BRADLEY v. U.S. PACKAGING, INC.

 STATE OF NORTH CAROLINA                            IN THE GENERAL COURT OF JUSTICE
                                                        SUPERIOR COURT DIVISION
 COUNTY OF GUILFORD             )                              95-CVS-8986
                                )
 C.E. BRADLEY, JR.,             )
                                )
             Plaintiff,         )
                                )
                v.              )                               ORDER ON
                                )                           SUMMARY JUDGMENT
 U.S. PACKAGING, INC., RICHARD
                                )
 D. HALL, MARK C. SPECKMAN, and
                                )
 CLARENCE C. DUKESHIRE,
                                )
            Defendants.         )
                                )


{1} THIS MATTER came on for hearing and was heard by the undersigned Judge on June 27, 1997 on
the Motion to Dismiss and Motion for Summary Judgment of the Defendants Hall and Speckman, the
Motion for Summary Judgment of the Defendant U.S. Packaging, Inc. and the Plaintiff�s Motion for
Summary Judgment. The Court has reviewed the facts and matters of record, heard the arguments of
counsel, reviewed the submissions of the parties in support of and in opposition to these motions. In
making this ruling, this Court has not relied on the Affidavits of James W. Sharrard, Doug Beane and
Joseph E. Johnson. Based on the foregoing, the Court concludes, as a matter of law, that the Motion to
Dismiss of the Defendants Hall and Speckman, the Motion for Summary Judgment of the Defendants Hall
and Speckman, and the Motion for Summary Judgment of the Defendant U.S. Packaging, Inc. all should
be DENIED and that the Motion for Summary Judgment of the Plaintiff should be GRANTED.

{2} In order to make clear for appellate review this Court�s reasoning in making these rulings, this Court
makes the following:

                                         FINDINGS OF FACT

{3} 1. The record is clear and undisputed in this matter that the Promissory Note (the "Note") which is the
subject of this action, was subject to valid Subordination Agreements with NCNB, later NationsBank, and
could not have been sued upon in 1990 at the time of the trial of the prior action involving these parties
and styled as follows: U.S. Packaging, Inc., Mark C. Speckman and C. C. Dukeshire, Plaintiffs, versus
Cecil Edward Bradley, Jr. and Eagle Products, Inc., Defendants and Third-Party Plaintiffs, versus Richard
D. Hall, Robeson Associates, a North Carolina General Partnership; and MEDD Leasing, a North Carolina
General Partnership; Third-Party Defendants, filed in the General Court of Justice, Superior Court
Division of Guilford County, North Carolina; case no. 87 CVS 7167 (the "Prior Action"). These
Subordination Agreements provided that the Note could not be sued upon or collected until such time as
all indebtedness owed by U.S. Packaging, Inc. to NCNB, later NationsBank, was paid in full. The
indebtedness of U.S. Packaging, Inc. to NationsBank was not paid in full until 1995 and, accordingly, the
bar to suit provided for in the Subordination Agreements prevented any claim by the Plaintiff from being
asserted or litigated in the Prior Action.

{4} 2. This Court has reviewed the entire transcript and exhibits from the Prior Action, together with the
opinion of the Court of Appeals in that other action involving these parties and filed in the General Court
of Justice, Superior Court Division of Guilford County, styled as follows: C. E. Bradley, Jr., versus
Richard D. Hall, Mark C. Speckman, Clarence C. Dukeshire, U.S. Packaging, Inc., and Robeson
Associates, a North Carolina General Partnership, Case No. 92 CVS 8282 (the "Declaratory Judgment
Action"). It is this Court�s view, and it so finds, that granting summary judgment to the Plaintiff in this
case does not the constitute a modification, amendment, or alteration of judgment entered by The
Honorable William H. Freeman in the Prior Action, nor is the granting of summary judgment in this case
to the Plaintiff and against the Defendants inconsistent in any way with the opinion of the Court of
Appeals in the Declaratory Judgment Action.

