any deeds or other
instruments necessary and desirable to carry out any of the purposes under the MRA agreements.
63. The MRA power of attorney states that it is coupled with an interest and is
irrevocable.
20
64. Mrs. Mumma, Lisa, and Linda executed similar powers of attorney. Mrs. Mumma
and Lisa also executed a power of attorney as executrices of the Estate.
65. The purpose of the MRA powers of attorney signed by the tenants-in-common was
to enable a majority in interest of the tenants to proceed with transactions pursuant to the majority
control provisions of Section 4 of the MRA agreements and effectuate decisions with or without the
subsequent cooperation of an individual tenant.
66. The MRA power of attorney signed by Bob on December 19, 1986, was not
connected with or motivated by Bob's upcoming trip to Colorado. (Klein Cross, Vol. I, pp. 91-92).
When Mr. Skinner prepared the power of attorney, he was not aware that Bob would be out of town
in late December and early January.
67. One of the reasons powers of attorney were need for all of the tenants-in-common
was because Bob was seldom in town, Barbara was often unavailable, and Linda was living in St.
Louis.
68. Following the execution of the MRA agreements in December, 1986, Gerald T.
Brawner, a partner at Morgan, Lewis & Bockius, was asked to review the MRA agreement and
make appropriate changes or revisions.
69. On March 11, 1987, Mr. Brawner sent the revised MRA agreements with a cover
memorandum to the tenants-in-common and to Mr. Klein for their review and comment.
70. On April 21, 1987, Mrs. Mumma, Lisa, Bob, and Barbara met with Mr. Brawner at
the offices of Pennsy Supply to review the revised agreements among tenants-in-common.
71. Following the April 21, 1986 meeting, Mr. Brawner prepared new revised
agreements among tenants-in-common and sent them to Lisa.
21
72. On June 7, 1987, upon Lisa's request, all of the tenants-in-common signed the
revised agreement except for Bob. An acknowledgement of the agreement was taken by Charlie
Lear, a notary at Pennsy Supply.
73. The possibility of Bob making an offer to purchase Pennsy Supply became a subject
of discussion in the autumn of 1986.
74. On November 10, 1986, Lisa sent Mr. Hadley a cover letter and a copy of a draft
letter to Bob which explained that the executrices were willing to consider an offer from Bob for the
purchase of Pennsy Supply.
75. Mr. Klein explained to Lisa that the executrices had to be careful when giving Bob
an opportunity to buy the business that they did not violate their duties as fiduciaries to obtain a fair
price for the business and that an arm's length transaction existed.
76. A decision was made not to send the letter drafted by Lisa and Mr. Klein.
77. On November 20, 1986, Mrs. Mumma sent Bob a different letter from the one
drafted by Lisa and Mr. Klein which invited Bob to make an offer for Pennsy Supply.
78. Under the instruction of the executrices, Mr. Hadley provided Bob with certain
financial information which he desired in reference to the company.
79. Mr. Hadley provided Bob with extensive financial information regarding Pennsy
Supply in a letter dated March 2, 1987. Bob was previously provided with depreciation schedules
for equipment and facilities.
80. In March, 1987, a meeting was held at Mrs. Mumma's home to give Bob the
opportunity to present his offer to purchase Pennsy Supply. Mrs. Mumma, Lisa, Bob, and Mr.
Hadley were all present at the meeting.
22
81. Mrs. Mumma, Lisa, and Mr. Hadley expected Bob to make an offer for the purchase
of Pennsy Supply at the meeting because Bob had already received the financial information he had
requested in reference to the company.
82. At the beginning of the March, 1987 meeting, there was a discussion of an
appropriate price for Pennsy Supply. Bob explained that he was interested in buying Elco Concrete,
a wholly-owned subsidiary of Pennsy Supply.
83. At the March, 1987 meeting, Mrs. Mumma informed Bob that she was not interested
in selling Elco separately from the rest of Pennsy Supply.
84. Bob left the meeting and never made an offer to purchase Pennsy Supply or Elco
Concrete.
85. During March or April of 19987, the executrices began considering the sale of Lot 1-
B in Lemoyne, Pennsylvania. The lot was owned by Mumma Realty Associates under the MRA I
agreement.
86. Lot 1-B was one of two adjacent parcels of realty owned by the Mumma family
interests in Lemoyne. The second lot was owned by High Spec, Inc., a corporation owned 50
percent by Bob and 50 percent by the Estate.
87. Mrs. Mumma told Bob that Taco Bell had approached the executrices about buying
Lot 1-B.
88. Bob explained to Mrs. Mumma that the executrices should not accept less than
$500,000 as the asking price for Lot 1-B.
89. Taco Bell was not willing to pay the asking price of$500,000 for Lot 1-B.
23
90. Subsequently, the executrices were approached by Tom Flynn, a developer from
Camp Hill, Pennsylvania who was interested in Lot 1-B. Mr. Flynn agreed to the price of$500,000
quoted by the executrices for Lot 1-B.
91. Bob explained to Mrs. Mumma in a telephone conversation that $500,000 would be
the asking price for Lot 1-B (the middle lot) and $600,000 would be the asking price for the
adjacent corner Lot 2. Bob thought that the middle lot should be sold before the corner lot.
92. During a trip to Europe in April, 1987, Bob told Mrs. Mumma that he had heard that
she sold Lot 1-B to Tom Flynn. Mrs. Mumma explained to Bob that she had negotiated the lot, but
no settlement had been reached with respect to the lot at that time. During this conversation, Bob
did not voice any protest or objection to the sale of Lot 1-B.
93. After the April, 1987 trip to Europe, Mrs. Mumma and Lisa learned tht Bob
indicated the he would not go along with the sale of Lot 1-B to Mr. Flynn.
94. On June 30, 1987, a meeting was held at Barbara's house to discuss the sale of Lot 1-
B.
95. Mrs. Mumma, Lisa, Linda, Bob, and Barbara attended the June 30, 1987 meeting.
96. At the June 30, 1987 meeting, Lisa told the family embers about the proposed sale of
Lot 1-B to Mr. Flynn for the price of$500,000.
97. During the June 30, 1987 meeting, Lisa also explained to the family members the
reason they needed to execute new powers of attorney in connection with the sale of Lot 1-B. By
executing new powers of attorney, the family members could avoid filing the MRA I agreement
which would have been required had the MRA powers of attorney been used to complete the sale of
Lot 1-B.
24
98. At the June 30, 1987 meeting, Bob had no objection to the $500,000 asking price for
Lot 1-B and said that the price was a fair one. (Mrs. Mumma Direct, Vol. II, p. 206, Lisa Direct,
Vol. III, pp. 427-28, Bob Direct, VoL III, p. 650, Bob Cross, vol. IV, p.701).
99. On June 30, 1987, in the middle of discussions regarding the sale of Lot 1-B, Bob
stated that he wanted a right of first refusal as to Pennsy Supply.
100. After Bob brought up the subject of a right of first refusal as to Pennsy Supply,
Barbara asked Bob if the family members could resolve the sale of Lot 1-B first, and then discuss
the right of first refusal issue.
101. Bob agreed to sign the necessary documents for the sale of Lot 1-B to Mr. Flynn.
102. On June 30, 1987, each of the family members signed a power of attorney. (Exhibit
P-15, Exhibit P-13). The powers of attorney signed by Kim, Lisa, Barbara, and Linda were
identical and were provided to Lisa by Mr. Brawner.
103. Bob's power of attorney was different from the other family members because Bob
insisted upon the removal of paragraph 4 from his power before he would sign it. After the
meeting, Lisa returned to the offices of Pennsy Supply and had the power retyped without
paxagraph 4. The revised power was then hand delivered to bob who signed the power on the same
day as the other family members.
104. All of the powers of attorney signed by the family members on June 30, 1987, were
notarized.
105. After Bob agreed to sign for the sale of Lot 1-B, the discussion at the June 30, 1987
meeting turned to Bob's request for a right of first refusal as to Pennsy Supply.
25
106. Mrs. Mumma and Lisa told Bob at the June 30, 1987 meeting that they were not
willing to grant him a right of first refusal as to Pennsy Supply without first speaking to their
lawyers and accountants.
107. At the June 30, 1987 meeting, there was no discussion of the duration, terms,
contingencies or other specifics regarding Bob's proposed right of first refusal.
108. After the June 30, 1987 meeting at Barbara's house, Lisa told Mr. Klein that Bob had
asked for a right of first refusal as to Pennsy Supply. Lisa asked Mr. Klein for his advice as to
whether the executrices should grant Bob such a right. (Klein Direct, Vol. I, pp.53-54).
109. Mr. Klein responded to Lisa's question by stating that the executrices could give Bob
the first opportunity to bid on Pennsy Supply, but Mr. Klein stressed that the executrices should not
give Bob a right of first refusal as Pennsy Supply. (Klein Direct, Vol. I, pp. 54-56, Lisa Direct, Vol.
III, p. 437). Mr. Klein explained that giving Bob such a right would jeopardize the marketability of
the company. Potential purchasers of the company would be unwilling to incur the costs of due
diligence if Bob had the ability to simply match whatever offer they put together and but the
company himself. By granting Bob a right of first refusal, the executrices could handicap
themselves. The executrices would eliminate the chance of selling Pennsy Supply to anyone but
Bob, and as a result could potentially breach their fiduciary duties to the Estate.
110. In addition to Mr. Klein, Lisa consulted with Mr. Hadley, who also strongly advised
against giving Bob a right of first refusal.
111. Mrs. Mumma also talked with Mr. Klein and Mr. Hadley about whether Bob should
be given a right of first refusal. Both Mr. Hadley and Mr. Klein advised against giving Bob the
right.
26
112. Subsequent to the discussions Mrs. Mumma and Lisa had with Mr. Klein and Mr.
Hadley, Mrs. Mumma explained to Linda, Bob, and Barbara, that following the advice of their
advisors, the executrices were unwilling to give Bob a right of first refusal as to Pennsy Supply.
113. Early in July, 1987, Bob telephoned Lisa and demanded that the power of attorney
he executed on June 30, 1987 be returned.
114. Following a discussion with Mr. Klein, Lisa returned Bob's June 30; 1987 power of
attorney.
115. The sale of Lot 1-B was closed on or about July 7, 1987. The executrices used Bob's
original MRA power of attorney, in addition to excerpts of the MRA I agreement provided by Mr.
Skinner,to close the sale of Lot 1-B instead of using Bob's June 30, 1987 power of attorney.
116. During the late summer and early fall of 1988, the executrices were approached and
began discussions with a foreign company interested in purchasing Pennsy Supply.
117. On November 2, 1988, Bob sent a letter to Barbara in which he asserted a right of
first refusal as to Pennsy Supply. Bob claimed the right stemmed from the June 30, 1987 meeting at
Barbara's house. Lisa also received a copy of the letter.
118. Prior to the November 2, 1988 letter, Bob had never asserted to the executrices that
he possessed a right of first refusal as to Pennsy Supply.
119. Following receipt of Bob's letter of November 2, 1988, Barbara had her attorney
draft a response to Bob, which she never sent, explaining that Barbara did not believe that Bob was
granted a right of first refusal as to Pennsy Supply as a result of the June 30, 1987 meeting. It was
Barbara's understanding that Mrs. Mumma decided not to give Bob a right of first refusal when her
attorney told her that granting such a right to Bob would dissuade other potential purchasers from
making offers.
27
120. Linda never gave Bob a right of first refusal to Pennsy Supply at either the June 30,
1987 meeting or at any other time.
(The following facts together with subheadings were found by Judge Sheeley in the matter of
ROBERT M. MUMMA, II Plaintiff v. PENNSY SUPPLY, INC, Defendant, Cumberland County
Court of Common Pleas, dockected at NO. 99-2765 EQUITY TERM, of which official notice is
taken.)
121. According to the records of the Commonwealth for Nine Ninety-Nine, Inc., on May
3, 1961, a corporation known as Pennsy Supply, Inc. which had been incorporated on March 20,
1958, merged into a corporation known as Fiala Crushed Stone Corporation, which had been
incorporated on November 5, 1958.
122. As a result of the merger, on May 3, 1961, Pennsy Supply, Inc., ceased to exist as the
name of a corporation recognized in the records of the Commonwealth.
123. According to the records of the Commonwealth for Nine Ninety-Nine, Inc.,
immediately after the merger, on May 3, 1961, Fiala Crushed Stone Corporation changed its name
to Pennsy Supply Inc.
124. On December 29, 1961 the two shareholders of Pennsy Supply Inc., Kim Company
and Jerry T. Simpson, entered into a shareholders' agreement, which limited the ability of current
shareholders to transfer shazes without first offering the shares for sale to the corporation.
125. Share certificates issued after this agreement bear a restrictive legend, which
identified the applicability of the restrictions imposed by the shareholders' agreement of December
29, 1961.
28
126. On August 1, 1963, the two shareholders, Kim Company and Jerry T. Simpson,
entered into a termination agreement, which provided, in pertinent part: "[S] aid parties hereto agree
that said shareholder's Agreement of December 29, 1961 between Kim [Company] and [Jerry T.]
Simpson is hereby cancelled, annulled and terminated."
127. The termination agreement further provided that"upon transfer of all of the shares of
stock of [Jerry T.] Simpson to [Robert] Mumma, [Plaintiff's father,] all rights, obligations and
conditions of said Agreement shall cease."
128. On August 1, 1963, Jerry T. Simpson transferred a total of 1,250 shares in Pennsy
Supply Inc. to Robert M. Mumma.
129. On August 5, Robert M. Muimna transferred 314 shares in Pennsy Supply Inc. to
Plaintiff and Plaintiff was issued a share certificate representing those shares.
130. Plaintiff's share certificate does not bear the restrictive legend that appeared on share
certificates issued prior to August 1, 1963, and after the execution of the shareholders' agreement.
131. According to the records of the Commonwealth for Nine Ninety-Nine, Inc., on May
31, 1979, a corporation known as Tri-Ms. Inc. merged into Pennsy Supply Inc.
132. According to the records of Commonwealth for Nine Ninety-Nine, Inc., on August
31, 1981, a corparation known as Four Forty One Corporation merged into Pennsy Supply, Inc.
133. Although the merger of May 31, 1979, refers to Pennsy Supply Inc., and the merger
of August 31, 1981, refers to Pennsy Supply, Inc., both mergers involved the same corporation, the
corporation which had been originally known as Fiala Crushed Stone Corporation and which had
been incorporated on November 5, 1958.
29
134. Thereafter, although the records of the Commonwealth for Nine Ninety-Nine, Inc.,
refer solely to Pennsy Supply, Inc., those references are to the same corporation previously
identified as Pennsy Supply Inc., the corporation which had been originally known as Fiala Crushed
Stone Corporation and which had been incorporated on November 5, 1958.
135. On October 9, 1981, Ten-O-One, Inc., was incorporated as a wholly- owned
subsidiary of Pennsy Supply, Inc.
136. According to the records of the Commonwealth for Nine Ninety-Nine, Inc., on
January 4, 1982, Pennsy Supply, Inc., changed its name to Nine Ninety-Nine, Inc.
137. On January 4, 1982, all outstanding share certificates bearing the name Pennsy
Supply, Inc., or any derivation thereof, were replaced with new share certificates bearing the name
Nine Ninety-Nine, Inc.
138. Plaintiff was issued a new share certificate bearing the name Nine Ninety-Nine, Inc.,
to replace his share certificate bearing the name Pennsy Supply, Inc.
139. Plaintiff retained possession of the share certificate, which bore the name Pennsy
Supply Inc. and which had represented 314 shares in Pennsy Supply, Inc.
140. On January 4, 1982, Ten-O-One, Inc., a wholly-owned subsidiary of Nine Ninety-
Nine, Inc., changed its name to Pennsy Supply, Inc.
141. Pennsy Supply, Inc., formerly known as Ten-O-One, Inc., continued to operate as a
wholly-owned subsidiary corporation of Nine Ninety-Nine, Inc.
142. In July 1993, pursuant to a majority vote of shareholders, all shares of Nine Ninety-
Nine, Inc., along with other corporate assets denominated collectively as the "Pennsy Supply
Businesses," were sold to another corporation CRH PLC.
30
143. On March 17, 1995, Plaintiff joined the sale of the "Pennsy Supply Businesses"
through the execution of an"irrevocable" consent and joinder.
144. On March 17, 1995, Plaintiff sold his outstanding shares in Nine Ninety-Nine, Inc.,
to CRH plc and received approximately $3 million in proceeds from the sale.
145. On March 17, 1995, Plaintiff transferred the shares and surrendered the share
certificate representing his shares in Nine Ninety-Nine, Inc.
146. As of March 17, 1995, Plaintiff retained no ownership interest in Nine Ninety-Nine,
Inc.
(The following facts were found by Judge Sheeley following hearings held July 25-26, 1993
following a request for preliminary injunction filed by Objector Robert M. Mumma, in the matter of
ESTATE OF ROBERT M. MUMMA, Cumberland County Court of Common Pleas, Orphan's
Court Division . No. 21-86-398 of which official notice is taken. (Separate Headings found in
original findings of fact deleted.))
147. Robert M. Mumma(hereinafter the Decedent) died on April 12, 1986.
148. His wife, Barbara McK. Mumma (hereinafter Barbara McK.), and his daughter, Lisa
M. Morgan (hereinafter Lisa), are the executrices of the Estate of the Decedent and trustees of the
Marital Trust under the will.
149. The Decedent's son, Robert M. Mumma, Jr. (hereinafter Robert), filed a disclaimer
under his father's will on January 12, 1987.
150. The effect of the disclaimer is that Robert is treated as if he pre-deceased his father.
Thus Robert's children would receive his interest the Decedent's will.
31
151. Robert M. Frey, Esquire (hereinafter Guardian), was appointed as guardian ad litem
to represent the interest of Robert's minor children on December 29, 1988.
152. One June 20, 1989, Robert filed a petition to revoke his disclaimer.
153. This court allowed Robert to revoke his disclaimer on March 21, 1991.
154. The effect of the revocation is that Robert will no longer be treated as if he pre-
deceased his father. Thus, Robert, rather than his children, will take under the Decedent's will.
155. Guardian plans to appeal the March 21, 1991 decision to the Pennsylvania Superior
Court on behalf of the minor children.
156. Guardian's standing is dependent of the Superior Court's ruling on the court's March
21, 1991 decision.
157. Lisa and Barbara McK. as officers of the corporations entered into negotiations to
sell various assets and properties comprising the Pennsy Supply businesses to CRH Industries in the
latter part of 1988.
158. CRH offered to buy Pennsy Supply, but the deal fell through because of threats of
litigation made by Robert costing Pennsy Supply approximately $20 million dollars.
159. In the summer of 1989, Robert made an offer of his own to buy the Pennsy Supply
business.
159. On December 9, 1991, Robert made an offer to enter negotiations for the purchase of
the Pennsy Supply businesses for $35 million dollars.
160. The terms of the December 9 offer include:
a) Robert would own all stock and assets of Nine Ninety-Nine, Inc., Pennsy Supply,
Inc., Hummelstown Quarries, Inc., Newport Quarry, Bender's Quarry, Silver Spring Quarry,
Lebanon Rock, Inc., and Muinina Realty.
32
b) Robert would own these companies and their assets free and clear of all existing
liens, encumbrances, and liabilities, including long term contracts, employment contracts, executive
covenants, option rights and any rights of first refusal to which they may be subject.
c) The purchase agreements would contain representations and warranties with non-
compete agreements of Lisa and Barbara McK. Mumma.
d) Such purchase price of$35 Million dollars is subject to adjustment for any "material
adverse"change of such assets since the date of the Decedent's death.
e) Robert would own a right of first refusal in Union Quarries with the agreement that
his mother's power to withdrawal from the marital trust would not extend to Union Quarries.