{5} 3. The Court finds on review of the record in the Prior Action that it was tried on the premise and
agreement of the parties that the Note which is the subject of this action was a valid and outstanding
indebtedness both as of the date of valuation in 1987 of U.S. Packaging, Inc., MEDD Leasing and
Robeson Associates, and as of the time of trial of the Prior Action in 1990. For this reason, this Court finds
that summary judgment in favor of the Plaintiff and against the Defendants is consistent with the
determination of the fair value of Bradley�s interests in U.S. Packaging, MEDD Leasing and Robeson
Associates made by Judge Freeman in the Prior Action. This Court further finds that to prohibit suit and
recovery by the Plaintiff on the Note would, in fact, be inconsistent with Judge Freeman�s determination
of the fair value of Bradley�s interest in U.S. Packaging, MEDD Leasing and Robeson Associates in the
Prior Action.

{6} 4. This Court finds that the expert who testified in the Prior Action on behalf of Bradley and the
expert who testified in the Prior Action on behalf of U.S. Packaging, Inc., MEDD Leasing, Robeson
Associates, Richard D. Hall, Mark C. Speckman and C. C. Dukeshire relied for their opinions as to the
fair value of U.S. Packaging, Inc. on the company�s financial statements, as audited by the accounting
firm of Sharrard McGee & Co. These audited financial statements reflect the Note which is the subject of
this action as a valid and binding obligation of U.S. Packaging, Inc. These experts� opinions were further
based on the financial records and statements of U.S. Packaging, Inc. which also reflected the Note which
is the subject of this action as an outstanding indebtedness of U.S. Packaging, Inc. which had not been
paid. This Court finds no evidence in the record of this case, which record includes the transcript of the
trial of the Prior Action, that there was any evidence introduced in the Prior Action, and certainly no
finding on the part of Judge Freeman, as to the face or discounted value of the Note. This Court further
finds that there were specific determinations made by Judge Freeman with respect to the value of
Bradley�s stock in U.S. Packaging, Inc. and the value of his interests in MEDD Leasing and Robeson
Associates. In this regard, the Court finds that there was not any determination made, or evidence offered,
with respect to the value of the Note for purposes of Judge Freeman valuing it as a part of Mr. Bradley�s
interests being purchased pursuant to the Order dated March 14, 1990 of The Honorable Russell G.
Walker entered in the Prior Action, and pursuant to which Judge Freeman proceeded, at trial, to value
Bradley�s stock in U.S. Packaging, Inc. and his partnership interests in MEDD Leasing and Robeson
Associates.

{7} 5. From this Court�s review of the Order dated March 14, 1990 of The Honorable Russell G. Walker
entered in the Prior Action, it is evident to this Court, and this Court so finds, that Judge Freeman was
carrying out the Order of Judge Walker. The March 14, 1990 Order directed that the relief being granted
"is the purchase of . . . Bradley�s shares in the . . . corporation by the corporation, or other plaintiffshareholders at their fair value as of the date . . . Bradley ceased his employment with the . . . corporation
in March of 1987." Judge Walker goes on to direct the fair value of Bradley�s interest in the partnerships
be determined using the term "interests" as opposed to "shares." Further in his Order he states that
Bradley�s shares of stock, representing a 25% interest in U.S. Packaging, Inc. shall be purchased, and
goes on to direct that the fair value of such shares be determined by the Court. This Court concludes that a
fair reading of Judge Walker�s Order, and Judge Freeman�s subsequent judgment, mandates the
conclusion, and this Court so finds, that Judge Freeman determined the fair value of the stock of Bradley
in U.S. Packaging, Inc. and not the value of some broader interest, including the Note.

{8} 6. This Court notes that Judge Freeman, at several points during the trial of the Prior Action, indicated
that he was valuing the shares of the Plaintiff Bradley in U.S. Packaging, Inc. and Bradley�s partnership
interests in MEDD Leasing and Robeson Associates. Nowhere did Judge Freeman indicate, in any way,
that he was including in his valuation and judgment the face value or a discounted value of the Note at
issue in this case.
{9} 7. In reaching the conclusion reflected in this Order on Summary Judgment, this Court relied in
particular on the following portions of the transcript from the trial of the Prior Action. The following
portions are hereby incorporated into this Court�s findings of fact:

                        (a) Portions at pages 10 and 11 wherein the attorneys for
                        the parties agreed on the value of the partnerships as of
                        April 30, 1987 and that those values included balances
                        due on a promissory note to Branch Banking & Trust
                        ("BB&T"). The funds borrowed from BB&T were then
                        loaned by the shareholders of U.S. Packaging, Inc.,
                        including Plaintiff, to U.S. Packaging which gave the
                        Note at issue in this case to its shareholders in return.

                        (b) The balance due on the Note is confirmed on page
                        18 by the admission, without objection, of Robeson
                        Exhibit 24, which showed the outstanding indebtedness
                        to BB&T of $419,208.66, resulting in a negative net
                        worth of Robeson Associates.

                        (c) The balance due on the Note is further confirmed on
                        page 26 where the attorneys for the parties stipulated the
                        value of the partnership interest pursuant to Robeson
                        Exhibit 24.

                        (d) There was further stipulation on page 29 to the effect
                        that whatever issues Judge Walker did not specifically
                        indicate had survived for trial had either been mooted or
                        withdrawn.     Judge      Walker�s Order specifically
                        references that those other interests were partnership
                        issues, back pay and breach of fiduciary duty claims by
                        Bradley. Those were the three other issues that Judge
                        Walker referred to in his Order.

                        (e) At page 86, Jackson N. Steele, Esq. who represented
                        U.S. Packaging, Inc., Mark C. Speckman, C. C.
                        Dukeshire, MEDD Leasing and Robeson Associates in
                        the Prior Action, made inquiry of Mr. Bradley wherein
                        Mr. Steele specifically asked questions about the value
                        of Bradley�s stock in U.S. Packaging, Bradley�s
                        interests in the partnerships, and the Note which is the
                        subject of this action.

                        (f) There was testimony elicited at page 87 of the
                        transcript about NCNB requiring subordination of the
                        Note.

                        (g) Mr. Steele made a statement at page 115 of the
                        transcript that the Court had ordered Mr. Bradley to sell
                        his stock in U.S. Packaging, and that the valuation
                        would be determined as of March 1987.

                        (h) There was examination of the Defendant Speckman
                        by his counsel, Mr. Steele, at pages 270 and 271,
                        wherein Mark C. Speckman testified concerning the
                        existence of the Note owed to the shareholders, and the
fact that the money was still owed on the Note.

(i) Consistent with his earlier testimony, Speckman
testified again, at page 293 of the Transcript of the trial
of the Prior Action, that U.S. Packaging, Inc. owed each
of the shareholders $125,000.00.

(j) At page 294 there is testimony concerning
negotiations held by Defendant Richard D. Hall with
Defendant Mark C. Speckman concerning the purchase
of Richard D. Hall�s stock in U.S. Packaging, Inc., his
partnership interests and the discounted value of Hall�s
portion of the Note for a total of $400,000.00. This
testimony indicates, and this Court so finds, that
Defendants Mark C. Speckman and Richard D. Hall,
consistent with earlier testimony and the books, records
and financial statements of U.S. Packaging, Inc.,
considered and treated the Note to be a valid and
existing obligation of U.S. Packaging, Inc., albeit
subordinated to payment of U.S. Packaging�s
indebtedness to NCNB. Similarly, at page 304,
Speckman gives testimony concerning possible purchase
of Hall�s stock and interest in the Note. There is
similar testimony to this effect at page 308. Consistent
with this testimony, there is testimony at pages 390-91
concerning the subordination of the Note to NCNB.

(k) The Court has also reviewed the testimony of Mr.
Napier, the expert who testified in the trial of the Prior
Action on behalf of U.S. Packaging, Inc., Richard D.
Hall, Mark C. Speckman, C. C. Dukeshire, MEDD
Leasing and Robeson Associates. This testimony
appears at pages 407-435. In particular, this Court took
note of Mr. Napier�s testimony appearing at pages
407, 408, 410, 411, 420 and 421. Here, Mr. Napier
testified about the highly leveraged condition of U.S.
Packaging and how it affected value and the fact that a
balance sheet approach was not a relevant method of
valuation because of the highly leveraged position of the
company.