� Robert would be paid one-fourth of the estate and trust assets either in cash or in
property in such manner as is satisfactory to Robert, offsetting the purchase price.
g) The Estate and Marital Trust will indemnify Robert against subsequently developing
tax liens or liabilities and any environmental clean-up responsibilities relating to activities prior to
the closing.
h) All parties will discontinue all legal actions presently pending.
161. On December 30, 1991, Lisa and Barbara McK. as corporate officers rejected
Robert's offer in a formal reply, the basis of which was; the amount offered, the assets involved, the
status of the litigation between parties and other pending claims.
162. On March 24, 1992, this court held in a declaratory judgment action in equity that
Robert was never given a right of first refusal to purchase the Pennsy Supply businesses. Barbara
McK. Mumma and Lisa Morgan, individuallv and as Executrices of the Estate of Robert M.
33
Mumma deceased and Linda M. Roth, plaintiffs v. Robert M. Mumma, II and Barbara McClure,
Defendants,No. 66 Equity 1988, Opinion and Order filed March 24, 1992.
163. During the Spring of 1992, Lisa and Barbara McK. went forward and tried to Market
the Pennsy Supply businesses to several other people.
164. In the summer of 1992, negotiations resumed with CRH.
165. As of January 1, 1993, Lisa and Barbara McK. were strictly dealing with CRH
because they were far along enough that they did not consider selling to other potential buyers.
166. January 5, 1993, Lisa and Barbara McK. entered into a confidentiality agreement.
166. As of May 8, 1993, Lisa and Barbara McK. entered into a letter of intent.
167. The terms of the sale include:
a) In exchange for the $32 million dollars from CRH, these five separate business
interests were sold;
i) stock in Nine Ninety-Nine, Inc., the holding company for
the Pennsy Supply businesses,
ii) stock in Hummelstown Quarry, the corporation that
actually holds the real estate which Pennsy Supply leases,
iii) one hundred per cent ownership of Benders Quarry in Mt.
Holly Springs,
iv) the Paxton Street yards, the main office building in
Harrisburg, and
v) for an additional $2 Million dollars, DRH would be given
120 days from the date of closing to exercise an option to buy a 50% in
Lebanon Rock, Inc., raising the total purchase price to $34 million dollars.
34
b) The money from the sale would be allocated over the five separate business interests
and distributed according to each shareholder's percentage of ownership with an escrow account for
dissenting shareholders.
c) CRH insisted that a corporation be formed so that they could buy the five business
interests as a whole from a single seller in order to maximize tax benefits and to avoid law suits
with Robert over the sale of each interest. Kodie Corporation was formed to comply with this
demand.
d) By purchasing the separate interests through Kodie Corporation, CRH assumes all of
the liabilities of each individual interest.
e) Non-business assets were retained by Pennsy Supply in a proportion to the stock
owners' percentage of ownership for future development.
� CRH agreed to honor existing long term contracts including employment contracts
protecting long term employees and a cap on CRH's right of indemnification.
g) CRH would own no interest in Union Quarry and could only obtain a 50% interest in
Lebanon Rock by paying an additional $2 million dollars.
h) The purchase price was fixed at $32 million dollars, no adjustments, no financing,
and no pledging of Pennsy Supply's assets,the full amount in cash.
168. Lisa put $4 million dollars in escrow for CRH, $2 million dollars for breaches of
warranty of covenants for the businesses and $2 million dollars for family litigation.
169. As owners of Kodie Corporation, Lisa and Barbara McK. received no separate
consideration, employment contract or consulting contract, or separate benefits.
35
170. The closing of the sale was set up into two stages: Stage I was schedules for July 8,
1993, and completion of the sale closing; Stage II was schedules at least ten days after the notice of
Stage I was mailed.
171. Stage I was scheduled for July 8, 1993, but no assets would be transferred until there
was confirmation that CRH released the $32 million dollars.
172. On July 9, 1993, notices were mailed to the participating stockholders, who, at that
time, were Robert and Barbara McClure.
173. By way of power of attorney, Barbara McClure signed on as a participating
stockholder leaving Robert as the only non-participating shareholder.
174. Notice was sent to all shareholders pursuant to Business Corporation Law (BCL), 15
Pa. C.S.A. 1766(b), and since the minor children were not shareholders, no notice was sent to
Guardian.
175. Stage II was scheduled for July 20, 1993, in order to comply with BCL regulation,
15 Pa. C.S.A. 1766(c).
176. Robert actually received his notice of Stage I of the sale closing on July 12, 1993.
177. Guardian learned of the Stage I closing on Friday, July 16, 1993, from Robert who
encouraged Guardian to file a petition for an ex parte preliminary injunction.
178. There was an understanding between Robert and Guardian that Guardian would file
for the preliminary injunction which Robert would later join and Robert would once again disclaim
any interest under his father's will.
179. Guardian filed a petition on Monday, July 19, 1993, for a preliminary injunction
seeking to enjoin the sale of Nine Ninety-Nine, Inc., and Huminelstown Quarry and a rule to show
cause why the sale of those assets should not be approved by this court.
36
180. Robert joined in the petition July 21, 1993, but to date has not disclaimed his interest
in his father's will.
181. A copy of the petition was not served on Lisa, Linda, Barbara McK., or Barbara
McClure.
182. On July 21, 1993, this court denied the ex parte injunction but set a date for a hearing
on July 26, 1993.
183. Stage II of the sale closing was completed July 21, 1993, and they did not learn of
the petition for the injunction until after the closing.
184. A shareholders' meeting was held July 22, 1993 where Stage I and II of the sale
closing was ratified by a majority of the shareholders.
185. The proceeds from the sale were allocated over each of the five business interests
and distributed accarding to each shareholder's percentage in ownership of those interests with an
escrow account for dissenting shareholders.
(The following facts together with subheadings were found by Judge Robert Matemsom in the
matter of BARBARA McK. MUMMA AND LISA M. MORGAN, individually and as executrixes
of the ESTATE OF ROBERT M. MUMMA, deceased, and as Co-Trustees of the Residuary Trust
under the Last Will of Robert M. Mumma, deceased and HIGH-SPEC, INC., a dissolved Florida
corporation, Plaintiffs v. ROBERT M. MUMMA, II, and HIGH-SPEC, INC., a dissolved Florida
corporation, Defendants, Circuit Court of the Nineteenth Judicial Circuit in and for Martin County
Florida docketed at CASE NO. 89-503, of which notice is taken)
Historv of this LitiEation
37
186. On July 26, 1993, this Court, through Judge Marc Cianca, entered a Final Judgment
which dissolved the Defendant Florida Corporation, High-Spec, Inc. and determined among other
things that Defendant Robert Mumma, II caused the illegal distribution of certain real property to
himself and is liable to High-Spec, Inc. in the amount of $450,000.00 plus prejudgment interest
from December 21, 1989 in the amount of$189,887.67.
187. The Court also required the directors of High-Spec, Inc. to prepare a final accounting
and wind up and liquidate the corporation.
188. By order on Defendants' Motion for New Trial or Rehearing to Alter or Amend
Judgment dated February 28, 1994, the Court suspended the running of interest on the prior July 26,
1993 Final Judgment and made certain amendments to debts created for the acquisition of the
corporation's assets, finding the corporation was owed the following debts created for the
acquisition of the corporation's assets:
A. To the Estate of Robert Mumma, Sr., the amount of$94,526.51;
B. To Mum.ma Realty Associates the amount of$330,320.91;
C. To Robert M. Mumma, II, the amount of$415,229.28.
189. By Order Re: Case Disposition dated June 15, 1998, this Court entered a final order
closing further proceedings in this action on the grounds that the parties did not pursue the case
diligently.
190. Both parties file appeals from the June 15, 1998 order.
191. By an opinion dated June 9, 1999 entered by the Fourth District Court of Appeal of
the State of Florida in Mumma v. Mumma, 734 So. 2d 571 (Fla. 4th DCA 1999) the appellate court
38
reversed the order of Judge Schack closing the case and determined that the 1993 partial Final
Judgment remains in force and need not be revisited on remand. The appellate court also
determined that the only issues left to be decided concerned the final accounting and winding up of
the corporation as well as attorneys' fees and costs.
192. By separate order also dated June 9, 1999, the appellate court granted the Motion by
Lisa Mumma Morgan and Barbara McK. Mumma, individually and as Co-Executrixes of the Estate
of Robert M. Mumma, deceased, and on behalf of High-Spec, Inc. for attorneys' fees on appeal
conditioned upon them being prevailing parties on the merits.
193. Following remand, a trial was held on the remaining issues identified by the
appellate court in its opinion. During this time, the trial transcript shows that Defendant Robert
Mumma's counsel raised, for the first time, the existence of a shareholder's agreement which Judge
Bryan refused to entertain because it had not been raised in the 1993 trial. (2000 Trial Transcript, p.
126).
194. The trial resulted in a Final Judgment entered by Judge Bryan of this Court on March
15, 2000. The Final Judgment recited the entry of the Final Judgment of Judge Cianca in 1993 and
adopted previous findings of the Court.
195. The Final Judgment also determined various issues relating to the final accounting of
the corporation and distribution of the corporate assets.
196. In this 2000 Final Judgment, the Court declined to award interest on the judgment
subsequent to July 26, 1993 and denied Plaintiffs' Motion for Attorney's Fees at both the appellate
and lower court levels.
197. Defendants filed an appeal from this Final Judgment, and Plaintiffs filed a cross-
appeal. In their brief, Defendants did not assign as error Judge Bryan's refusal to consider the
39
alleged shareholder's agreement in determining ownership by Mumma Sr's estate of 50% of the
shares of High-Spec, Inc. stock.
198. By an opinion dated March 28, 2001 entered by the Fourth District Court of Appeal
for the State of Florida in Mumma v. Mumma, 780 So. 2d 1001 (Fla. 4t" DCA 2001), rev. den. 797
So. 2d 587 (Fla. 2001), the appellate court modified that portion of the March 15, 2000 Final
Judgment which suspended interest after the 1993 Final Judgment. The appellate court also
modified the trial court's order denying Plaintiffs' motion for attorneys' fees for fees incurred in the
trial court and previous appeal and remanded the matter back to the trial court to determine such an
award.
199. The appellate court also issued a separate order awarding appellate attorneys' fees to
the Plaintiffs for this second appeal and ordered the trial court to determine the amount of these
fees.
200. On April 27, 2001, Defendants filed a Notice to Invoke Discretionary Jurisdiction to
the Supreme Court for review of the opinion of the Fourth District Court of Appeal.
201. On October 5, 2001, the Supreme Court of Florida denied review and granted
Respondents' (i.e. Plaintiffs') Request for Attorneys' Fees on Appeal and made an award in the
amount of$2,500.00.
202. Plaintiffs' Motion for entry of Amended Final Judgment Following Appellate review
seeks the entry of an Amended Final Judgment consistent with the appellate decisions of the Fourth
District Court of Appeal and Supreme Court of Florida in 2001 and specifically requests:
A. Reasonable attorneys' fees for services rendered in the lower court proceedings;
B. Reasonable attorneys' fees far services rendered in the first appeal from this
Court's 1998 Order closing the case;
40
C. Reasonable attorneys' fees for services rendered for lower court proceedings
following remand culminating in March 15, 2000 trial;
D. Reasonable attorneys' fees for services rendered in the appeal of the Court's
March 15, 2000 Final Judgment;
E. Interest on the 1993 Final Judgment to tlie date of entry of the Amended Final
Judgment;
F. Reasonable attorneys' fees in the amount of$2,500.00 awarded by the Supreme
Court of Florida in its October 5, 2001 decision;
G. Such further adjustment to the final accounting as may be appropriate in light of
the appellate decisions;
H. An award of costs as may be appropriate, including costs for appellate work and
at the trial court;
203. On August 15, 2002, Plaintiffs served an Amendment to Plaintiffs' Motion for entry
of Amended Final Judgment Following Appellate Review to request the award of prejudgment
interest on the attorneys' fees warded by both the Fourth District Court of Appeal and Supreme
Court of Florida from the time of the award of those fees in those appellate courts. Plaintiffs
subsequently filed an Amended Motion for Attorney's Fees dated May 8, 2001 seeking lower court
and appellate attorneys' fees.
204. On November 18, 2003 Plaintiffs served their Motion for Appointment of a Receiver
to take possession of High-Spec's certificate of deposit funds in Pennsylvania and to pay the
corporate debts and make appropriate distributions according to the amended final judgment.
205. On June 6, 2003, Defendant, Mumma II file his Motion to Dismiss or in the
Alternative for a New Trial Due to Recently Discovered Evidence of Lack of Jurisdiction and Fraud
41
upon the Court. In his motion Defendant claimed that the Plaintiffs are not shareholders of High-
Spec, Inc. and alleged in paragraph 14 under "newly discovered evidence" that a shareholder's
agreement existed. By order entered January 16, 2004, Judge Angelos denied this motion.
Defendants Mumma and High-Spec, Inc. timely appealed. Their brief did not raise the
shareholder's agreement but instead argued on other grounds that the circuit court erred in denying
the motion. The Fourth District Court of Appeal affirmed the January 16, 2004 order per curiam on
May 11, 2005, and issued a mandate on July 8, 2005. The Fourth District also issued an order
awarding Plaintiffs their appellate attorneys' fees. Following remand Plaintiffs filed Plaintiffs'
Motion to Assess Attorneys' Fees on Third Appeal dated August 5, 2005.
206. On December 16, 2004, Defendant Mumma, acting pro se at the time, filed his
Motion to Dismiss or Stay in which he contended that this action should be dismissed because the
inventory in his father's ancillary estate in Florida, which the Court determines was dismissed in
1999, failed to include the shares of High-Spec, Inc. stock as an asset. He also alleged that the
shares of stock in High-Spec, Inc. which were distributed from his father's Pennsylvania estate to
his Residuary Trust on January 1, 2002, were subject to a shareholder's agreement, an unsigned
copy of which he attached to his motion. Defendant Mumma II had previously raised this
shareholder's agreement in the 2000 trial before Judge Bryan and again in his June 6, 2003 Motion
to Dismiss. He asked that this action be stayed pending the outcome of a related Pennsylvania court
action he had filed to determine the enforceability of this shareholder's agreement.
207. On May 24, 2005, Plaintiffs served their Motion to Add Additional Party Plaintiffs.
In this motion,they sought to add themselves as additional Plaintiffs in this action in their capacities
as Co-Trustees of Robert Mumma's Residuary Trust contained in his will. Their motion alleged
that the estate of Robert Mumma, Sr., had, on January 1, 2002, distributed its interest in the High-
42
Spec, Inc. shares to the decedent's Residuary Trust of which they were Co-Trustees. Because
Defendant Mumma had contended that Plaintiffs, as Co-Executrixes of this estate, lacked standing
to maintain this action they sought to make the standing issue moot by joining themselves in their
capacities as Co-Trustees as well. This motion was granted by the Court, after which the Plaintiffs,
as Co-Trustees, filed their Appearance by Trustees of Residuary Trust and Consent to Plaintiffs'
Actions in which they consented to all actions of themselves as Co-Executrixes, the appointment of
a Receiver, the entry of an Amended Final Judgment, and to the award of attorneys' fees, cost, and
interest.
208. High-Spec, Inc. is hereby dissolved as a result of the shareholders being deadlocked
and the illegal distribution of a major corporate asset to Robert M. Mumma, II.
209. Robert M. Mumma II caused the illegal distribution of certain real property to
himself and is liable to the corporation, High Spec, Inc. for said distribution in the amount of
$450,000.00 plus prejudgment interest at the rate of Twelve (12%) per annum from December 12,
1989 until the date of the entry of the original Final Judgment on July 26, 1993 in the amount of
$189,887.67 for a total sum due and owing on the Final Judgment as of July 26,1993 of
$639,887.67. Judge Cianca's February 28, 1994 order suspending the running of interest on this
judgment, which was approved by this court in its Final Judgment entered March 15, 2000, has
since been modified on appeal to allow for interest. Therefore, this sum of $639,887.67 shall
constitute the "Judgment Sum." Plaintiffs, as Co-Executrixes of the estate of Robert Mumma, Sr.,
deceased, on behalf of Plaintiff High-Spec, Inc. shall recover this Judgment Sum from Defendant
Robert Mumma II, individually, whose Florida address is 6880 SE Harbor Circle, Stuart, FL
34996-1968, and this Judgment Sum shall bear interest from and after July 26, 1993 at the statutory
rate applicable to the judgment when entered in 1993 which, under §55.03, Fla. Stat. (1993) was
43
12% per annum. The daily rate of post judgment interest at 12% per annum on the sum of
$639,887.67 after July 26, 1993 is $210.374 per day, and interest at the rate of 12% per annum shall
continue from that date through the entry of this Amended Final Judgment and thereafter on the
unpaid balance of the Judgment Sum until paid in full. The Clerk of this Court is hereby directed
and ordered to issue a writ of execution forthwith on the Judgment Sum plus all accrued interest to
the date of this order. The address of Plaintiff Lisa Mumma Morgan is 1140 N. Ocean Boulevard,
Gulfstream, FL 33483-7230, and the address of Plaintiff Barbara McK. Mumma is 4333 North
Ocean Blvd., Apt D-55, Delray Beach, FL 33483. The address of Plaintiff High-Spec, Inc. is c/o
Robert Mumma II, its sole surviving director, 6880 SE Harbor Circle, Stuart, FL 34996-1968 and
also P.O. Box 58, Bowmansdale, PA 17008.
210. The corporation is liable for the following debts created for the acquisition of the
corporation's assets, real estate:
A. To the Estate of Robert Mumma Sr., the amount of$94,526.51;
B. To Mumina Realty Associates I, the amount of$330,329.91;
C. To Robert Mumma II, $415,229.28.
211. The loans by Robert M. Mumma, II, or his controlled companies were used to build
his personal residence and are not valid corporate debts of High-Spec, Inc.
212. At the November 28 and 29, 2005 final hearing this Court also heard and received
evidence and arguments on Plaintiff's Motion to Appoint Receiver dated November 13, 2003.
Upon the evidence presented and arguments of counsel, this Court determines that the appointment
of a Receiver is necessary pursuant to §607.1432, Fla. Stat. 2005 in order to liquidate the Certificate
of Deposit in the name of Defendant High-Spec, Inc. currently on deposit with M&T Bank in
Harrisburg, Pennsylvania, and to collect and receive from the Plaintiffs whatever Plaintiffs, in their
44
capacities as Co-Executrixes, recover on the money judgment against Defendant Robert Mumma II
for $450,000 plus prejudgment and postjudgment interest, after Plaintiffs pay themselves such
attorneys' fees and costs as the Court may enter in a separate final judgment in the future. The
appointment of a receiver is also needed to wind down and pay the debts and obligations of High-
Spec, Inc. and distribute its assets.
Factual Background
213. In 1985, Robert M. Mumma ("Mumma I") and his son, Robert M. Mumma II
("Mumma II") formed a Florida corporation known as High-Spec, Inc.
214. They were the only two shareholders of the corporation. Mumma I died on April 12,
1986.
215. Miunma II commenced the instant action in 2004.
216. It seeks to enforce an alleged Share Restrictive Agreement ("agreement") between him
and his father.
217. An unsigned copy of the agreement is attached to the amended complaint.
218. Mumma II alleges that the signed agreement "may have been stolen with other
documents from a safe-deposit box at Dauphin Deposit Bank. The relevant sections of the unsigned
agreement provide as follows:
"4. TRANSFER OF SHARES UPON DEATH OF SHAREHOLDER In the event of
the death of any Shareholder, it is agreed that all of the shares of the Corporation held by such
decedent at the time of his death shall be sold in the same manner as provided in Section 3 of this
Agreement in that the personal representative of the decedent shall first offer, within sixty (60) days
45
after his qualificatian as such personal representative , the shares owned by the decedent to the
Corparation and if the Corporatian daes nat purchase such shares as provided in Section 3 of this
Agreement, then the personal representative shall thereupon crffer such shares pra rata to the ather
Shareholder or Sharehalders of this Carporatian who hereby agree individually to purchase such
shares in the manner as provided in paragraph 3 thereof.