(l) In making its ruling herein, this Court also relied
upon Mr. Napier�s valuation at page 441 of only
$103,600.00 for the value of Mr. Bradley�s stock in
U.S. Packaging, and the fact that Mr. Napier determined
that value based purely on a capitalization of earnings
approach. This Court finds that there could not, in the
capitalization of earnings approach, and in the figure of
$103,600.00, been any value placed, even a discounted
value, on the Note.

(m) In arriving at its ruling in this matter, the Court
specifically took note of Defendant Richard D. Hall�s
testimony at page 448 in the trial of the Prior Action
                         concerning the fact that the Note was considered
                         separately from the value of his stock in U.S. Packaging
                         and his partnership interests.

                         (n) This Court also relies for its ruling on a number of
                         statements in the transcript from Judge Freeman wherein
                         he indicated that he was determining the actual value of
                         Mr. Bradley�s shares in U.S. Packaging. These
                         references made by Judge Freeman are found at pages
                         501, 508, 516 and 517 of the transcript of the Prior
                         Action.

                         (o) In addition, this Court noted, and notes for purposes
                         of this Judgment, the statements made by Jackson N.
                         Steele, Esq. counsel for U.S. Packaging, Inc., Mark C.
                         Speckman, C. C. Dukeshire, Robeson Associates and
                         MEDD Leasing in his closing and subsequent argument.
                         These references are found at pages 519, 520, 523, 525,
                         530 and 531 of the transcript. In these references, Mr.
                         Steele     referred repeatedly to the value of Mr.
                         Bradley�s stock and who would buy Mr. Bradley�s
                         stock in U.S. Packaging, and that there was a
                         determination as to the fair value of Mr. Bradley�s
                         stock. Nowhere was there any indication, argument or
                         contention that Mr. Bradley�s interest in, or the Note
                         itself, was part of the value of Bradley�s stock being
                         purchased in the Prior Action.

{10} 8. Based on this Court�s review of the pleadings, discovery, submissions and arguments of counsel,
the transcript in the Prior Action, and in particular those citations to the transcript in the Prior Action set
forth above, this Court concludes and finds as a fact that granting summary judgment to the Plaintiff on the
Promissory Note in this case is entirely consistent with the proceedings in the Prior Action and is not, in
any way, an amendment, alteration or addition to the judgment in the Prior Action as the Court of Appeals
ruled was the case in the Declaratory Judgment Action. This Court views this case differently from the
situation presented by the Declaratory Judgment Action because the Promissory Note was not yet ripe for
suit at the time the Prior Action was filed, nor was it ripe for suit at the time the Prior Action was tried in
1990, the Promissory Note becoming ripe for suit only in 1995. Further, the Court of Appeals specifically
held that the Declaratory Judgment Action was a case in which Bradley had requested the trial court to
modify a prior judgment and not to construe a deed, will, written contract or other writing constituting a
contract. This Court views and so finds this to be an additional essential difference between the
Declaratory Judgment Action and this case. In this matter, there is a written contract or a writing
constituting a contract in the form of the Note which is the subject of this action.

{11} 9. Defendants� defense predicated on former N.C. Gen. Stat. � 105-202 provides no bar to
Plaintiff�s recovery on the Note because the statute has been repealed.

Based on the foregoing, and in order to make clear for appellate review this court�s rulings, this Court
makes the following:

                                        CONCLUSIONS OF LAW

{12} 1. The Promissory Note is unambiguous.

{13} 2. The principal sum of $125,000.00, together with interest, attorney�s fees and all other reasonable
fees and expenses incurred by Bradley in exercising his rights upon default by U.S. Packaging upon the
Note is due and payable to the Plaintiff by U.S. Packaging.

{14} 3. The parole evidence rule bars any oral modification of the terms of the Note.

{15} 4. The Defendants, including U.S. Packaging, Inc., are judicially estopped to deny the existence of
the Note as a valid debt of U.S. Packaging, Inc., payable in part to the Plaintiff. The Defendants are further
judicially estopped from contending in this action that the Note was intended as equity. This judicial
estoppel is based upon the positions taken and testimony given by the Defendants in the Prior Action and,
in particular, on statements of their counsel to the Court in the Prior Action that the Note was then
outstanding and would have to be paid at some point in time and that the Court should take that into
consideration in determining how and when U.S. Packaging should have to pay Mr. Bradley for his stock
in U.S. Packaging. The Court concludes as a matter of law that the position taken by U.S. Packaging, Inc.
and the other Defendants in this case are inconsistent with the position adopted by them in the Prior
Action and there is, in addition to the parole evidence rule, a judicial estoppel which this Court applies in
bar to the Defendants� positions and all defenses with respect to Plaintiff�s collection of his portion of
the Note.

{16} 5. The Plaintiff has a right to sue on this Promissory Note as a demand instrument in which he is a
joint payee, having joined the other alleged joint payees as parties defendant.

{17} 6. The amendments to the Complaint whereby the Plaintiff joined the Defendants Richard D. Hall,
Mark C. Speckman and Clarence C. Dukeshire as parties defendant were filed at this Court�s direction
after hearings in this case in which U.S. Packaging, Inc. contended, through the Defendants Richard D.
Hall and Mark C. Speckman, that the Plaintiff was without the right to collect his portion of the
Promissory Note unless the other payees of the Note were made parties to this case.

{18} 7. This Court has authority over the subject matter of this action and personal jurisdiction over all the
Defendants. The individual Defendants are necessary and proper parties to determine U.S. Packaging,
Inc.�s liability to Plaintiff on the Note.

{19} 8. In making this Order on Summary Judgment, this Court is not interpreting, modifying or
reforming the Judgment in the Prior Action. This Court�s review of the transcript in the Prior Action
took place only to the extent necessary to rule on the defenses raised by the Defendants which defenses
were based on the proceedings and judgment in the Prior Action, and not for purposes of interpreting or
modifying in any way the orders or the Judgment in the Prior Action.

{20} 9. The Plaintiff is not barred from recovery on the Note by the doctrines of res judicata, collateral
estoppel or merger, nor is Plaintiff barred from recovery by the provisions of former N.C. Gen. Stat. �
105-202.

{21} 10. There is an actual and justiciable controversy existing between the Plaintiff on the one hand and
the Defendants on the other.

{22} 11. Bradley is entitled to have and recover on the Note from the Defendant U.S. Packaging, Inc. the
principal sum of $125,000.00, together with interest, attorney�s fees and all other reasonable fees and
expenses incurred by Bradley in exercising his rights and remedies upon default on the Note by U.S.
Packaging.

{23} Based on the pleadings, discovery and other facts and matters of record and the foregoing Findings
of Fact and Conclusions of Law, it is hereby ORDERED, ADJUDGED AND DECREED as follows:

{24} 1. The Motion to Dismiss and Motion for Summary Judgment of the Defendants Hall and Speckman
and the Motion for Summary Judgment of the Defendant U.S. Packaging, Inc. are hereby DENIED in
their entirety and the Motion for Summary Judgment of the Plaintiff is hereby GRANTED; and
{25} 2. Plaintiff shall have and recover the following from U.S. Packaging, Inc.:

(a) The sum of Two Hundred Forty-Two Thousand, Nine Hundred Fifty and 34/100 dollars ($242,950.34)
with interest thereon from and after September 28, 1995 at the contract rate of fifteen percent (15%) per
annum (which interest amount is equivalent to $99.84 per day), until all amounts due hereunder are paid in
full; and

(b) The sum of Thirty-Six Thousand Five Hundred Two and 45/100 dollars ($36,502.45) in reasonable
attorney�s fees; and

(c) The sum of Twelve Thousand Three Hundred Eighty-Three and 87/100 dollars ($12,383.87) in other
reasonable fees and expenses incurred by Bradley in exercising his rights and remedies upon default by
U.S. Packaging on the Note.

{26} 3. All costs of this action are taxed to Defendant U.S. Packaging to the extent they are not covered
by the award in Paragraph 2 above.

This the 9th day of April, 1998.