In the event the affer is not made within said sixty (60} days periad as herein provided, it shall be
deemed ipsa facto to be made at the end of said sixty (60} day period and if, within thirty days
thereafter, the Corparation does not request delivery of the shares to it for purchase, the
Sharehoiders shall enforce delivery of such shares of the deeeased Shareholder pro rata to thern,
upon cornpliance of the Shareholders of the terrns and conditions of this Agreement."
219. Mumrna II asks us ta require the Estate of Murnma I to sell its shares to him or the
corporation in accordance with the terms af the agreement.
220. Defendants' Motion for Surnmary Judgrnent rests upan their assertion that previous
litigatian in Florida precludes Murnma II from bringing the instant actian. They also content that
the aetion is time barred.
221. The Florida actian at issue was camrnenced by the executrices of the Estate of Mumma
I against Mutnma Ii in 1989.
222. It took 17 years, several hearings and as many appeals, before a final judgment was
entered.
223. The factual and procedural histary was summarized in the Amender Final Judgment
filed in the Circuit Court of the Nineteenth Judicial Circuit in and for Martin County, Flarida by
Judge Robert Makemson on February 17, 2006.
46
224. Judge Makemson's summarized the "History of the Litigation" as follows:
"1. On July 26, 1993, this court, through Judge Marc Cianca, entered a Final Judgment
which dissolved the Defendant Florida Corporation, High-Spec, Inc. and determined among other
things that Defendant Robert Mumma, II caused the illegal distribution of certain real property to
himself and is liable to High-Spec, Inc....
2. The Court also required the directors of High-Spec to prepare a final accounting and
wind up and liquidate the corporation.
3. By an opinion dated June 9. 1999 entered by the Fourth District Court of Appeal of
the State of Florida in Mumma v. Mumma, 734 So. 2d 571 (Fla 4�h DCA 1999) the appellate
court...determined that the 1993 partial Final Judgment remains in force and need not be revisited
on remand. The appellant court also determined that the only issues left to be decided concerned
the final accounting and winding up of the corporation as well as attorneys' fees and costs.
4. Following remand, trial was held on the remaining issues identified by the appellate
court in its opinion. During this time, the trial transcript shows the Defendant Robert Mumma's
counsel raised, for the first time the existence of a shareholder's agreement which Judge Bryan
refused to entertain because it had not been raised in the 1993 trial. (2000 Trial Transcript, p. 126).
5. The trial resulted in a Final Judgment entered by Judge Bryan of this Court on March
15, 2000. The Final Judgment recited the entry of the Final Judgment of Judge Cianca in 1993 and
adopted previous finding of the Court.
6. Defendants filed an appeal from this Final Judgment, and Plaintiffs filed a cross-
appeal. In their brief, Defendants did not assign as error Judge Bryan's refusal to consider the
alleged shareholder's agreement in determining ownership by Mumma Sr's estate of 50% of
the shares of High-Spec, Inc. stock.
47
8. By an opinion dated March 28, 2001 entered by the Fourth District Court of Appeal
for the State of Florida in Mumma v. Mumma, 780 So. 2d 1001 (Fla. 4t" DCA 2001), rev. den. 797
So. 2d 587 (Fla. 2001), the appellate court modified that portion of the March 15, 2000 Final
Judgment which suspended interest after the 1993 Final Judgment.
9. Plaintiffs' Motion for entry of Amended Final Judgment Following Appellate
Review seeks the entry of an Amended Final Judgment consistent with the appellate decisions of
the Fourth District Court of Appeal and Supreme Court of Florida in 2001.
10. On June 6, 2003, Defendant Mumma II filed his Motion to Dismiss or in the
Alternative for a New Trial Due to Recently Discovered Evidence of Lack of Jurisdiction and Fraud
upon the Court. In his motion Defendant claimed that the Plaintiffs are not shareholders of High-
Spec, Inc. and alleged in paragraph 14 under "newly discovered evidence" that a shareholder's
agreement existed. By order entered January 16, 2004, Judge Angelos denied this motion.
Defendants Mumma and High-Spec, Inc. timely appealed. Their brief did not raise the
shareholder's agreement but instead argued on other grounds that the circuit court affirmed the
January 16, 2004 order per curium on May 11, 2005, and issued a mandate on July 8, 2005.
11. On December 16, 2004, Defendant Mumma, acting pro se at the time, filed his
Motion to Dismiss or Stay in which he contended that this action should be dismissed because...the
shares of stock in High-Spec, Inc. which were distributed from his father's Pennsylvania estate to
his Residuary Trust on January 1, 2002, were subject to a shareholder's agreement, an unsigned
copy of which he attached to his motion. Defendant Mumma II had previously raised this
shareholder's agreement in the 2000 trial before Judge Bryan and again in his June 6, 2003 Motion
to Dismiss. He asked that this action be stayed pending the outcome of a related Pennsylvania court
action he had filed to determine the enforceability of this shareholder's agreement."
48
225. This restrictive share agreement referred to in the Florida action is the same one upon
which the instant action is based.
226. In the "Amended Final Judgment" Judge Makemson held in relevant part as follows:
Defendant's continued attempts to relitigate the shareholder status of the Plaintiffs
based on allegations of an existing shareholder's agreement are barred by res judicata, estoppel by
judgment, and judicial waiver by failing to raise on appeal this Court's refusal to consider the
alleged shareholder's agreement in the 2000 Final Judgment and the January 6, 2004 Order on
Defendant Mumma's Motion to Dismiss or for New Trial. Plaintiffs' Motion for entry of Amended
Final Judgment Following Appellate Review, as amended, is granted. High-Spec Inc. is hereby
dissolved as a result of the shareholders being deadlocked and the illegal distribution of a major
corporate asset to Robert M. Mumma, II."
(Aslo see, Mumma, et. al. v. Estate of Mumma, Docket 2004-6183 (Cumberland County CCP) and
Mumma, et. al. v. Muimna, et. al., Docket 2006-2197 (Cumberland County CCP), aff d at 970
A.2d 1089 (Pa. Super. 2008) allocater denied 602 Pa. 659, 980 A 2d. 111 (2009), holding that
claims regarding a restrictive share agreement in High Spec, Inc. are barred by res judicata citing
the Florida litigation)
49
The undersi�ned findin�s of fact are as follows:
226. Robert M. Mumma died on April 12, 1986.
227. His Last Will and Testament appointed his widow Barbara McK. Mumma and his
daughter Lisa M. Morgan his Executrices and also the trustees of the two trusts established under
Mr. Mumma's Last Will and Testament. (Exhibit A-4). The Petition for Probate and Grant of
Letters was filed on June 5, 1986 and a Decree of Probate and Letters Testamentary were issued by
the Cumberland County Register of Will on June 5, 1986.
228. Attached to the decedent's Last Will and Testament was a hand written note in decedent's
hand to his widow, Mrs. Mumma, that she should "move slowly and get good counsel. Then do
what you honestly think best."
229. Mrs. Mumma (even though she was 85 years old at the times she testified) testified as
to her late husband's business which included Concrete business, aggregate business, horses, Real
Estate (both commercial and residential) and community work.
230. During her late husband's lifetime, she was not directly involved in the business but
knew about the businesses and each business and property location.
231. After her husband's death in April 1986, Mrs. Mumma spoke to her and her
husband's lawyers, George Hadley, Mr. Feldaman, the business accountants, met and
spoke with appraisers to get a handle on what her husband owned.
232. Mrs. Mumma went with her attorney to her husband's safety deposit box located at
the Dauphin Deposit Bank in search of his Last Will and Testament.
50
233. Mrs. Mumma was present when the opened the box by Ba,nk personnel, but no Last
Will and Testament was faund in the box.
234. There were other papers and recards in the bax.
235. At some time follawing the search for decedent's wil�, an agent ofthe Department
of Revenue inventoried this box and noted it cantained no items of value.
236. The Last�Uill and Testament and the Codicil was discovered in Attorney
Baswell's affice files.
237. Mr. Murnma and Mrs. Mumma had a joint safety box at the Fulton Bank.
238. Mr. Hadley prepared an inventory ofthis box's contents. (Ex. T-7}
239. The late Mr. Mumrna had a great amount of personal and business debts and 1WIrs.
Mumma was determined that these rnatters had ta be immediately addressed.
240. Mrs. Mumma stepped into run businesses to insure employees we were nat going ta leave and went to
office every day for 8 years.
241. In her new role as manager ofthe businesses, Mrs. Mumma had ta sacialize with custamers, did calls on
clients and customers, received cantracts and if she had questions shed call the attorneys, the accauntants, she
wauld consult with my daughter, Lisa and others and then made decisians.
242. The Late Mr. Muxnxna had many horses (between 50 and 100}, both Pacers and Trotters.
243. Sarne horses were awned outright by the Estate and some in partnership with others.
244. The harses were stabled and an a farm in Amity Hall (Perry eaunty}PA.
245. The harse business was not making money, as racing was expensive and included upkeep, baarding,
feeding, hands,trainers, etc.
246. Tagether with Lisa Morgan and the advice of her attorneys and accountants,the Executrices sald some af
the horses by rneans of private sale and the remaining horses were sold at auctian.
51
247. From the beginning, the Executrices divided their roles in handling estate matters and then handling
trusts matters.
248. At the time of her father's death, Lisa Morgan was an associate attorney working in the Intellectual
Property division of the Philadelphia law offices of Morgan Lewis Bockius ("MLB").
249. Following her father's death, Lisa Morgan would travel frequently from Philadelphia but the amount of
work needed to manage the Estate's assets and insure the Mumma companies were operating properly and
productively became more time consuming.
250. In 1987, Lisa Morgan moved with her husband, a practicing attorney himself, from the Philadelphia area
to Harrisburg.
251. Lisa Morgan then worked full time on Real Estate matters and was general counsel for all the Mumma
companies and affiliated business handling contract, personnel and labor issues, and Mrs. Mumma worked as
the chief executive officer for all the Mumma businesses.
252. The Executrices hired a full time property manager and appraisers .
253. The Executrices hired attorneys and relied on their expertise in filing corporate and estate or trust related
documents as required by federal, state and local laws including tax matters, permits, fictitious name filings,
corporate documents, agreements and the like.
254. After consulting with their attorneys, accountants and advisers the executrices sold non-performing
property and retained the money makers.
255. The Executrices discussed any matters relative to the estate and the trusts among themselves and if they
needed more information or an opinion they would consult experts and act as they felt in best interest of the
family.
256. George W. Hadley is a certified public accountant ("CPA") from Buffalo,New York.
52
256. Mr. Hadley has been a CPA since 1969 and has since his graduation from the University of
Buffalo in 1965 worked as an accountant.
257. Hadley began warking for the Buffalo, NY accounting firm of Lucker, Kennedy &
Feldenman in 1965 and in 1986 became a partner.
259. Hadley is a licensed CPA in the State of New York and a member of the American Society
of Certified Public Accountants and the New York Society of Certified Public Accountants.
260. Mr. Hadley has since the 1960s worked with the Mumma family, first with the
decedent during his lifetime and then with the Executors and Trustees of the Estate of
Robert M. Mumma from 1986 until the present.
261. Hadley also worked with Objector Robert M. Mumma II and Objector Barbara
Mumma at various times from the 1960s through the 1990s.
262. Mr. Hadley had detailed, specific knowledge of the Mumma family businesses,
including the many facets of the corporate structures used by the Mumina family.
263. Mr. Hadley had worked with the decedent during his lifetime on a variety of
accounting issues and had worked closely with the decedent's attorneys, specifically
William Boswell of Harrisburg, PA and several attorneys from the law firm Morgan Lewis
& Bockius of Philadelphia, PA.
264. From 1969 until Decedent's death in 1986, Hadley worked on all of the decedent's
personal tax matters and Mr. Karl Feldaman was decedent's personal financial advisor.
265. Mr. Feldaman died in November 1986 and had been ill for over a year prior to his
passing.
266. In the later part of 1985 until Decedent's death in June 1986, Hadley became
Decedent's financial advisor as well as his accountant.
53
26'7. In 1990 the firm of Lockhart, Kennedy & Feldraman divided and Mr. Hadley
formed his own accaunting firm.
26$. Mr. Hadley was requested by the Estate and Trusts ta continue his representatian of
the Estate and the Trusts and Hadley retained all the Mumma recards, both personal,
corparate and business related, which had forrnerly been retained by Lockhart, I�ennedy &
Feldaman.
269. Mr. Hadley and his firm had unfettered access to all the financial and persanal
records af the decedent including legal, corparate, real estate and financial with the
exception of a personal Chase account.
270. Hadley had helped create and rnaintain corporate camputer based records for the
larger corporations under the decedent's Corporate Family structure including general
ledgers, depreciation schedules and check baoks.
271. Hadley helped create and maintain manually (hand) created recards for the smaller
corporations and entities under the decedent's family carporate structure.
272. Annuaily since at least 1965 Hadley and his firm prepared year end statements for
decedent's rnany corporatians which included a detaiied flow chart showing the inter-linked
structure and ownership interests of the related business.
273. Each year fram at least 1965 until decedent's death in 1986 Hadley and his firm
prepared these documents and presented the sarne to the Decedent far his review and
comment prior to making the annual statements final.
274. Hadley and his firrn also provided annual persanal statements of assets and
ownership interests to Decedent.
54
275. During his life time and throughout his business career, Decedent had numerous
corporation and other business entities come into existence and also go out of existence and
the annual statements and flow charts supplied by Hadley, Feldenmen and their firm were
created to assist Decedent and maintain a historical record of any changes.
276. Hadley and his firm also prepared year end statements for Objector Robert M.
Mumma II from 1980 through 1988 and presented the same annually to Robert M. Mumma
II for his review and comment prior to finalizing each year end annual statement.
277. Hadley and his firm also prepared similar annual statements for all of the Decedent's
other children: Lisa, Linda and Barbara.
278. Hadley has never been an officer, shareholder or director of any of the Mumma
Family corporations including those owned in whole or part of any Mumma family member
and his services and those of his firm were billed on an hourly basis for work performed.
279. During the administration of the Estate of Robert M. Mumma and the Trusts created
thereunder, Hadley and his firm have given all parties to this matter and all Beneficiaries of
the Estate and Trusts access to all records he maintains, with the exception to proprietary
work papers and records required by regulations relating to Certified Public Accountants.
280. These records exceed 100,000 pages of documents.
281. All records Hadley maintained were made available for inspection by the Objectors
and/or their respective counsel.
282. Mr. Hadley personally prepared and supervised the tax returns far all the Munima
family corporations together with the personal t� returns for the Mumma family members,
including the Decedent and Objector Robert M. Mumma II for at least fifteen (15) years
prior to decedent's death.
55
283. Hadley prepared and supervised the audited financial statements for year end 1985
together with a June 30, 1986 statement for Pennsylvania Supply Company, Kim Company,
Nine Ninety Nine, Inc., Pennsy Supply, Inc. and the subsidiaries of Pennsy Supply, Inc.
284. Mr. Hadley was found to be a very credible witness.
285. At the time of decedent's death in June 1986, Mr. Hadley had first hand, detailed and
specific knowledge of the assets owned by decedent and their relative values.
286. At the time of Decedent's death, Mr. Hadley identified a number of problems or
potential problems facing the Estate.
287. These problems were: the great debt which had been amassed by the Decedent which
included 100-200 separate debts to various banks; the lack of profitability of the Mumma
companies; the purchase of race horses and the care and upkeep of the horses; new
purchases of equipment on credit and valuation of assets.
288. Following the passing of the decedent, Hadley met and discussed the many debt
issues and cash flow problems with Barbara McK. Mumma and Objector Robert M.
Mumma, II.
289. Hadley also contacted the many creditors and banks to assure them a comprehensive
plan was being developed to address the debt issues.
290. In July 1986 Attorney Arthur Klein drafted a redemption and consent agreement
relating to 85 shares of Pennsylvania Supply Company. (Ex. T-37 and T-38)
291. The redemption of these 85 shares was being made in favor of Barbara McK.
Mumma, surviving spouse pursuant to Section 303 of the Internal Revenue Code.
292. Mr. Hadley performed the calculations necessary to support the valuation stated in
the redemption agreement.
56
293. All four children including Bob Mumma, Babs Mumma, Lisa Morgan and Linda
Roth(now Mumma) signed the unanimous consent to the agreement. (Ex. T-109)
294. Robert M. Mumma, II, as Vice President of Pennsylvania Supply Company executed
the redemption agreement. ( Ex. T-115).
295. Thereafter the 85 shares of Pennsylvania Supply Company were redeemed.
296. In 1986 following receipt of Letters of Testamentary from the Cumberland County
Register of Wills, the Executrices, after consultation with their legal advisors and
discussions with others, hired Hadley and his firm as the accountant for the Estate of Robert
M. Muinma.
297. Prior to accepting and agreeing to this representation, Hadley and his firm had
experience representing wealthy persons in the construction and real estate field and other
family owned , closely held businesses and also representing their respective estates.
298. The Mumma Estate was the most complex of any estate Hadley and his firm had
ever handed not based on the value of assets but based on the complex nature of the inter-
connected corporate structures.
299. Hadley had several meetings with family members, the Executrices, the Estate's
attorneys, the officers, employees, customers, and creditors of the various corporations
owned in whole or in part by the Decedent and advised all interested parties that the
Mumma businesses would continue as usual.
300. Hadley and his firm also continued to be the accounts for all the Mumma companies.
301. Hadley and his firm worked on valuing the Estate's assets and initially worked
closely with attorney Arthur Klein of the law firm Morgan Lewis & Bokius ("MLB"), and
later with many other attorneys at the firm.
57
302. At the time of his death in June 1986 Decedent owned the following:
a. 5,000 shares equaling 50 percent of the outstanding shares in Lebanon Rock, Inc.
b. 700 shares equaling 98.32 percent of the outstanding shares in Pennsylvania Supply
Company.
303. At the time of Decedent's death Pennsylvania Supply Company owned 7,241 shares
equaling 83.42 % of the outstanding shares in Kim Company, together with various property
and equipment valued at $2,101,100.00, including 100,000 shares equaling 14.28 percent of
Middle Park, Inc., a Colorado Corporation.
304. At the time of decedent's death Pennsylvania Supply Company owned 100,000
shares representing 14.28 percent of the issued and outstanding shares in Middle Park, Inc.,
a Colorado Corporation.
305. At the time of Decedent's death Middle Park, Inc., a Colorado Corporation, owned
10 shares equaling 100 percent of the outstanding shares of Bobali Corporation which
owned various property and equipment valued at $928,805.
306. At the time of Decedent's death Kim Company owned 1,100 preferred shares and
867 common shares of Nine Ninety Nine, Inc. (the preferred shares equaling 100 percent of
the outstanding preferred shares of said corporations and the common shares equaling 40.97
percent of the outstanding shares of said corporation), together with various property and
equipment valued at $2,108,859.00 and a one half (fifty (50) percent) interest in Union
Quarries, Inc., d/b/a Union Quarries Booneybrook Quarries located in South Middleton
Township Cumberland County, PA.
307. At the time of Decedent's death Nine Ninety Nine, Inc owned 2,500 shares equaling
100 % of the outstanding shares in Pennsy Supply, Inc.
58
308. At the time of Decedent's death Pennsy Supply, Inc. owned 5,000 shares equaling
100 percent of Elco Concrete Products, Inc.; 500 shares equally 100 percent of the
outstanding shares of Kim & Kin, Inc.; and 1000 shares equaling 100 percent of the
outstanding shares of Robert M. Mumma, Inc.
309. In addition to Decedent, at the time of Decedent's death the Decedent's son Robert
M. Mumma II owned 5,000 shares or 50 percent of the outstanding stock of Lebanon Rock,
Inc.
310. In addition to Pennsylvania Supply Company, at the time of Decedent's death the
Decedent's children: Robert M. II, Barbara, Linda, and Lisa each owned 1500 shares
equaling 21.43 percent each of the outstanding shares of Middle Park, Inc.
311. In addition to Pennsylvania Supply Company, at the time of Decedent's death the
Decedent's children : Barbara, Linda, and Lisa each owned 333 shares or 3.84 percent of
the outstanding shares of Kim Company, and Robert II owned 334 shares.
312. In addition to Pennsylvania Supply Company and Decedent's children, at the time of
Decedent's death the Decedent's wife, Barbara owned 106 shares or 1.22 percent of the
outstanding shares of Kim Company.
313. In addition to Kim Company, at the time of Decedent's death the Decedent's
children: Barbara and Lisa each owned 103 shares of preferred stock and 312 shares of
common stock , Linda owned 61 shares of preferred stock and 312 shares of common stock
and Robert II owned 314 shares of common stock of Nine Ninety Nine, Inc.
314. Subsequent to being named as accountants for the Estate of Robert M. Mumma and
prior to year end 1986, Hadley, the attorneys at MLB, the family members and the
Executrices discussed in detail the viability of liquidating some of the Mumma companies,
59
specifically Kim Company and Pennsylvania Supply Company pursuant to the Internal
Revenue Code's General Utilities Doctrine which was scheduled to expire on December 31,
1986.
315. The General Utilities Doctrine was a federal statutorily created mechanism through
which certain entities could step-up their basis in certain assets, thus possibly creating a
beneficial tax consequence.
316. After consultation and recommendations from both Mr. Hadley's firm and the
attorneys from MLB, it was agreed by all parties including the executrices and all the
beneficiaries, that Kim Company and Pennsylvania Supply Company should be liquidated at
the same time, by first merging Kim Company into Pennsylvania Supply then into Nine
Ninety Nine, Inc.
317. Mr. Hadley had at a minimum weekly telephone or face to face meetings with either
executrices, Mrs. Mumma or Mrs. Morgan or both of them, throughout the administration of
the Estate and the Trusts created thereunder.
318. For all real estate owned by Mr. Mumma or his business entities, the executrices
with the help of Hadley hired real estate appraisers.
319. For the Pennsylvania properties, the Estate engaged the Helsen Firm to appraise
properties in Cumberland, Dauphin and Perry Counties who compiled three (3) books of
appraisals by county. (Exhibits T-8, T-9, T-10)
320. The Estate did not appraise the Bender property which was located in Adams
County, as it had been purchased within four (4) months of the decedent's passing and the
purchase price of$277,184.50 was utilized.
60
321. The property in Stewart Florida was appraised by a Florida appraisal Company
(Exhibit T-11).
322. Hadley valued High Spec at $5,000.00 based on its huge debt.
323. The value of the many horses owned by the decedent were obtained by the
executrice, Mrs. Mumma, from horse brokers.
324. Hadley and his firm prepared the values of the various corporations in which
decedent had an interest which included: Darier, Inc., Pennsy Supply, Inc. , Nine Ninety
Nine, Inc., Pennsylvania Supply Company and Kim Company. (Exhibits T-12, T-13, T-14,
T-15, T-16).
325. Mr. Hadley used the investment made by the decedent in Lebanon Rock, which had
been formed within six months of his passing and was owned fifty percent by the decedent
and fifty percent by his son, Objector Robert M. Mumma II. (Exhibit T-167)
326. Hadley explained the methodology he and his firm utilized in the valuation of each
of these companies which included historical reviews (5 years) of earning power, dividends
analysis, book value, together with individually owned assets of the individual companies.
327. In early 1987 Hadley advised the Executrices that for ease of accounting, the two
Colorado companies, Middle Park, Inc. and Bobali, Inc. should be merged.
328. Resolutions recommending this merger were prepared and signed by all directors of
the companies including Robert M. Mumma, II and a meeting scheduled for March 23, 1987
for approval. (Exhibits T-189 and T-190).
329. The directors of Midle park elected Barbara McK. Mumma as President (Exhibit (T-
177).
61
330. On March 12, 1987 the proposed Plan and Agreement of Merger and Notices of the
scheduled meeting to vote an the propasal were sent ta all shareholders. (Exhibit T-1'71}.
331. Shareholder Robert M. Mumma II wrote an his copy"out af town" and returned it to
the corporation. (Exhibit T-191).
332. Sharehalder Linda Roth Mumma executed a praxy in favor af Lisa Margan. (Exhibit
T-178}.
333. The scheduled and noticed meeting was held and a majority of the shareholders
voted in favor of the rnerger and Barbara McK. Mumma executed the Plan Agreernent of
Merger as president of both companies. (Exhibit T-179}.
334. On March 27, 1987 notification of the merger was filed with the Colarado Secretary
of State. (Exhibit T-180}.
335. Hadley and his firm had had prior experience in performing valuations af farnily
ov�med real estate cornpanies, building material companies, quarries, sand and gravel
aperations and ather sirnilar closely held business organizations.
336. Mr. Hadley had forrnerly testified in New Yark State as an expert in quarry operation
values.
337. In addition to his professional experience, his and his firm's persanal and historical
knowledge af the Mumma farnily businesses, together with the advice of the tax department
of MLB, Hadley relied heavily on Revenue Ruling 59-6d and the rnethadolagy set forth in
that Revenue Ruling to calculate the fair market value af the decedent's business interests.
(Exhibit T-143}.
62
338. Mr. Hadley, following his and his firm's review of the valuations and at the direction
of the Executrices, compiled a final document listing all of the decedent's business assets for
review by the tax department of MLB. (Exhibit T-17)
339. Hadley and his firm together with advise from the tax department of MLB prepared
the Estate's Pennsylvania lnheritance Tax Return and the Federal Estate Tax Return.
340. Following review of the documents prepared by their attorneys and accountant, on
July 13, 1987, the Executrices filed the Federal Estate Tax return.
341. Following review of the documents prepared by their attorneys and accountant he
Executrices filed the Pennsylvania lnheritance Tax Return.
342. Following receipt of the Federal Estate Tax Return, the Internal Revenue Service
advised the Estate and its attorneys and accountants that an audit of the return would be
conducted.
343. Following the audit the Internal Revenue Service contacted the Estate through its tax
attorney, Arthur Klein, Esquire and stated the IRS was adjusting the values of the Estate's
assets upward. (See Exhibit A-3)
344. Following the review of the findings of the Internal Revenue Service's audit and
after consultation with the Estate's attorneys and accountants, the Co-executrices accepted
the findings as settled by the Internal Revenue Service.
345. After further consultation with their attorneys and accountant's the estate and Mrs.
Mumma, the decedent's widow, exercised the option to defer the payment of Estate tax due
until her death.
346. Following receipt of the closing letter from the Internal Revenue Service, the
Pennsylvania lnheritance tax was finalized. (Exhibit T-227)
63
347. Mr. Hadley was asked by the Executrices to review the various assets and make
recommendations for placing 50% of the gross estate into the marital trust and 50% of the
gross estate into the residual established under the decedent's will ("Marital Trust" and
"Residual Trust").
348. Mr. Hadley spent many hours reviewing the possibilities as to which assets to place
into the two trusts with attorneys from MLB and the executrice, Mrs. Mumma.
349. Mr. Hadley consulted the former real estate appraisers for appropriate adjustments of
their 1986 land appraisals and was advised that the 1986 figures were appropriate in 1987
(Exhibit T-144).
350. Mr. Hadley made adjustments to the values of the interest in the various corporations
using similar methodology he and his firm had used in preparing the 1986 date of death
values, together with the review of other reports, including a 1987 Touche Ross report
regarding Pennsy Supply, Inc. and consultations with the attorneys at MLB. (Exhibits T-
145, T-59, T-58, T-173, T-159, T-22, T-28).
351. Mr. Hadley reviewed all the assets and recommended which assets should be placed
in either the marital or the residual trust.
352. Mr. Hadley factored many aspects of each asset including the assets income
producing capabilities, the book-keeping requirements and other factors.
353. Mr. Hadley met and discussed differing mixes of assets with the executrices and
their attorneys and after several months the assets were divided as close as practicable on a
fifty—fifty basis between the two trust., each trust receiving approximately $8,200,000.00 in
assets.
64
354. Mrs. Mumma was entitled to the income from the trusts as well as a five (5) percent
withdraw power from the marital trust. (See Last Will and Testament of Robert M. Mumma
and Exhibit T-18)
355. Pending the filing and final determination of the federal estate return, Mrs. Mumma
had not so exercised this withdraw power; however, in 1987 she was entitled to a withdraw
of$416,155.00 and by the end of the year the amount would exceed $700,000.
356. At this point in time there was not sufficient cash in the estate or in the trusts which
were being funded to make such a payment and therefore Mrs. Mumma sought the advice of
Arthur Klein, a senior partner with MLB regarding the five (5)percent withdraw power.
357. Attorney Klein advised Mrs. Mumma that in lieu of a cash payment, a payment in
kind of stock or property was appropriate. (Exhibit T-20)
358. By November 18, 1987, the executors, after advice and review by their accountants
and attorneys, had separated the assets of the Estate and placed fifty percent in the marital
trust and fifty percent in the residuary trust.
359. On November 18, 1987, after the assets were divided into the two trusts the
Executrices decided that Mrs. Mumma's five percent withdraw power would be taken on an
in kind basis. (Exhibit T-19) �
360. On December 18, 1987, Mrs. Mumma received her percentage share interest in
capital stock, rather than a cash payment. (Exhibit T-21).
361. After the funding of the two trusts Mr. Hadley and his firm performed all the
accounting needs and paperwork necessary for the financial side of the trusts and all the
related entities in which the trusts had controlling interest including: GET, Bobali, D.E.
Distribution, MRA I and MRA II.
65
362. These services included: record keeping, preparation of tax returns, accountings,
rendering financial and accounting advice to the executrices and trustees, recommendations
and meetings with various attorneys and attending various court hearings and depositions.
363. Beginning in the 1990s, Mr. Hadley and his firm also took over check writing duties,
but did not have signatory powers as such control remained with the executrices and
trustees.
364. Mr. Hadley and his firm reviewed stock books and minutes of the various businesses
and related companies to determine ownership of stock.
365. Mr. Hadley in conjunction with various attorneys assisted in calculating the values of
various stock owned by the Estate, determine the percent of stock which would equate to the
five (5) percent in kind in lieu of cash payments to Mrs. Mumma, the widow of the
decedent,prepared documentation for executrice commissions and trustee commissions.
366. Following such determinations the figures were presented to the executrices and
trustees.
367. Mrs. Mumma declined all commissions and fees.
368. The decedent's Last Will and Testament provided that Mrs. Mumma would receive
any income generated from the trusts and a five (5)percent"scoop out"provision.
369. Mrs. Mumma did receive during her lifetime in excess of $1.6 million as
distributions of income from the trusts.
370. Mrs. Morgan received executrice's commissions and trustee fees; however, Mrs.
McK. Mumma insisted that these commissions and fees were taken from the income
generated by the trusts.
66
371. During the administration of the estate and the trusts such executrice/trustee fees
were taken from the income protion of the trusts.
372. Mrs. Morgan is extremely active in her role as trustee working 20-40 hours per week
and receives no salary from any of the corporations or entities which she manages; she does
receive commissions as trustee.
373. Following discussions with Mr. Hadley and her advisors as to which in kind property
was proper for a distribution in lieu of cash, to her mother, Lisa Morgan as Executrice
determined and selected real estate being leased by Fulton Bank together with a proportional
shares of interest in various entities owned by the estate.
374. After receiving her first in kind distribution in lieu of cash, thereafter on an annual
basis, Mrs. Mumma annually, up until the time of her death exercised her right of taking five
(5)percent of the value of the trust in kind, in lieu of cash.
375. The executrices reviewed all bills from the accountants and attorneys and many
times requested deduction in fees or questioned time allotted to issues and matters.
376. In 2000, Mrs. Mumma had established her own trust naming herself and her
daughter, Lisa Morgan as the trustees.
377. Upon the passing of Mrs. Mumma, Mr. Hadley became a trustee of this trust.
378. At the time of her death, Mrs. Mumma had not taken all income she may have been
entitled to take during her lifetime.
379. Mr. Hadley based on a legal opinion given by Attorney O'Connor of MLB, had
calculated a date of death value of the undistributed income due Mrs. Mumma at the time of
her passing, which totaled in excess of two million dollars.
67
380. David C. Clever is an attorney at law currently practicing law in Chambersburg,
Pennsylvania.
381. Attorney Clever graduated from the Dickinson School of Law in 1967, has been a
professor at the Dickinson School of law instructing students in the area of Estate Planning
for more than thirty years.
382. Attorney Clever's practice is a statewide practice involving estate planning,
interpretation of wills and trusts and the taxes affecting the same.
383. Attorney Clever was hired as an expert to review the reports of Objector Robert M.
Mumma II's experts, specifically the reports of Attorney May and Attorney Crist and the
objections of Robert M. Mumma II.
384. In addition to the reports and objections, Attorney Clever reviewed the last Will and
Testament of Robert M. Mumma, the Petition for the grant of letters testamentary, the
inventory and appraisement, the appraisals of the Real Estate, the valuations made by Mr.
Hadley, the valuations for the estate and inheritance taxes, the Internal Revenue Service
closing letter, the accounts filed by the estate, the exceptions [objections], the prehearing
depositions, the testimony given at the current hearings.
385. Attorney Clever was asked to provide an opinions and prepared reports relating to
the wording of Paragraph 7 of the decedent's Will, the meaning and implementation of the
wording of decedent's will which gave his widow the right to withdraw from the corpus of
the marital trust $5,000.00 or five (5) percent of the marital trust, the tax consequences
associated with the decisions of the executrices and the trustees and the allocation of assets
between the marital trust and the residuary trust.
68
386. Attorney Clever discussed that the executrices had opted to take a "Q Tip" election
on both trusts. This election relates to the federal estate tax and allows a surviving spouse to
defer estate taxes which will then be payable at the death of the surviving spouse.
387. Mrs. Mumma, the decedent's widow, had elected to defer the payment of estate taxes
until the time of her death.
388. Attorney Clever also discussed the status of estate law and practice in 1982 at the
time decedent's Last Will and Testament was written and the language used at that time and
the common understanding in estate practice with the use of the terms so used.
389. Attorney Clever opined that the allocation of assets made by the Executrices between
the Marital and residuary trusts was proper under the terms of the decedent's will.
390. Attorney Clever opined that Mrs. Mumma was entitled to five percent (5%) per
annum of the value of the Marital trust and that it could be taken as either cash or in kind in
lieu of cash.
391. Attorney Jonathon Christ was called as an expert by Objector Robert M. Mumma.
392. Attorney Christ is a practicing attorney from Hershey, Pennsylvania with over
twenty years of estate practice and in addition to his juris doctorate, Attorney Christ holds a
Masters of Law in taxation.
393. He opined that Attorney Clever's opinion relative to the distribution of estate assets
and that the Executrices interpretation of the seventh paragraph of decedent's will was
proper.
394. Objector Barbara M. Mumma presented the expert testimony of Attorney Daniel
Johnson, an attorney from Allegheny County, Pennsylvania.
69
395. Attorney Johnson graduated, cum laude, with a juris doctorate from the University
of Pittsburgh in 1987.
396. He has twenty years' experience in the field of estate practice and taxation. And is a
partner with the firm Williams & Coulson.
397. His firm represents Objector Barbara M. Mumma for her estate planning matters.
398. He opined that the distribution of assets between the two trusts was improper and in
difference to the specific language of the Seventh Article of Decedent's Last Will and
Testament.
399. He also opined that the value of the marital trust had been over valued by at a
minimum of$861,000.00 because no reduction was made for the value of specific legacies
made to Barbara McK. Mumma in other Articles of the Last Will and Testament. As a result
the Residuary fund undervalued.
400. He also opined that because of the over valuation, Mrs. Mumma received a larger
share to which she was entitled each time she took her five percent (5%) withdraw right.
401. Objector Barbara M. Mumina also offered expert testimony from Joseph D.C.
Wilson, III.
402. Mr. Willams is a Certified Public Accountant having been licensed since 1973.
403. Mr. Williams began his career with Touche Ross and later Arthur Young and has
since 1988 had his own practice in Pittsburgh.
404. Mr. Wilson's field of expertise include accounting, probate, Estate and Trust funding
and accounting.
405. Mr. Wilson spoke with Mrs. Mumma and Bob Williams of the Williams Coulson
law firm and reviewed some of the Mumma company records and appraisals. Mr. Wilson
70
stated he believed the marital trust assets were undervalued at the time of funding between
20-25 million dollars.
406. As a result, he opined the annual five (5) percent in kind distribution to Barbara
McK. Mumma likewise improperly determined and which amounted to an excess of over
two million dollars in assets to Barbara McK. Mumma.
407. Mr. Wilson also stated he believed that almost all the decisions made by the
Executrices caused a higher tax burden to the estate, including CHR's squeeze out of Bob
Mumma and the Estate's 1986 use of the General Utilities Doctrine to step up the basis of
the quarrying operations.
408. In late 1986, Thomas Hill, then the Vice President of Acquisitions of Old Castle
Materials, Inc., a wholly owned subsidiary of CHR, was contacted through a mutual friend
by Objector Robert M. Mumma relative to the Mumma family quarrying businesses.
409. Mr. Hill and Clint Brocktold had been office mates from 1980-1985.
410. Clint Brocktold and Bob had been acquaintances for many years.
411. In 1986 Mr. Hill was traveling throughout the United States and acquiring operating
quarries for his company and its parent company CHR.
412. At the time he was contacted in late 1986, Mr. Hill knew nothing about the Mumma
family or any of the Mumma businesses.
413. Mr. Hill met with Bob in Bob's office to get to know him because Bob understood
that Mr. Hill and his company were actively seeking acquisitions.
414. Although they talked about the Mumma quarry operations, Bob never mentioned to
Mr. Hill that his mother and sister were the Executors of his father's estate.
71
415. Following his meeting with Mr. Hill, Objector Robert Mumma approached the Estate
and proposed to the estate that he be permitted to purchase the quarrying operations.
416. On November 22, 1986 the Executrice Barbara McK. Mumma sent Objector Bob
Mumma a letter asking him to make an offer to the Estate to purchase the quarrying
business. (Exhibit 02-11).
417. The Executrices then advised Mr. Hadley to provide Objector Bob Mumma and his
advisors with records he might need. (Exhibit T-27).
418. In March 1987 a meeting was held between the Executrices and Objector Bob
Mumma regarding giving Bob the opportunity to buy the quarrying operations.
419. Objector Bob Mumma believed the operation to be worth between five (5) and seven
(7) million dollars ; however, after no agreement could be reached, the executors notified
Bob that the Estate would not be selling him the quarrying operations.
420. Several months later in 1988, Mr. Hill was contacted by a business broker who stated
the Mumma family business relating to their quarrying operations may be for sale.
421. Mr. Hill then began speaking with Jack Hayes from CHR, Mrs. Mumma and Bud
Lake, the Mumma quarrying operations' Chief Operating Officer and after signing
confidentiality agreements met with Hayes and Mrs. Mumma in Harrisburg.
422. Mrs. Mumma was very up front about the disputes in the family and the complex
nature of the Mumma operations.
423. Mr. Hill had been involved in making approximately 300 acquisition offers to
purchase small and medium sized operations and companies and had closed on
approximately 200 of those offers.
72
424. In late 1988, Mr. Hill made an offer to the Executors for the Mumma quarrying
business in the amount of 43 million dollars; however, there were many contingencies and
CHR had to perform due diligence before any closing could occur.
425. In November 1988 Bob Mumma opposed the sale and wrote a letter to his mother
claiming he had the right of first refusal. (Exhibit T-121)
426. Following letters to the Executors and personal calls to Bob regarding Bob's position
that he has the first right to buy certain Muimna businesses, Mr. Hill revoked his company's
offer and advised the Estate to contact him once all litigation was finalized.
427. In 1993, after a final determination that Bob did not have the right of first refusal to
buy the quarrying operations [See facts in Equity 66 and Judge Sheeley's findings above],
Mr. Hill, then the CEO of Old Castle Materials, Inc., negotiated and closed on the
acquisition of the Mumma quarrying operations for approximately 35 million dollars.
428. Objector Bob Mumma had a minority interest in the company or companies
purchased by Old Castle Materials, Inc. from the Estate.
429. Mr. Hill, Mr. Hayes and their companies, after consultation with their attorneys
made the determination to "squeeze out" Bob's minority issue.
430. The "squeeze out" option, a legal mechanism which permits a corporation's majority
shareholders to sell the corporation over the objections of a minority shareholder, was
exercised, implemented and insisted by Mr. Hill, his company and CHR.
431. CHR is a public company and has legal teams which do their due diligence including
legal review of ownership interests, ownership of land and rights of all parties associated
with the transaction.
73
432. Following the closing of the purchase from the Estate and trust created thereunder,
which included the Estate's one half interest in Lebanon Rock, Mr. Hill then met with Bob
Mumma and purchased Bob's one half interest in Lebanon Rock and also leased some
additional ground from the Trustees.
433. Mr. Hill left CHR sometime in 2008.
434. During his tenure with CHR Mr. Hill completed approximately six billion dollars of
acquisitions and law firms hired and used for the acquisitions insured that all was done
properly prior to any closing.
435. Mr. Hill acknowledged that the Mumma deal generated more litigation than any
other acquisition in the history of his former company, but that his company was successful
in all the litigation with Bob.
436. Following the sale of the quarrying operations the trustees continued to manage the
trusts' assets.
437. If problems arose the trustees consulted with their attorneys, accountants and
managers prior to making decisions.
438. As Mrs. Mumma grew older, she relied more on Lisa Morgan who handled the day
to day operations, but Mrs. Mumma remained active in her duties as trustee.
439. In 1989 the Executrices and Trustees brought an action in Florida against Objector
Robert Mumma for allegedly transferring or attempting to transfer an Estate asset, a piece of
real estate, to himself.
440. Bob Mumma constructed a private residence on the transferred property.
441. The Executrices hired counsel in Florida to prosecute their claim.
74
442. Following years of litigations [details set forth above in findings relating to the
Florida action], Bob was found liable to the Estate and the legal owner of the property, Higli
Spec, Inc. in an amount equal to the value of the real property he had misappropriated,
together with the Estate's legal fees which totaled more than the value of the property.
443. Beginning a few months following the death of his father, Objector Robert M.
Mumma II has filed more than twenty (20) separate actions against the Estate of his father,
the executrices/trustees, his mother and sister, his other siblings and CHR.
444. After being named in these various actions in Dauphin County, Adams County,
Lebanon County, Perry County, Cumberland County, the Commonwealth Court, the United
States District Court for the Middle District of Pennsylvania, and other courts in
Pennsylvania and Florida, the decedent's estate and his executrices/trustees have answered
the claims, including this audit and expended attorneys' fees in excess of five million
dollars.
445. Barbara McK. Mumma passed away on July 17, 2010.
446. Subsequent to her mother's passing, Lisa Morgan, as surviving trustee, together with
Mr. Hadley, the estate's and trusts' attorneys, managers and advisors, reviewed matters
involving the estate and attempted to keep her brother and sisters informed.
447. From the outset of accepting the appointment as an executrice and trustee of her
father's estate, Lisa Morgan understood that her duties were to: 1. Review her father's will
and understand what it provided and to do what it said; 2. To determine what assets were
owned by the Estate; 3. To protect those assets; and 4. To act in the best interest of the
Estate.
75
448. Initially following her father's death, relations between the family members were
fine and all parties executed agreements and corporate documents needed to complete the
proposed plan of liquidation as proposed by the estate's attorneys, tax advisers and
accountants.
449. Lisa Morgan had as a child and up until she became involved in her father's estate
had idolized her older brother Robert M. Mumma II.
450. Following that decision in 1987 not to sell Bob the quarry operations relations
between Objector Robert Mumma and the Executrices became even more strained.
451. Following each litigation filed by Objector Bob Mumma relations within the family
continued to falter.
452. On August 1, 1996 Mrs. Morgan and Mrs. Mumma entered into an agreement to sell
their individual and the Estate's interest in Bobali, Corporation to Tiger Development, Inc.
toalling forty-seven (47) percent of the stock in consideration of 1.3 million dollars (Exhibit
T-161).
453. The agreement require the consent of Bob Mumma, Babs Muinina and Linda Roth
Mumma.
454. Linda Roth Mumma and Objector Babs Mumma were in agreement with the sale.
(Exhibit T-185).
455. Objector Bob Mumma would not agree to the sale claiming that he did not recognize
the estate's ownership in Bobali Corporation and the sale never occurred.
456. In 2000 Lisa Morgan sent notices to the Objectors and Linda Mumma regarding the
cash flow problems of Bobali Corporation and strongly suggested one or more pieces of real
estate be sold and also recommended a meeting to address concerns. (Exhibit T-175)
76
457. After the parties could not reach any agreement, discussions between the Estate and
Babs Mumma regarding Bab's purchase of the Bobali interests.
458. Babs Mumma declined to move forward as she did not desire to displease her brother
Bob Mumma and the affect it might have to his litigation against the Executrices and the
Estate. ( Exhibit T-135).
459. The Objectors were requested to pay their share of the real estate taxes on the
properties owned by Bobali Corporation and they refused.
460. Because of the lack of cash, and the failure of the Objectors to provide funds to pay
their portion of the real estate taxes, Mrs. Barbara McK. Mumma personally loaned money
to the corporation to pay real estate taxes and avoid tax sales.
461. Since the death of Barbara McK. Miunma, relations between Lisa Morgan with the
residuary beneficiaries, her brother and sisters have also been strained.
462. At times during the course of the administration of the Estate and the trusts, Lisa
Morgan has had times when she desired to cease being trustee; however, she has continued
in her appointed role.
463. During the administration of the Estate and the trusts established thereunder, the
executrices/trustees and their accountants and advisers have provided requested estate and
trust information and documents, if the information or documents were within their powers
of control to the Objectors and other beneficiaries.
464. Objector Robert Mumma had requested a review of certain corporate books and
records.
77
465. A meeting was scheduled at a Harrisburg law office and during the meeting,
Objector Robert Mumma grabbed a stack of the records, fled the building and had to be
chased down the public street by Lisa Morgan's husband.
466. Objector Robert Mumma was caught and the records were retrieved and returned to
the law firm.
467. Since that time, the executrices decided that Objector Robert Mumma would not be
permitted to have access to original documents, only copies and that he would be closely
supervised.
468. Lisa Morgan continues to review all bills including all attorney bills and she
continues to demand a lower fee or that partner's time be kept at a minimum and that
associates be used.
469. Lisa Morgan would at times utilize local Harrisburg area attorneys or negotiate
matters on behalf of the Estate and the trusts created thereunder to keep fees and costs at a
minimum.
470. Prior to the death of her father, Objector Barbara M. Mumma, had worked with her
father and was the Corporate Secretary for all the Mumma business.
471. Her father or his attorneys would prepare documents and she would sign them.
472. She did not maintain any copies of any records.
473. Following the death of her father, Objector Barbara Mumma moved to Colorado and
had little or nothing to do with the administration of the Estate and the trusts created
thereunder.
78
474. Objector Barbara Mumma returned to the central Pennsylvania area and after
receiving the 2003 accounts became more active in reviewing the Executrices/trustees
administration of her father's estate.
475. Objector Barbara Mumma requested the family hire a mediator to attempt to resolve
any personal issues between the family members.
476. The Estate and trusts were required to hire attorneys and incurred legal fees for a
myriad of matters, including: tax advice, corporate structuring, estate issues, trust issues,
preparation of estate, trust accounts, tax returns, litigation matters in various courts of
record.
477. The Estate presented detailed bills of work completed by any and all attorneys
associated with every legal matter handled by any law firm hired by the Estate or the Trusts ,
including the name of the person completing the work, the time and rate of the attorney or
paralegal associated with the matter.
478. Attorneys John O'Connor and Brady Green and Ivo Otto testified at length regarding
the need for specialized legal advice on certain legal and litigation matters, the
reasonableness of the attorney fees associated with the respective firms and for the matters
which had been assigned to those firms or attorneys.
79
Conclusions of Law
Those parties filing an objection to an account (with the exception of objections to fees or
commissions) bear the burden of proof. Estate of Geniviva, 450 Pa. Super 54, 675 A.2d 206 (1996).
Conclusions relating to the Obiections of Robert M. Mumma II
1. Whether the Executrices/Trustees have r� osslv undervalued the assets of the Estate
The Executrices and/or the Trustees of the Estate of Robert M. Mumma have properly
valued the assets of the Estate. Objector Robert M. Mumma II argued the values of certain
assets, most important the quarrying operations, had been under-valued by the
Executors/Trustees. The evidence upon which he based this position was that the quarrying
operation sold for more than three times the date of death more than five years following the
establishment of the estate. The values placed on the various estate assets were determined
by the estate's accountants and attorneys and approved by the executrices. The Internal
Revenue Service audited the estate's return and adjusted the figures upward, which were
accepted by the executrices. The estate's accountant Mr. Hadley was a credible witness.
Objector Robert M. Mumma II produced no competent evidence to overcome the valuations
determined by the Internal Revenue Service audit and accepted by the Executrices.
80
2. Whether the Executrices/Trustees have disproportionately allocated the assets of the Estate
into the Marital Trust.
The Seventh Article of Mr. Mumma's Last Will and Testament provides:
"SEVENTH: If my wife, BARBARA McK. MUMMA, survives me, I give and bequeath to
the trustees hereinafter named, an amount equal to fifty (50%) percent of my total gross estate as
finally determined for Federal Estate TaY Purposes, taking into account and including therein, for
computation purposes, my undivided interest in the value of all my interests in property which pass
or have passed to my wife under other provisions of this Will or otherwise than under this Will, but
only to the extent that such interests are, for the purpose of the Federal Estate Tax, included in
determining my gross estate and allowed as a marital deduction. In funding this Trust, I authorize
my Executors to use cash or other property or a combination thereof, and I direct that any such other
property so used shall, for the purpose of funding the trust, be valued as of the date of its
distribution. In computing the amount of this bequest, I direct that the values and amounts as finally
determined for Federal Estate Tax purposes shall control.
Notwithstanding anything to the contrary contained in this Will, I direct that (a) the Trust
shall not be funded with any property or the proceeds of any property which (1) would not qualify
for the marital deduction allowable in determining the Federal Estate Tax on my Estate or (2) is
includible in my gross estate for Federal Estate Tax purposes and also subject by reason of my death
to any inheritance tax, transfer tax, estate tax or other death duty in any foreign country or political
subdivision thereof, except that the property described in this clause may be allocated to the Trust to
the extent that other property of my Estate, which does quality for the marital deduction, is not
sufficient to fund the Trust in full; (b) that the trustee shall not retain in the Trust beyond a
reasonable time, any unproductive property as an investment to be held in the Trust; and (c) that
none of the powers granted to my Executors and trustees by this Will shall be exercised in such
manner as to disqualify the Trust or any part thereof from the marital deduction allowable to
determine the Federal Estate Tax on my Estate, except as may be hereinafter provided.
I direct that the trustees hold said amount, In Trust Nevertheless,
to manage, invest and reinvest the same, to collect the income and to pay over or apply the net
income to, or for, the benefit of my wife,
BARBARA McK. MUMMA, at least yearly. My individual trustee, other than my wife, solely and
within her discretion alone, is authorized to distribute to and for the benefit of my wife, BARBARA
McK. MUMMA, in addition to the income hereinabove specified, so much of the principal of this
Trust as she may deem necessary or advisable to reasonably provide for her support, health,
welfare, maintenance or comfort, to maintain for her a standard of living which she has during our
married life enjoyed, taking into account, however, my wife's income from other sources including,
but not limited to, all income from trusts, estates and business interests, as well as available
principal assets. Notwithstanding the limited invasion right of trust principal by my one trustee for
the use and benefit of my wife, which requires a deficiency in other available funds, I give unto my
wife a right, which shall not be cumulative, to request annually in writing a distribution to her by
the trustees from the principal of this Trust of up to Five Thousand ($5000.00) Dollars or up to five
(5%) percent of the then principal of this Trust, whichever shall be the greater, and the trustees,
81
upon receipt of such writing, shall make payment thereof to my wife during the calendar year in
which said writing was received. The annual request by my wife is not mandatory, but shall be
made, if desired, only by herself individually.
I hereby authorize my Executors, in their sole discretion, to elect that any part or all of any
amount passing under this article of my Last Will and Testament, to my wife, BARBARA McK.
MUMMA, in the event she survives me, be treated as qualifying terminal interest property for the
purpose of qualifying for the marital deduction allowable in determining the Federal Estate Tax on
my Estate. Without limiting the discretion contained in this foregoing sentence, it is my
exprectation that my Executor will make said election with respect to all of any such amount, unless
the timing of my spouse's death and mine and the computation of the combined death duties of our
two (2) estates renders such an election inappropriate.
Upon the death of my said wife, the principal of this Trust, as it is then constituted, shall be
paid over by my surviving trustee unto my children, ROBERT M. MUMMA, II, BARBARA M.
McCLURE, LINDA M. ROTH and LISA M. MUMMA, free of this Trust, share and share alike,
per stirpes and not per capita."
"When interpreting the provisions of a trust, "the polestar in every trust is the settlor's intent and that
intent must prevail. The rules for determining a settlor's intent are the same for a trust as for a will.
The settlor's intent must be ascertained from a consideration of(a) all the language contained in the
four corners of the instrument and (b)the distribution scheme and(c)the circumstances surrounding
the testator or settlor at the time the will was made or the trust was created and (d) "the existing
facts."
Technical rules or canons of construction should be employed only if the language of the
instrument is ambiguous or conflicting or the intent of the settlor or testator is for any reason
uncertain. When provisions of a trust instrument conflict, "they should be read in such a fashion as
to give effect to both and/or fulfill the intent of the settlor."
In Re Stella Scheidmantel , 2005 Pa. Super. 6; 868 A.2d 464, 488 (2005), citing In re Trust of Hirt,
2003 Pa. Super 287, 832 A.2d 438, 448 (2003) (other cites omitted).
The Pennsylvania Supreme Court has also given direction on construction of wills and the proper
method to interpret the intent of the testator:
"The primary consideration in the construction and interpretation of wills is that the
intent of the testator be followed . . . Absent ambiguity, that intent is to be determined
from "the four corners of his will," . . . The duty of the court is not to determine what
the testator might or should have said in light of subsequent events but, rather, the
82
actual meaning of the words used . . . Only if the language employed by the testator is
ambiguous should the court resort to canons of construction. (citations omitted)
Estate of Blough, 474 Pa. 177, 185, 378 A.2d 276, 280 (1977).
It is quite clear from the wording of Mr. Mumma's Last Will and Testament that the
primary purpose for the trusts was to benefit his wife, Barbara McK. Mumma, during her lifetime.
The Seventh section reads in part : "If my wife, BARBARA McK. MUMMA, survives me, I give
and bequeath to the trustees hereinafter named, an amount equal to fifty (50%) percent of my total
gross estate ... . I direct that the trustees hold said amount, In Trust Nevertheless, to manage, invest
and reinvest the same, to collect the income and to pay over or apply the net income to, or for, the
benefit of my wife, BARBARA McK. MUMMA."
One thing I have gleaned through the many days of hearing over these past years is the Late Mr.
Mumma was a very sawy business man who loved his wife and children. He knew that his business
interests were many, that he had vast assets and a great amount of debt. He knew the administration
of his Estate would be a complex matter. Mr. Mumma established a very detailed plan for the
administration and distribution of his estate with the advice of several noted and respected estate
attorneys and accountants. He knew and understood that which he desired and all provisions of his
ten page Last Will and Testament and his three page First Codicil have meaning to insure his wife
was protected and provided for during her lifetime, but who he desired to control and administer his
Estate.
No expert is needed to show Mr. Mumma wanted that the maximum benefit be given to his
wife. No expert is needed to review the words of the document.
83
The first question is what is the "amount equal to fifty (50%)percent of my total gross estate
as finally determined for Federal Estate Tax Purposes." Answer found in Exhibit A-3: $17,296,337
multiplied by 0.50 equals $8,648,168.50.
The second question is need to ask is do I add any additional amount, need I subtract any
amount, or need I do nothing to the amount? Answer: I must be "taking into account and including
therein, for computation purposes, my undivided interest in the value of all my interests in property
which pass or have passed to my wife under other provisions of this Will or otherwise than under
this Will, but only to the extent that such interests are, for the purpose of the Federal Estate Tax,
included in determining my gross estate and allowed as a marital deduction." Prior to 1981 the
marital deduction was limited; however following the 1981 amendments to the Internal Revenue
Code, the marital deduction became unlimited. Prior to this time drafters of Wills containing typical
A, B trusts read "fifty percent of my gross estate, excluding therefrom the value of all property
passing to my spouse under other Will provisions or outside my Will, ... ." The undersigned vivdly
recalls the changes to the t� code and the recommended proposed changes to take advantage of the
amendment. The language recommended was to delete the words EXCLUDING THEREFROM
and replace them with "taking into account and including therein." Therefore under Mr. Mumma's
Will property which his wife received outside the will is to be considered part and parcel of the
$8,648,168.50. Mr. Mumma did not desire that this amount be reduced at all.
The allocation of the assets between the marital and residuary trust were divided in as equal
and amount of value as practicable. The estate had a variety of assets in many forms including
personal, real and intangible property. The executrices consulted with their attorneys and
accountants and reviewed differing scenarios before making an informed decision in the division
and placement of the various assets into the two trusts. Mr. Hadley was the most credible witness
84
regarding values. He testified that he adjusted the values of all the assets prior to the distribution
being made by the Executrices. The division was reasonable given the complexity of the estate and
its various assets. The parties presented the expert testimony of various attorneys who gave their
opinions.
The question is did the executrices take custody of the estate's assets and administer those assets
and preserve and protect the assets for the ultimate distribution to the proper parties. Also did the
executrices exercise to the degree of judgment, skill and care and diligence that a reasonably
prudent person would exercise in the management of his or her own affairs (see, Estate of
Kurkowski, 487 Pa. 295, 400 A.2d 357 (1979)). The Objector has not met his burden of proving
they did something imprudent or improper. In retrospect it is easy to state a party might have
completed a task in a differing manner. Here the executrices sought the advice and counsel of
numerous professionals. Mr. Hadley, the individual with the most independent knowledge and the
person most familiar with the businesses worked to calculate values. Many scenarios were reviewed
and a determination of the distribution of the assets between the trusts was made based on
information available at the time. The assets the Executrices placed in each trust were of
approximately equal value at the time the transfers to the trusts were made. Their actions were
proper under the terms of the decedent's last Will and Testament and were properly administered in
accordance with their duties as Executrices.
3. Whether the Executrices/Trustees have incurred unnecessar ��ca ip tal �ains taxes, fiduciarX
income t�es, or inheritance taxes.
85
The executrices/trustees have incurred no unnecessary taxes, capital gains, fiduciary income tax,
estate tax or inheritance tax. Objector Robert M. Mumma II produced no credible evidence to
support this objection. The undersigned notes that the executrices sought and obtained detailed t�
advice from numerous attorneys and accountants. The method they used to take advantage of the
changing tax laws in 1986-87 coupled with the decision of Mrs. Barbara McK. Mumma to defer the
payment of the estate taxes until the date of her passing, saved the estate a significant amount of
taxes.
4. Whether the Executrix Barbara McK. Mumma is entitled to selectivelv withdraw individual
assets / assets-in-kind from the Marital Trust as onnosed to receiving the desi�nated dollar
amount or ern centage.
The trust established by the Last Will and Testament of Robert M. Mumma granted unto his
widow the right to receive annually five (5) percent of the marital trust. Therefore, the Executrice
Barbara McK. Mumma, as the widow and beneficiary of her late husband's will and the trust
established thereunder was entitled to take her annual five percent in cash or in kind in lieu of cash.
Mrs. Mi.unma consulted with her attorneys, accountants and advisors, including the co-executrice
and co-trustee and determined it was simpler and more advantageous to receive the five percent in
kind in lieu of cash. Objector Robert M. Mumma II presented no legal authority to support his
objection. The five (5)percent withdraw in kind was proper.
5. Whether the Executrices/Trustees failed to �roperlv account for the stock distributions to
Barbara McK. Mumma.
The executrices/trustees properly accounted for any and all stock distributions to Barbara McK.
Mumma. The accountant for the estate testified that upon being notified of Mrs. Mumma desire to
86
take her five (5) percent, he would calculate the then stock awned by the estate and transfer an
amount equal ta five (5)percent to Mrs. Miimma.
6. Whether the ExecutriceslTrustees failed ta�roperly account far ancUar distribute estate
incame to Barbara McK. Mumma.
The executricesttrustees praperly accounted for ati distributians af income to Barbara McK.
Mumma as the beneficiary af the income from both of the trusts. All incame fram the tzusts was to
inure to the benefit of the decedent's widow. The undersigned nates that in her capacity as
Executrice and trustee, Mrs. Mumma refused to accept or take any commissions far her services
even though she was entitled to do so. 4bjector Robert M. Mumma II produced na evidence to
suppart this abjectian.
7. Whether the allocations of Decedent's corporate stoek to the Maritat Trust violated ri ng ts of
first refusal accruing ta the undersigned.
The issue raised by this objection had previously been previousiy determined by this Honorabie
Caurt in Equity 66 (see abave} and the determination that C}bjector Robert M. Mumma II had no
right of f rst refusal affirmed foltowing appeais.
This conclusian of law is the law of this case and was a final determinatian. (See Mumma v.
Mumma, 433 Pa. Super 660, 639 A.2d 846 (1993), allocatar denied 539 Pa. 679, 652 A.2d 1324
(I 994)
8. Whether the Executrices/Tnzstees failed to allncate ca�ital gains arid increases in value of
estate assets durin�the administratian ta the Residuary Trust.
Objector Robert M. Murnma II produced na evidence ta suppart any improper action on the part af
the Executricesltrustees relating to allocations of capital gains or valuatian of assets of the residuary
trust.
8?
9. Whether the Executrices/Trustees failure to significantiv fund the Residuary Trust until
2002 while the Marital Trust was funded in 1987. violated the intent of the Decedent's Will.
Objector Robert M. Mumma II failed to produce any evidence that the trusts were not properly
funded. When the marital trust was funded, the remaining assets became the corpus of the residuary
trust. Executrices did not violate the intent of decedent's last will and testament.
10. Whether the Executrices/Trustees improperlv accounted for the Fulton Bank propertv in
Lemoyne, Penns 1�.
Objector Robert M. Mumma II failed to produce any evidence that the executrices/trustees
improperly accounted for the Fulton Bank property in Leymoyne, Pennsylvania. The
executrices/trustees properly accounted for the Fulton Bank property located in Lemoyne,
Cumberland County, PA. The accountant for the estate and trusts, Mr. Hadley together with the
executrices, Barbara McK. Mumma and Lisa Morgan, competently testified as to the value of
this property, the various appraisals received and reviewed prior to accounting for the same.
Barbara McK. Mumma was a credible witness. Lisa Morgan was a credible witness.
11. Whether the Executrices/Trustees improperiv accounted far the Leadville, Colorado
r���X.
Objector Robert M. Mumma II failed to produce any evidence that the executrices/trustees
improperly accounted for the Leadville, Colorado property. The accountant for the estate and trusts,
Mr. Hadley together with the executrices, Barbara McK. Mumma and Lisa Morgan, competently
testified as to the value of this property, the various appraisals received and reviewed prior to
accounting for the same.
12. Whether the Executrices/Trustees improperlv accounted for the Bender propertv in Mount
Holly Sprin�s, Pennsvlvania.
88
Objector Robert M. Mumma II failed to produce any evidence that the executrices/trustees
improperly accounted for the Bender property. The executrices properly accounted for the Bender
property. The accountant for the estate and trusts, Mr. Hadley together with the executrices, Barbara
McK. Mumma and Lisa Morgan, competently testified as to the value of this property, the various
appraisals received and applicable values reviewed prior to accounting for the same. The property
was valued at its purchase value as it had been purchased within four months of decedent's passing.
13. Whether the Executrices/Trustees improperly accounted for the Grove property in Mount
Hollv Sprin�s Penns. l�ania.
Objector Robert M. Mumma II failed to produce any evidence that the executrices/trustees
improperly accounted for the Grove property. The executrices properly accounted for the Grove
property. The accountant for the estate and trusts, Mr. Hadley together with the executrices, Barbara
McK. Mumma and Lisa Morgan, competently testified as to the value of this property, the various
appraisals received and applicable values reviewed prior to accounting for the same.
14. Whether the Executrices/Trustees undertook unilateral and unauthorized actions on behalf of
corporations and corporate enterprises and otherwise failed to comply with applicable state
law and regulations.
Objector Robert M. Mumma II produced no competent evidence to support this objection. The
objector attempted to point to a single instance during the course of the twenty-five year plus
administration of a complex estate. It involved the handling of an insurance fire claim. The
undersigned notes that the claim had been handled by the insurance carrier. The carrier had
proposed an amicable settlement at no additional cost to the estate and the trusts created thereunder
or to any beneficiary or other party; however, Objectar Robert M. Mumma II refused to sign the
release. Signing the release would have ended the matter. Because the release was not signed,
89
protracted litigation and appeals followed. As a result of Objector Bob Mumma's actions greater
time, effort and money were expended. In an appeal of this matter, a statement made in a Superior
Court opinion, that Lisa Morgan in her capacity as manager of the property may have acted in an
inappropriate manner in signing certain documents relating to a commercial lease, does not rise to
the level of malfeasance or misfeasance as required by law. All acts by the executrices/trustees were
performed in compliance with their duties and powers as set forth in the decedent's Last Will and
Testament and within the bounds of their powers as set forth in the law.
15. Whether the Executrices/Trustees have not recognized or have concealed shareholder
a�reements that govern the ownership of corporate stock.
Objector Robert M. Mumma II continued to argue this position but presented no evidence to
support his objection. His argument that there such were agreements is fallacious. His position is
they did formerly exist, but he had no copies of them but remembers signing them. He also argued
the executors, the trustees, the attorneys, the accountants and anyone who may have had a copy
destroyed the originals and the copies. He presented no person who remembers seeing any such
document, presented no testimony other than his own of the agreements existence. Many of the
witnesses he called on his behalf did not give testimony support his argument. Objector would state
that the witnesses were lying and that it was a cover up of a plot to steal his inheritance. Objector
Robert M. Mumma II was not a credible witness. Therefore having no competent evidence to
support his claim, this object must fail.
16. Whether the Executrices/Trustees' actions and omissions with respect to shareholder
a�reements would have precluded the estate from acquiring stock in multiple corporations,
90
including but not limited to, Pennsylvania Supplv Companv, Penns�pply Inc., Bobali
Corp. Lebanon Rock, Inc., High-Spec., Inc.,Nine-Nintv-Nine, Inc., and/or 999, Inc.
Objector Robert M. Mumma II failed to produce any competent evidence that the
executrices/trustees actions and omissions with respect to shareholder agreements would have
precluded the estate from acquiring stock in multiple corporations, including, but not limited to,
Pennsylvania Supply Company, Pennsy Supply Inc., Bobali Corp., Lebanon Rock, Inc., High-Spec.,
Inc., Nine-Ninty-Nine, Inc., and/or 999, Inc. The executrices'/trustees action with regard to any
activity with these entities was proper.
17. Whether the Executrices/Trustees properly controlled the Decedent's shares in High-Spec,
Inc. Pennsvlvania Su�ply Company, Penns�Su�plv Inc., Bobali Corp., Lebanon Rock, Inc.,
Nine-Ninty-Nine, Inc., and/or 999, Inc.
Objector Robert M. Mumma II failed to produce any competent evidence that the
executrices/trustees actions regarding the handling of decedent's shares in these various
corporations was anything but proper.
18. Whether the Executrices/Trustees violated the Share Restrictive A�reement applicable to
High Spec Inc. when thev refused to offer to sell the Decedent's shares in Hi�h-Spec, Inc.
to the remainin� shareholder at book value.
Objector Robert M. Mumma II produced no competent evidence that there was a restrictive
agreement and that the estate was required to sell its interest to any party at book value. It is noted
that the Florida Court determined Objector Robert Mumma II misappropriated assets from High
Spec to himself and also awarded the estate its attorney fees. The evidence produced during the
course of the hearings show that executrices/trustees actions regarding the handling of
estate's/trusts' interest in High Spec, Inc. was anything but proper.
91
19. Whether the Executrices/Trustees violated Section 3 of the Share Restrictive A�reement
applicable to Hi h�-S�ec Inc. when it transferred the Decedent's shares in Hi�h-Spec, Inc. to
the Residuary Trust in January 2002 (See e� nerall ��Objection#14 filed Mav 27, 2004).
Objector Robert M. Mumina II produced no competent evidence to show that
executrices/trustees actions regarding the handling of estate's/trusts' interest in High Spec, Inc. was
anything but proper.
20. Whether the Executrices/Trustees undervalued the stock of Pennsylvania Suppl�Compan�
Penns�pplv Inc. Bobali Corp., Lebanon Rock, Inc., High-Spec., Inc., Nine-Nintv-Nine,
Inc., and/or 999, Inc.
Objector Robert M. Mum.tna II produced no competent evidence to show that
executrices/trustees undervalued any stocks in which the estate had an interest. All actions
regarding the handling of estate's/trusts' interest in the aforementioned corporations and the values
placed on these various estate assets were determined by the estate's accountants and attorneys and
approved by the executrics. The Internal Revenue Service audited the estate's return and adjusted
the figures upward, which were accepted by the executrices. Later and prior to dividing the estate's
assets into the trusts, Mr. Hadley reviewed and adjusted values where appropriate.
21. Whether the Executrices/Trustees overstated the value of the Decedent's stock.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees over stated the value of any stocks. The values placed on the various estate
assets were determined by the estate's accountants and attorneys and approved by the executors.
92
The Internal Revenue Service audited the estate's return and adjusted the figures upward, which
were accepted by the executrices.
22. Whether the Executrices/Trustees have enga�ed in corporate transactions which conveyed
assets out of Pennsvlvania Supply Company, Kim Companv, Pennsv Supply Inc., Bobali
Corp. Middle Park Inc., Nine-Ninty-Nine, Inc., and/or 999, Inc., and other unknown
transactions.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees improperly engaged in corporate transactions involving any corporations in
which the estate/trusts had an interest or that any merger harmed or lowered any values of the trusts
or Estate.
23. Whether the Executrices/Trustees fraudulentiv terminated the corporate existence of Middle
Park, Inc. via mer�er with another corporate entitv.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees fraudulently terminated the corporate existence of Middle Park, Inc. via merger
with another corporate entity.
To the contrary, Objector Robert M. Mumma II signed the initial merger proposal of Middle
Park, Inc. into Bobali Corporation as director and then chose not to attend the formal shareholders
meeting formally approving the merger. He returned the Notice of the Meeting and marked it "out
93
of town." The merger was approved and the plan of Merger filed with the appropriate Colorado
authorities.
24. Whether the Executrices/Trustees knowin.glv concealed corporate records that were known
to be altered in their effort to conceal the identity of true stock ownership.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees knowingly concealed corporate records that were known to be altered in their
effort to conceal the identity of true stock ownership.
Objector Robert M. Mumma, II continued to claim the estate concealed signed agreements
which would have granted him certain rights. He also denied signing agreements which bore his
signature and which had been previously determined to have been knowingly executed by him (See
Equity 66, supra.). He argued that the MRA I and MRA II agreements provided him with rights
which had been previously decided and which were the subject of an interim report. Also at the
hearings he attempted to re-litigate the issue of whether there were two separate and distinct Pennsy
Supply, Inc. One company having a comma and the other not having a comma. He did this in spite
of having presented the same to His Honor in a former action and having a final determination of
the issue and also a second mandamus action in the Commonwealth Court on the same issue which
was summarily dismissed. He presented a proposed expert who attempted to testify that all the
courts were wrong and that Objector Mr. Mumma was correct and that two separate corporations
existed.
94
Objector Robert M. Mumma II produced an original document filed by the attorneys for the
estate with the Commonwealth's Bureau of Corporations. On the face of the document appeared
two different time stamps and also two different names for the Secretary of the Commonwealth.
Objector Robert Mumma argued that this showed the attorneys went and changed the document or
that this somehow showed they were altering stock ownership. Other than producing the document
and making the argument, Objector offered no other credible or relevant evidence. Practicing
attorneys do make errors in documents and what appears to have occurred is that the document was
filed by the estate's Philadelphia law firm (must likely by mail as it was dated 1987). A clerk
received it and time stamped it and sent it to another clerk. The document was reviewed had a
signature stamped on it and went to the recording division, but someone notice an error and the
form was returned to the estate's attorney (again most probably through the postal service). What
the problem was has not been shown, nor would the undersigned ever be able to know. Was it a
block was not checked, an address not typed, a signature not properly placed on the document?
Regardless, the form was returned to be corrected. The law firm received the time-stamped and
signature stamped form in the mail, presumably corrected the error and returned the corrected
document to Harrisburg. In the interim the Secretary of the Commonwealth resigned his position
and a new Secretary assumed that office. (The undersigned takes administrative notice that this did
in fact occur). The corrected document was received by a clerk in the Corporation Bureau and upon
opening the envelope containing the corrected form with the old time stamp and stamped signature,
had a second time stamp placed on the document. The new document was sent to another clerk or
supervisor for review. Once the error was determined to be corrected, a new signature stamp was
placed on the document, the document was recorded, a copy placed on micro film and the original
document with the two time stamps and two stamped signatures returned to the estate's law firm in
95
Philadelphia. The document in and of itself shows no concealment or attempt to doctor corporate
records on the part of the executrices/trustee.
The undersigned notes that the Objector had requested and been given access of the corporate
records at a Harrisburg law office. The credible testimony showed that the Objector took those
records, ran out of the law office and attempted to flee with the corporate records. The co-
executrice's husband, then a Harrisburg attorney, chased the Objector down on the public street,
stopped him and retrieved the corporate records. If any records have disappeared, the only
evidence received to support any disappearance was the former conduct of the Objector Robert M.
Mumma II.
25. Whether the Executrices/Trustees concealed their knowledge of the Decedent's activities
prior to A�ril 12, 1986 which became known to them and their accounts, and which they
further concealed via the Stradley Ronin law firm, without an�planation of same or
without otherwise disclosing same to the shareholders.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees or any attorney or law firm hired by them concealed any knowledge of
decedent's activities prior to his death.
26. Whether the Executrices/Trustees fraudulentl�ppropriated life insurance proceeds
ri�htfullv owned bv Pennsylvania Supplv Companv and Pennsy Supplv.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees fraudulently misappropriated any life insurance proceeds .
96
27. Whether the Executrices/Trustees individual� assumed corporate desi�nations which were
not set forth in an ��rporate by-laws.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees assumed any corporate designation to which they were not authorized or
permitted.
28. Whether the Executrices/Trustees individuall�assumed corporate positions to which they
were not elected and which were not otherwise authorized.
Objector Robert M. Mumma II produced no competent evidence to show that executrices/trustees
ever assumed any positions corporate or otherwise to which they were not authorized.
29. Whether the Executrices/Trustees have awarded themselves salaries and health insurance
benefits that were never authorized.
Objector Robert M. Muimna II produced no competent evidence to show that
executrices/trustees awarded themselves salaries or health care benefits to which they were not
authorized. As previously concluded, Barbara McK. Mumma as executrice and trustee
personally refused any commissions for serving in such capacity. Lisa Morgan did receive
commissions and fees which were reasonable based on the time and effort involved in the
management of the estate and the trusts created thereunder. Although Mrs. Mumma was entitled
to all the income from both trusts, she demanded and directed that all fees and commissions
97
paid to her co-executrice and co-trustee be withdrawn from the trust's income. Mrs. Mumma
testified she did this so that her other children's share of the trust would not be diminished.
30. Whether the Executrices/Trustees have failed to account for or document significant chan�es
in major investment holdin�s of the Estate.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees failed to account for or document changes in major investment holdings
of the estate. The executrices/trustees employed competent attorneys, accountants and others
to document and account for all matters relating to the estate and trusts created thereunder.
31. Whether the Executrices/Trustees en�a�ed in and/or have continued to en�a�e in a
svstematic pattern of self-dealing and personal enhancement.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees have continued to engage in a systematic pattern of self-dealing and
personal enhancement. Although this was a major theme of Objector throughout the
hearings, Objectar Robert M. Mumma II could not provide any evidence to support his
argument. On numerous occasions he would claim to have evidence of the same but none
was provided in spite of numerous requests from the undersigned.
32. Whether withdrawals from the Marital Trust have substantiallv diminished the interests of
the beneficiaries/remaindermen while rg eatly enhancin� the interests of the
Executrices/Trustees.
The decedent's last will and testament provided that Mr. Mumma's beloved widow, Mrs.
Barbara McK. Mumma, would receive all the income from both the marital trust and the
residuary trust. In addition the decedent's beloved widow was entitled to an annual five (5)
98
percent "scoop out" of the marital trust. Following the funding of the trusts, on an annual
basis, the descendant's widow exercised this right and received five (5) percent of the then
value of the marital trust, in kind in lieu of cash. In respect to the payments to Mrs. Mumma
as the widow of decedent, the executrices/trustees acted appropriately and in accordance
with the clear language of the last will and testament and the duties imposed upon them by
the testator's will and the law. Objector Robert M. Mumma II argues that because Mrs.
Mumma was also the Executrice and trustee that her receipt of funds or estate assets as
widow was somehow improper. He further argued that because his mother favored his sister,
Lisa Morgan, in her personal estate over him and his other siblings supports his theory.
What Barbara McK. Mumma did with her estate is of no matter to the audit of these
accounts. Objector is attempting to intertwine a matter better suited for challenges to his
mother's estate. We here are concerned not with Mrs. Mumma's Last Will and Testament,
but the estate and trusts established under the Last Will and Testament of Robert M.
Mumma.
33. Whether the Executrices/Trustees properlv selected and retained Estate counsel.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees improperly selected and retained Estate counsel. The executrices
retained Mr. Mumma's former estate planning attorneys. They also retained and maintained
a relationship with Mr. Mumma's former accountants and financial advisors.
From the beginning this estate was problematic: huge debt, anxious creditors,
worried employees, scrambling vendors, changing tax landscape together with executrices
who had little or no business experience. The executrices needed help and they sought out
the help of experts. The initial expenses for counsel fees given the circumstances was
99
proper. The executrices have presented ample testimony to support the need for proper
counseL They selected attorneys whose skill and standing in the legal community is
unquestioned. The amount of work performed for the return ultimately received when the
estate's quarrying operation was sold is proof positive. Two inexperienced persons took a
faltering quarrying operation and within five years sold an asset everyone in 1987 believed
to be worth between 5-7 million dollars, to a group of Irish investors for 35 million dollars.
The estate was called upon to defend or initiate numerous actions and appeals involving
Objector Robert M. Mumma II. It appears that the estate was successful in all its actions
with Objector Mumma. At first blush, the undersigned believed it may have been imprudent
to initiate the Florida action. That action resulted in a find that Objector Bob Mumma had
misappropriate real estate owned in part by the estate to himself, but the action and the
appeals had cost the estate more money than the value of the property. The undersigned was
unaware that prevailing parties are awarded attorney fees and all the attorney fees paid
together with interest is part of the award. The trustee Lisa Morgan testified that the trust
will be attempting to collect this debt from Objector Mumma, which is not only its right, but
a duty.
Attorneys employed by an Estate or Trust are entitled to reasonable and just
compensation for the services provided to the estate or trust. See U.S. National Ba.nk in
Johnston v. Campbell, 354 Pa. 583. 47 A.2d 697 (1946). The Pennsylvania Supreme Court
has set forth a number of factors to consider in making a determination of whether the fees
are reasonable and just and they include:
a. amount of work performed,
b. character of services rendered,
c. difficulty of problems involved,
100
d. importance of the litigation,
e. amount of money or value of property in question,
f. degree of responsibility incurred,
g. whether the fund was created.by the attorney,
h. professional skill and standing of the attorney in his profession,
i. results he was able to obtain,
k. ability of the client to pay a reasonable fee for the services rendered.
See, Estate of LaRocca, 431 Pa. 542, 246 A.2d 337 (1968).
Where an estate requires additional legal services due to unusual complications and
circumstances, such fees are appropriate. See, McClatchy v. Mecke, 492 Pa. 352, 424 A.2d 1227
(1981). The complications facing the executrices/trustees in this matter were many including the
constant legal actions by Objector Bob Mumma.
Having reviewed the statements and invoices for legal fees presented and having heard the
testimony of the attorney's involved or their firm's representatives who had familiarity with the fees
and matters associated with each matter; having heard the testimony of the parties; having
evaluated the difficultly and necessity of each legal matter, and the particular attorney or firm
selected to perform the task; together with the individual litigation, I conclude after considering the
factors established by the Pennsylvania Supreme Court that all attorney fees and costs associated
with the administration of this estate and the trusts were reasonable.
101
34. Whether the Executrices/Trustees are pavin� duplicative, excessive, or unjustified counsel
fees to Estate counsel.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees are paying duplicative, excessive or unjustified counsel fees. The estate bears
the burden to show that their counsel fees were reasonable and proper. And as discussed above, the
estate produced every detailed invoice for attorney fees and costs associated with the administration
of the Estate. No duplicity was shown at the hearings befare the undersigned. The undersigned
notes that a vast majority of the fees and costs have been associated with Objector Robert M.
Mumma II's numerous challenges and lawsuits. Of all the matters initiated by Objector Robert M.
Mumma he did not present any matter in which he was successful.
35. Whether the Executrices/Trustees are paving excessive or uniustified accountant fees to the
Estate accountant(s).
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees are paying duplicative, excessive or unjustified accounting fees. The estate and
trusts produced every detailed invoice for accounting fees and costs associated with the
administration of the Estate and the trusts. The Estate also presented competent testimony from Mr.
Hadley and from the executrices/trustees as to the amounts charged and the necessity of the services
rendered. No evidence was presented otherwise, therefore this Objection must fail.
102
36. Whether the Executrices/Trustees have perpetuated and enga�ed in and continue to
perpetuate and enga�e in an enterprise and/or scheme of fraudulent conveyances of estate
assets.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees have perpetuated and engaged in a scheme of fraudulent conveyances of
estate assets. The decedent's last will and testament provided that Mr. Mumma's beloved
widow, Mrs. Barbara McK. Mumma, would receive all the income from both the marital trust
and the residuary trust. In addition the decedent's beloved widow was entitled to an annual five
(5) percent "scoop out" of the marital trust. Following the funding of the trusts, on an annual
basis,the descendant's widow exercised this right and received five (5) percent of the then value
of the marital trust, in kind in lieu of cash. In respect to the payments to Mrs. Mumina as the
widow of decedent, the executrices/trustees acted appropriately and in accordance with the clear
language of the last will and testament and the duties imposed upon them by the testator's will
and the law. Objector Robert M. Mumma II argues that because Mrs. Mumma was also the
Executrice and trustee that her receipt of funds or estate assets as widow was somehow
improper. He further argued that because his mother may have favored his sister in her personal
estate over him and his other siblings this is evidence of some alleged subterfuge on the part of
the executrices/trustees. How Mrs. Mumma handled her personal assets and to whom she may
have given her assets is of no concern to the review of these accounts. Objector is attempting to
intertwine a matter better suited for challenges to his mother's estate. We here are concerned not
with Mrs. Mumma's Last Will and Testament, but the estate and trusts established under the
Last Will and Testament of Robert M. Mumma.
103
37. Whether the Executrices/Trustees have failed to account for or document the contents of all
safe deposit boxes owned individually or jointl�by the Decedent.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees failed to account for or document the contents of all safety deposit boxes.
Objector argues that these alleged boxes may have contained some legal documentation which
would support his many theories. As the undersigned stated to the Objector during the hearings,
if there were signed legal documents giving the Objector priorities or rights, one would think he
would at least have a photocopy or a signed copy of the document or some other evidence of the
same. Although he promised evidence of the same, none was ever produced.
The evidence produced showed there were two boxes. The first box was jointly owned with
Objector Bob Mumma and located at the Dauphin Deposit Bank in Harrisburg. The second box
was jointly owned with Mrs. Mumma and located at the Fulton Bank. Both boxes were
inventoried. The first box was inventoried by the Department of Revenue which noted it
contained no items of value. This box was opened by Bank personnel in the presence of Mrs.
Mumma during a will search. No will was found and the box closed to be later inventoried. The
second box was inventoried by Mr. Hadley and his inventory was filed.
The undersigned notes that Objector Bob Mumma filed an action against Dauphin
Deposit Bank relative to their conducting a will search of the box following his father's death.
The Dauphin County Court did not rule in Objector Bob Mumma's favor.
104
38. Whether the Executrices/Trustees have failed to account for or document the value of all
bank accounts owned individually or jointiv bv the Decedent.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees failed to account for document the value of bank accounts owned individually
or jointly by the Decedent.
39. Whether the Executrices/Trustees have failed to account for or document the Decedent's
documents, contracts, and other records throughout the administration of the Estate,
including the failure to account for their stora�e and record-keeping in Pennsvlvania,
Florida, Europe, and elsewhere.
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees failed to account for the decedent's records and papers. In addition to the
accounts provided in this matter, the executrices and accountants have provided Objector Robert
Mumma with thousands of documents. He argued that he was entitled to review and receive a copy
of the hundreds of thousands of documents of all the businesses relating to any of his father's
business from the all times prior to his father's death up and through the present. Objector Robert
Mumma also argued that he was entitled to all personal communications between his mother and
father. There was evidence that Mrs. Mumma prior to her passing was storing some family
paperwork in Florida. Objector Robert M. Muimna II presented no legal authority nor any
competent evidence to support this objection.
105
40. Whether the Executrices/Trustees refused to entertain the hi�hest and best offers of purchase
of the Decedent's property and/or enterprises thereb fy ailin� to maximize the value of the
Estate
Objector Robert M. Mumma II produced no competent evidence to show that
executrices/trustees failed to entertain the highest and best offers to purchase any of the Estate's
assets.
To the contrary, the previous decisions of this Honorable Court and the evidence presented
by Mr. Mumma through his many witnesses evidenced that the executrices/trustees had
maximized the value of the estate. At the time of his death Mr. Mumma's businesses were in
disarray and overburdened with debt. The executrices through their hard wark and effort and in
spite of the adverse actions of the Objector began a course of actions which greatly enhanced
the value of the estate's assets. Judge Sheeley determined that it was the Objector's actions
which were diminishing the value of the estate's assets and that the Executrices actions were
not.
Objector Mumma suggested during the hearings that he would have paid more to the
estate than was ultimately paid by CHR. CHR paid the estate 35 million dollars. It must be
noted that CHR had originally offered even more money for the estate's quarrying operations,
that being 43 million. Judge Sheely noted in Equity 66 that Objector Mumma though his actions
had actually cost the estate 10 million dollars.
The undersigned notes that Objector Bob Mumma contacted representatives of CHR shortly
after his father's death. There was no evidence that he shared this information with the Estate.
Mr. Hill had a clear memory of the place and time of the meeting in 1986. After speaking to Mr.
Hill, the head of acquisitions, Objector Mumma began negotiating the purchase the quarrying
106
f
operations from the Estate. During these negotiations in 1987 Objector Bob Mumma valued the
quarrying operations between 5-7 million dollars. Fortunately for the Estate, no agreement could
be reached and the agreement with CHR was settled in 1993.
The undersigned also notes that Objector Bob Mumma was obstructive when the estate has
attempted to sell its interest in Bobali Corporation. The executrices have never refused to
entertain the highest and best offers for any asset of the estate.
41. Whether the Executrices/Trustees have failed to carrv out the terms of the Decedent's Will
and/or acted in contravention of the Decedent's testamentary plan.
Objector Robert M. Muinina II produced no competent evidence to show that
executrices/trustees failed to carry out the terms of the Decedent's Will or acted in any manner
which would have contravened Decedent's testamentary plan. Conversely the evidence
produced at the hearings including the opinion of Attorney Jonathon Christ, Objector's own
witness, showed the executrices /trustees were cognizant of their duties and when in doubt
sought the legal advice of their counsel and advisors. The undersigned notes that in each of the
many legal actions involving this Estate whether initiated by Objector, by the Estate or by
others, the Estate and the executors/trustees have not favored the position espoused by Objector.
Based on the documentary evidence and all the testimony of the witnesses and taking into
account their respective credibility and appropriate weight to be given to each document or
person, I must conclude the Executrices/trustees were diligent in the performance of their duties
and acted in accordance with the dictates of the Last Will and Testament of the decedent.
107
42. Whether the Executrices/Trustees are subject to surcharge attributable to their acts or
omission.
Having concluded that Objector Robert M. Mumma II has failed to show that the
Executrices/trustees have done anything improper in the administration of the estate and the
trusts, in the interpretation of the Last Will and Testament or in any other matter, no
surcharge attributed to Robert M. Mumma II objections would be proper.
Conclusions relating to the Obiections of Barbara M. Mumma
43. Whether the selection of assets to be distributed bv the Marital Trust and to the Residuarv
Trust was appropriate. In order to resolve this objection and several others, it will be necessarv
to understand the �ustification for what appeared to be a counterproductive asset distribution
strateg,v. Assets for which rapid appreciation could be expected were placed in the Marital trust,
not the Residuarv Trust, thereby creatin�the potential for unnecessary estate tax liabilitv upon
the death of Barbara McKimmie Mumma.
The Seventh Article of Mr. Mumma's Last Will and Testament provides:
"SEVENTH: If my wife, BARBARA McK. MUMMA, survives me, I give and bequeath to
the trustees hereinafter named, an amount equal to fifty (50%) percent of my total gross estate as
finally determined for Federal Estate Tax Purposes, taking into account and including therein, for
computation purposes, my undivided interest in the value of all my interests in property which pass
or have passed to my wife under other provisions of this Will or otherwise than under this Will, but
only to the extent that such interests are, for the purpose of the Federal Estate Tax, included in
determining my gross estate and allowed as a marital deduction. In funding this Trust, I authorize
my Executors to use cash or other property or a combination thereof, and I direct that any such other
property so used shall, for the purpose of funding the trust, be valued as of the date of its
distribution. In computing the amount of this bequest, I direct that the values and amounts as finally
determined for Federal Estate Tax purposes shall control.
108
Notwithstanding anything to the contrary contained in this Will, I direct that (a) the Trust
shall not be funded with any property or the proceeds of any property which (1) would not qualify
for the marital deduction allowable in determining the Federal Estate Tax on my Estate or (2) is
includible in my gross estate for Federal Estate Tax purposes and also subject by reason of my death
to any inheritance tax, transfer tax, estate tax or other death duty in any foreign country or political
subdivision thereof, except that the property described in this clause may be allocated to the Trust to
the extent that other property of my Estate, which does quality for the marital deduction, is not
sufficient to fund the Trust in full; (b) that the trustee shall not retain in the Trust beyond a
reasonable time, any unproductive property as an investment to be held in the Trust; and (c) that
none of the powers granted to my Executors and trustees by this Will shall be exercised in such
manner as to disqualify the Trust or any part thereof from the marital deduction allowable to
determine the Federal Estate Tax on my Estate, except as may be hereinafter provided.
I direct that the trustees hold said amount, In Trust Nevertheless,
to manage, invest and reinvest the same, to collect the income and to pay over or apply the net
income to, or for, the benefit of my wife,
BARBARA McK. MUMMA, at least yearly. My individual trustee, other than my wife, solely and
within her discretion alone, is authorized to distribute to and for the benefit of my wife, BARBARA
McK. MUMMA, in addition to the income hereinabove specified, so much of the principal of this
Trust as she may deem necessary or advisable to reasonably provide for her support, health,
welfare, maintenance or comfort, to maintain for her a standard of living which she has during our
married life enjoyed, taking into account, however, my wife's income from other sources including,
but not limited to, all income from trusts, estates and business interests, as well as available
principal assets. Notwithstanding the limited invasion right of trust principal by my one trustee for
the use and benefit of my wife, which requires a deficiency in other available funds, I give unto my
wife a right, which shall not be cumulative, to request annually in writing a distribution to her by
the trustees from the principal of this Trust of up to Five Thousand ($5000.00) Dollars or up to five
(5%) percent of the then principal of this Trust, whichever shall be the greater, and the trustees,
upon receipt of such writing, shall make payment thereof to my wife during the calendar year in
which said writing was received. The annual request by my wife is not mandatory, but shall be
made, if desired, only by herself individually.
I hereby authorize my Executors, in their sole discretion, to elect that any part or all of any
amount passing under this article of my Last Will and Testament, to my wife, BARBARA McK.
MUMMA, in the event she survives me, be treated as qualifying terminal interest property for the
purpose of qualifying for the marital deduction allowable in determining the Federal Estate Tax on
my Estate. Without limiting the discretion contained in this foregoing sentence, it is my
exprectation that my Executor will make said election with respect to all of any such amount, unless
the timing of my spouse's death and mine and the computation of the combined death duties of our
two (2) estates renders such an election inappropriate.
Upon the death of my said wife, the principal of this Trust, as it is then constituted, shall be
paid over by my surviving trustee unto my children, ROBERT M. MUMMA, II, BARBARA M.
McCLURE, LINDA M. ROTH and LISA M. MUMMA, free of this Trust, share and share alike,
per stirpes and not per capita."
109
"When interpreting the provisions of a trust, "the polestar in every trust is the settlor's intent and that
intent must prevail. The rules for determining a settlor's intent are the same for a trust as for a will.
The settlor's intent must be ascertained from a consideration of(a) all the language contained in the
four corners of the instrument and (b)the distribution scheme and(c)the circumstances surrounding
the testator or settlor at the time the will was made or the trust was created and (d) "the existing
facts."
Technical rules or canons of construction should be employed only if the language of the
instrument is ambiguous or conflicting or the intent of the settlor or testator is for any reason
uncertain. When provisions of a trust instrument conflict, "they should be read in such a fashion as
to give effect to both and/or fulfill the intent of the settlor."
In Re Stella Scheidmantel , 2005 Pa. Super. 6; 868 A.2d 464, 488 (2005), citing In re Trust of Hirt,
2003 Pa. Super 287, 832 A.2d 438, 448 (2003) (other cites omitted).
The Pennsylvania Supreme Court has also given direction on construction of wills and the proper
method to interpret the intent of the testator:
"The primary consideration in the construction and interpretation of wills is that the
intent of the testator be followed . . . Absent ambiguity, that intent is to be determined
from "the four corners of his will," . . . The duty of the court is not to determine what
the testator might or should have said in light of subsequent events but, rather, the
actual meaning of the words used . . . Only if the language employed by the testator is
ambiguous should the court resort to canons of construction. (citations omitted)
Estate of Blough, 474 Pa. 177, 185, 378 A.2d 276, 280 (1977).
It is quite clear from the wording of Mr. Mumma's Last Will and Testament that the
primary purpose for the trusts was to benefit his wife, Barbara McK. Mumma, during her lifetime.
The Seventh section reads in part : "If my wife, BARBARA McK. MUMMA, survives me, I give
and bequeath to the trustees hereinafter named, an amount equal to fifty (50%) percent of my total
gross estate ... . I direct that the trustees hold said amount, In Trust Nevertheless, to manage, invest
110
and reinvest the same, to collect the income and to pay over or apply the net income to, or for, the
benefit of my wife, BARBARA McK. MUMMA."
One thing I have gleaned through the many days of hearing over these past years is the Late Mr.
Mumma was a very savvy business man who loved his wife and children. He knew that his business
interests were many, that he had vast assets and a great amount of debt. He knew the administration
of his Estate would be a complex matter. Mr. Mumma established a very detailed plan for the
administration and distribution of his estate with the advice of several noted and respected estate
attorneys and accountants. He knew and understood that which he desired and all provisions of his
ten page Last Will and Testament and his three page First Codicil have meaning to insure his wife
was protected and provided for during her lifetime, but who he desired to control and administer his
Estate.
No expert is needed to show Mr. Mumma wanted that the maximum benefit be given to his
wife. No expert is needed to review the words of the document.
The first question is what is the " amount equal to fifty (50%) percent of my total gross
estate as finally determined for Federal Estate T� Purposes." Answer found in Exhibit A-3:
$17,296,337 multiplied by 0.50 equals $8,648,168.50.
The second question is need to ask is do I add any additional amount, need I subtract any
amount, or need I do nothing to the amount? Answer: I must be "taking into account and including
therein, for computation purposes, my undivided interest in the value of all my interests in property
which pass or have passed to my wife under other provisions of this Will or otherwise than under
this Will, but only to the extent that such interests are, for the purpose of the Federal Estate Tax,
included in determining my gross estate and allowed as a marital deduction." Prior to 1981 the
marital deduction was limited; however following the 1981 amendments to the Internal Revenue
111
Code, the marital deduction became unlimited. Prior to this time drafters of Wills containing typical
A, B trusts read "fifty percent of my gross estate, excluding therefrom the value of all property
passing to my spouse under other Will provisions or outside my Will, ... ." The undersigned vivdly
recalls the changes to the tax code and the recommended proposed changes to take advantage of the
amendment. The language recommended was to delete the words EXCLUDING THEREFROM
and replace them with "taking into account and including therein." Therefore under Mr. Mumma's
Will property which his wife received outside the will is part and parcel of the $8,648,168.50. Mr.
Mumma did not desire that this amount be reduced at all.
The allocation of the assets between the marital and residuary trust were divided in as equal
and amount of value as practicable. The estate had a variety of assets in many forms including
personal, real and intangible property. The executrices consulted with their attorneys and
accountants and reviewed differing scenarios before making an informed decision in the division
and placement of the various assets into the two trusts. Mr. Hadley was the most credible witness
regarding values. He testified that he adjusted the values of all the assets prior to the distribution
being made by the Executrices. The division was reasonable given the complexity of the estate and
its various assets. The parties presented the expert testimony of various attorneys who gave their
opinions to their interpretation of the will's meaning and values placed on assets. Of all those
testifying relative to values Mr. Hadley's values were proper. He explained how each asset was
reviewed from a personal, hands on experience with those assets. He was a seasoned accountant and
worked with estates and quarrying businesses. He was the best person to evaluate the then values
and his determinations were proper. Objector's experts admitted they had not reviewed the
historical data of the operations and had only reviewed limited information. They also stated they
112
had looked at value of the assets at a point 4-5 years following the death of the decedent and worked
backwards rather than looking at the value of the assets at the time of death and working forwards.
The question is did the executrices take custody of the estate's assets and administer those assets
and preserve and protect the assets for the ultimate distribution to the proper parties. Also did the
executrices exercise to the degree of judgment, skill and care and diligence that a reasonably
prudent person would exercise in the management of his or her own affairs (see, Estate of
Kurkowski, 487 Pa. 295, 400 A.2d 357 (1979)). The Objector has not met her burden of proving the
executrices did something imprudent or improper in the valuation of the assets. In retrospect it is
always easy to state a party might have completed a task in a differing manner. Here the executrices
sought the advice and counsel of numerous professionals. Mr. Hadley, the individual with the most
independent knowledge and the person most familiar with the businesses worked to calculate
values. Many scenarios were reviewed and a determination of the distribution of the assets between
the trusts was made based on information available at the time. The assets the Executrices placed in
each trust were of approximately equal value at the time the transfers to the trusts were made. Their
actions were proper under the terms of the decedent's last Will and Testament and were properly
administered in accordance with their duties as Executrices.
The undersigned further notes that the executrices sought and obtained detailed tax advice from
numerous attorneys and accountants. The method they used to take advantage of the changing tax
laws in 1986-87 coupled with the decision of Mrs. Barbara McK. Mumma to defer the payment of
the estate taxes until the date of her passing, saved the estate a significant amount of taxes. No
competent evidence was presented that following the passing of Mrs. Mumma, the estate
experienced any unnecessary estate taxes. Therefore this objection should be overruled.
113
44. Whether assets distributed to Barbara McKimmie Mumma as income distributions,
including the Fulton Bank propertv, were undervalued therebv prejudicing the interests of other
beneficiaries. In order to resolve this objection, it will be necessary to determine the method
bv which various non-liquid assets were valued and the appropriateness of the valuations.
Pursuant to the Seventh and Eighth Articles of the Last Will and Testment the executrices
were required to pay all income to Mrs. Mumma and also five (5) percent per year on the
unfunded portion of the Marital Trust. By the end of 1987 this amount totaled over
$700,000.00 and the estate had no liquid assets to satisfy the debt to Mrs. Mumma. After
consultation with the estate's advisors, attorneys and accountant, it was decided Mrs.
Mumma would be given the Fulton Bank property together with other non-liquid assets all
of which totaled the value of the debt owed Mrs. Mumma. The calculations were made by
Mr. Hadley relative to the distribution needed to satisfy this debt. Following that the estate
made the transfer to Mrs. Mumma, as beneficiary. This transfer in kind was proper and
appropriate.
The question is did the executrices take custody of the estate's assets and administer
those assets and preserve and protect the assets for the ultimate distribution to the proper
parties. Also did the executrices exercise to the degree of judgment, skill and care and
diligence that a reasonably prudent person would exercise in the management of his or her
own affairs (see, Estate of Kurkowski, 487 Pa. 295, 400 A.2d 357 (1979)). The Objector has
not met her burden of proving they did something imprudent or improper. She argued that
the estate only selected the good assets for Mrs. Mumma to receive in kind in lieu of cash.
In retrospect it is easy to state a party might have completed a task in a differing manner. No
one can predict the actual ebb and flow of the market place. Here the executrices sought the
114
advice and counsel of numerous professionals. Mr. Hadley, the financial person most
familiar with the businesses worked to calculate value. The Fulton Bank building is a branch
office in Lemoyne Cumberland County which had an appraised value of much less than the
money owed Mrs. Mumma.
Objector presented no appraisals from realtors relating to values of the property in question
or an appropriate appraisal of the interest in shares distributed to support her objection. Objector
presented no competent evidence to support this objection.
The transfers in kind, in lieu of cash, were proper.
45. Whether assets distributed to Barbara McKimmie Mumma pursuant to her power to receive
an annual distribution of 5% of the value of the Marital Trust, were undervalued therebv
prejudicing the interests of the other beneficiaries. In order to resolve this objection, it will be
necessarv to determine the method by which various non-liquid assets were valued.
The allocation of the assets between the marital and residuary trust were divided in as equal
and amount of value as practicable. The estate had a variety of assets in deferring forms including
personal, real and intangible property. The executrices consulted with their attorneys and
accountants and reviewed differing scenarios before making an informed decision in the division
and placement of the various assets into the two trusts. The division was reasonable given the
complexity of the estate and its various assets. As concluded above, the allocation was proper.
The marital trust established by the Last Will and Testament of Robert M. Mumma granted
unto his widow the right to receive annually five (5) percent of the marital trust. Therefore, the
Executrice Barbara McK. Mumma, as the widow and beneficiary of her late husband's will and the
115
trust established thereunder was entitled to take her annual five percent in cash or in kind in lieu of
cash. Mrs. Mumma consulted with her attorneys, accountants and advisors, including the co-
executrice and co-trustee and determined it was simpler and more advantageous to receive the five
percent in kind in lieu of cash.
The five (5)percent withdraw in kind, in lieu of cash, was proper.
46. Whether discretionary distributions were made to Barbara McKimmie Mumma from the
Marital Trust despite her indication that she did not want distributions unless required for her
immediate expenses. In order to resolve this objection, it will be necessary to determine the
advice and strategy, as well as the nature of the input from Mrs. Mumma, that resulted in
substantial distributions being made to Mrs. Mumma in vears when she did not have an�
for funds and in circumstances which appeared to run counter to her expressed family financial
and tax strate�v.
Withdrawn By Objector.
47. Whether estate assets, including entities in which estate had an interest, were mana�
efficiently. In order to resolve this objection, it will be necessary to determine whv the estate
ado�ted a strateg.v of allowin� real estate assets of the estate and of Bobali to remain
unproductive for extended periods of time and, in some cases, of not even pavin� the real estate
taxes due on properties, thereb r��that they would be sold at ta�c sale and their future
value lost to the estatepermanently.
Objector Barbara M. Mumma produced no competent evidence to support this objection.
116
The question, as previously stated, is did the executrices take custody of the estate's assets
and administer those assets and preserve and protect the assets for the ultimate distribution to
the proper parties. Also did the executrices exercise to the degree of judgment, skill and care
and diligence that a reasonably prudent person would exercise in the management of his or her
own affairs (see, Estate of Kurkowski, 487 Pa. 295, 400 A.2d 357 (1979)). The Objector has not
met her burden of proving the executrices did anything imprudent or improper in the valuation
of the assets or the preservation of the assets. The executrices sought the advice and counsel of
numerous professionals. Mr. Hadley, the individual with the most independent knowledge and
the person most familiar with the businesses worked to calculate values.
The Estate and the executrices/trustees have attempted to sell their interest in Bobali and
had a buyer who was willing to pay 1.3 million dollars for their interest. Objector Babs Mumma
had worked on this project, but in the end she did not desire to upset her brother Objector Bob
Mumma and the negotiations ended. Objector Babs Mumma and Robert M. Mumma admitted
they do not pay any of the real estate taxes for the properties owned by Bobali even though they
have individual interests in Bobali Corporation. In their capacity as trustees, the trustees are not
responsible to pay the taxes and expenses of Bobali, but the expenses should be shared on a pro
rata basis among the shareholders, the trusts being one such shareholder. However, these parties
can agree reach no agreement.
During the course of the hearings the Objectors and the Estate argued regarding the payment of
property tax on a small unproductive parcel of raw land. The Estate argued that the Objector's
refused to pay their respective share of the tax, the objectors argued that the taxes were to be
paid by the estate. One or both of the objectors brought a legal action regarding the payment of
the tax. After being shown a plot plan of the land which was part of a storm management plan
117
for a development, and which was being t�ed improperly, the undersigned called a lunch
recess. The undersigned left the hearing and traveled downstairs from the hearing room to the
office of the assessor for Cumberland County. The undersigned met with the chief assessor,
presented the plan and they reviewed the county aerial photos of the parcel and the assessed
value. Following the lunch break, the assessor came to the hearing room and announced the
value of the land for tax purposes was de minimus and the taxes would be reduced to under
$100.00 per annum.
Objector presented no competent evidence to support this objection.
48. Whether the estate was wound up promptly and efficientiv, without incurrin�
unnecessarv legal and other expenses and prejudicin� the interests of beneficiaries. In order to
resolve this objection, it will be necessarv to determine whv the estate remained open for over
twentv-two vears and why some assets have remained unsold and unproductive for that period
of time. It is evident that there have been various le a�l proceedings related to the estate, but it is
far from clear why the estate could not have been wound up more quicklv and without the
attendant le ag 1 expense.
Objector Barbara M. Mumma produced no competent evidence to show that
executrices/trustees have incurred any unreasonable expense including the legal fees. Many of
the legal fees associated with this estate appear to stem from what can only be characterized as
"recreational litigation" on the part of one or more of the parties. The Superior Court has called
the parties "the litigious Mumma family." The question are: should a reasonably prudent
executrice/trustee defend contentious litigation and initiate litigation to protect assets of the
118
estate? The answer is yes. It is not just the Objectors and the executrice/trustee who are
involved, but a fourth person, Linda Mumma, one of the beneficiaries.
The legal expenses in this matter are greater than most cases but were proper given the
circumstances. Had the Estate not initiated the action in Equity for a Declaratory Judgment
which determined Robert M. Mumma II had no right of first refusal, the quarrying operations
could not have been sold to CHR. Likewise, when Robert M. Mumma II without proper
authority transferred certain Florida real estate to himself, the Estate properly brought an action.
The many, many actions initiated by Robert M. Mumma, II and the many appeals which
followed were properly managed as were the legal costs associated with those matters.
Objector produced no competent evidence to show that executrices/trustees have paid
unjustified counsel fees.
The estate bears the burden to show that their counsel fees were proper. The estate produced
every detailed invoice for attorney fees and costs associated with the administration of the
Estate. The Estate also presented competent testimony from the attorneys representing the estate
and from the executrices/trustees.
Attorneys employed by an Estate or Trust are entitled to reasonable and just compensation
for the services provided to the estate or trust. See U.S. National Bank in Johnston v.
Campbell, 354 Pa. 583. 47 A.2d 697 (1946). The Pennsylvania Supreme Court has set forth
a number of factors to consider in making a determination of whether the fees are reasonable
and just and they include:
a. amount of wark performed,
b. character of services rendered,
c. difficulty of problems involved,
119
d. importance of the litigation,
e. amount of money or value of property in question,
f. degree of responsibility incurred,
g. whether the fund was created by the attorney,
h. professional skill and standing of the attorney in his profession,
i. results he was able to obtain,
k. ability of the client to pay a reasonable fee for the services rendered.
See, Estate of LaRocca, 431 Pa. 542, 246 A.2d 337 (1968).
Where an estate requires additional legal services due to unusual complications and
circumstances, such fees are appropriate. See McClatchv v. Mecke, 492 Pa. 352, 424 A.2d 1227
(1981). The complications facing the executrices/trustees in this matter were many including the
constant legal actions by Objector Bob Mumma.
Having reviewed the statements and invoices for legal fees presented and having heard the
testimony of the attorney's involved or their firm's representatives who had familiarity with the fees
and matters associated with each matter; having heard the testimony of the parties; having
evaluated the difficultly and necessity of each legal matter, and the particular attorney or firm
selected to perform the task; together with the individual litigation, I conclude after considering the
factors established by the Pennsylvania Supreme Court that all attorney fees and costs associated
with the administration of this estate and the trusts were reasonable.
49. Whether the Estate was administered in a manner that exacerbated friction among family
members thereby dela�g the administration of the estate and increasin��al and other
expenses. In particular, Ms. Mumma is concerned that the approach adopted bv counsel to the
120
estate — whatever the le�al merit of an�particular position on an�particular issue — has led to
unnecessarv friction amon� family members. It was the intent of the Testator that his assets be
utilized in a manner that would allow, to the �reatest extent possible, for all familv members to
benefit jointly and en a�L�e in joint efforts to make the best and most productive use of familv
assets and to solidifv rather than undermine family bonds. Particularlv in li�ht of that intention,
means could have been pursued to resolve some or all of these matters by an amicable process
which would have lessened rather than increased tensions and ultimatelv would have benefited
all family members.
Objector produced no competent evidence to support her objection that the Executrices/trustees
actions exacerbated friction among the family members.
The evidence presented did not show that it is executrices or trustees or their respective
counsel or accountants who are the source of the friction in the Mi.umna family. The evidence,
conduct of the witnesses and parties clearly show that the executrices/trustees, that being Mrs.
Barbara McK. Mumma and Lisa Morgan and their attorneys and accountant have acted
appropriate during the administration of the estate and the trusts and also during the hearings.
During the first year following Mr. Mumma's death it appeared everything between the family
members was copasetic. Then beginning in 1987 and 1988 around the time when the estate
would not sell Objector Bob Mumma the estate's quarrying operations for his value of between
5 and 7 million dollars, that relations began to falter. Be that as it may, Bob Mumma is the
master of his fate and the executrices/trustees have no control over his actions. To attempt to lay
the blame of familia problems at the feet of the executrices and trustees is simply wrong.
121
The question is did the executrices take custody of the estate's assets and administer
those assets and preserve and protect the assets for the ultimate distribution to the proper parties.
Also did the executrices exercise to the degree of judgment, skill and care and diligence that a
reasonably prudent person would exercise in the management of his or her own affairs (see,
Estate of Kurkowski, 487 Pa. 295, 400 A.2d 357 (1979)). After review of all the evidence I
conclude the executrices/trustees acted appropriately and The Objector has not met her burden
of proving they did something imprudent or improper.
Additional Matters
50. What amount of auditor fee and costs, if any are due the previous auditor, Taylor Andrews,
Esquire.
I conclude and recommend Taylor Andrew's Esquire be paid $11,856.46 in accordance with a
fee scheduled submitted to this Honorable Court by Praecipe dated October 1, 2008.
51. Whether Barbara McK. Mumma's decisions regarding the handling of her personal estate is
relative to her role as executrice/trustee of the Estate of her husband Robert M. Mumma.
Following the passing of their mother both Objectors Bob and Babs Mumma argued that
because Mrs. Mumma had favored Lisa Morgan in her personal estate this was evidence of she
and Lisa Morgan were not treating the beneficiaries of the Estate of Robert M. Mumma equally.
The Objectors attempted to present copies of Mrs. Mumma's will which was probated in
Florida as well as copies of Mrs. Mumma's inter vivos trust. Neither is relevant to this audit. To
whom Mrs. Mumma left her personal estate is of no concern to this audit. Having witnessed the
122
treatment shown Mrs. Muinma during the hearings, the undersigned is not surprised to learn the
late Mrs. Mumma may have favored one or more of her children over others when dividing her
estate. Mrs. Mumma's personal estate is irrelevant.
There was no evidence presented to show the beneficiaries of the trust were not treated
equally. To the contrary, Mrs. Mumma took no fees or commissions during her lifetime from
the estate. During her lifetime she was entitled to all the income from her late husband's estate
but she did not receive it. Instead Mrs. Mumma insured the fees and commissions of her co-
executrice and co-trustee were first taken from the income and then the balance provided to
Mrs. Mumma. She testified she made this decision to insure her children were treated equally.
The Objectors argue that a scheme was hatched back in 1986-87 in the selection of the
assets which went into the two trusts so that Mrs. Mumma would be able to amass a larger estate
and then disinherit the Objectors. The Objectors were unable to produce any evidence of such a
claim other than conjecture on their part. The evidence showed that during this time period and
throughout the handling of the estate neither trustee or executrice favored any of the residuary
beneficiaries.
The purpose of the testator's plan was that his wife would receive the maximum benefit
possible with the least tax liability during her lifetime and at her passing if there were any
remaining assets, the assets or their value would be distributed equally between his four
children. The Objectors position is that the testator's plan should have been established to
maximize the benefits they may receive from the estate.
The executrices/trustees performed their duties in an appropriate and proper manner in spite
of the problems within the family.
123
52. Whether the Estate, the trusts or the Objectors should bear the costs and fees associated with
the Auditor's hearings, and if any apportionment among and between the parties is fair,
equitable and appropriate, how is it to be calculated.
The Estate has argued that the time spent on the hearings on the Objections was unnecessary
based in a large part on the nature of the presentation of the evidence by the Objectors. The
Estate has proposed a sharing of the expenses as follows: Trusts : 23.2 32%, Mr. Mumma II
57.39 % and Babs Mumma 19.39%.
Babs Mumma was represented by counsel during the first few hearings, but later continued
on a pro se basis. Mr. Mumma proceeded on a pro se basis even though he had his attorney and
a paralegal with him on most occasions. During the hearings Mr. Mumma did act as though he
was seeking discovery. He called many witnesses who were adverse to his position and
attempted to re-litigate every matter which had been determined by this Honorable Court and
other courts. He was obdurate and attempted to delay and prolong hearings. His conduct was
extremely unprofessional toward the Court, my position, the other attorneys and the opposing
parties. Most of that which he presented was irrelevant to the proceedings. He called witness
after witness and would continually ask to reach a relevant issue but continually attempted to
return to issues which had long been decided by this Honorable Court and other courts. He
repeatedly promised to present credible relevant evidence, but did not meet any of his promises.
I believe it would be right, just and appropriate to assess one half of the costs of the audit to
Objector Robert M. Mumma, II.
No portion of the cost of the audit should be assessed to Objector Barbara Mumma.
53. Whether additional attorney fees should be awarded to the Estate and the trusts.
124
I believe it only fair, right just and appropriate that the trust be awarded fifty percent (50%)
of its attorney fees to be assessed from Objector Robert M. Mumma II and that a hearing be
scheduled for the determination of the same. He was obdurate and dilatory and equity dictates
that he bear the cost associated therewith.
Final Conclusion
125
All accounts of the Executrices and Trustees and the account of the surviving Trustee should be
accepted as filed and that Robert M. Mumma, II be assessed one half the costs of the auditor
together with one half the trust's attorney fees, accountant fees and costs associated with the auditor
hearings. Further that the surviving Trustee proceed to final distribution of assets among and
between the beneficiaries.
Lisa Morgan had previously petitioned Your Honor to permit her to solely begin the process of
distribution of the Estate"s Assets to the residuary beneficiaries. For the reasons detailed in my
former interim report and the reasoning set forth therein, I would again recommend, at this time, the
petition be granted. Under the terms of Robert M. Murnma"s Last Will and Testament Lisa Morgan
has the clear authoriry to begin a plan of liquidation and to thereafter distribute the assets among
and between the four children in equal shares of any and all the remaining assets in the trust
established under the Seventh Section (the marital trust) and the Eighth Section (the residuary trust)
of the Last Will and Testament of Robert M. Mumma.
In addition Taylor Andrew, Esquire, the fornler auditor had submitted a bill which had not
been paid. Upon reviewing the time spent and the files prepared his fees and costs are appropriate
and should be paid and included as the cost of this audit and should be paid.
I further recommend that if your Honor agrees with my findings and conclusions, following
the time period for exceptions, your Honor enter an Order overruling the Objections and approving
the accounts and the distribution of assets. The transcripts of the hearings shall also be delivered to
the Clerk of the Orphans Court for your review.
126
I have attached a two recommended orders to accomplish the same.
Respectfully submitted,
,`
August 5, 2013
s h D. Buck e , Esquire, Aud' r
Supreme Court # 38444
1237 Holly Pike
Carlisle, PA 17013
(717) 249-2448
JoeBLaw(a�aol.com
127