UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

COMMERCE FUNDING CORPORATION, 

Plaintiff,

v.

WORLDWIDE SECURITY SERVICES

CORPORATION,

Defendant-Appellant,  No. 02-1977

v.

SOUTHERN FINANCIAL BANK,

Defendant-Appellee,

and

BANK OF ASHEVILLE,

Defendant. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, Chief District Judge.

(CA-99-201-A)

Argued: May 9, 2003

Decided: October 28, 2003

Before TRAXLER, KING, and GREGORY, Circuit Judges.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: William Michael Holm, WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C., McLean, Virginia, for Appellant. Thomas
Patrick Gorman, TYLER, BARTL, GORMAN & RAMSDELL,

P.L.C., Alexandria, Virginia, for Appellee. ON BRIEF: Jerry W.

Boykin, WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C.,

McLean, Virginia, for Appellant. Steven B. Ramsdell, TYLER,

BARTL, GORMAN & RAMSDELL, P.L.C., Alexandria, Virginia,

for Appellee.

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

In a previous appeal, we concluded that Worldwide Security Services Corporation ("Worldwide Security") had presented sufficient

evidence to survive a motion for summary judgment filed by Southern

Financial Bank ("Southern Financial") on Worldwide Security’s

claim for tortious interference with contractual relations, and we

remanded so that Worldwide Security could continue to pursue its

claim. See Commerce Funding Corp. v. Worldwide Sec. Servs. Corp.,

249 F.3d 204, 214-15 (4th Cir. 2001). On remand, the district court

conducted a bench trial and entered judgment for Southern Financial

on that claim. Worldwide Security appeals. For the reasons stated

below, we affirm. 

I.

Although Commerce Funding contains a thorough recitation of the

underlying facts, we must consider Worldwide Security’s appeal in

light of the evidence developed at trial rather than the summary judgment record that was previously before us. See Distaff, Inc. v. Springfield Contracting Corp., 984 F.2d 108, 111 n.1 (4th Cir. 1993)

("[S]ummary judgment is usually made before trial and decided on

documentary evidence, while directed verdicts are made at trial and

decided on the evidence that has been admitted." (internal quotation

2 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
marks omitted)); cf. Thorpe v. Mutual of Omaha Ins. Co., 984 F.2d

541, 545 (1st Cir. 1993) ("Evidence adduced at trial will almost

always differ in degree, force, and quantity from that submitted on a

motion for summary judgment."). Of course, in the present appeal, we

need only review the facts relating to Worldwide Security’s single

claim of tortious interference with contractual relations. 

Between 1996 and 1997, the United States Department of Labor

and the Federal Bureau of Investigation ("FBI") awarded Denmark

Security, Inc. ("Denmark") several contracts to provide security guard

services (the "government contracts"). Denmark was in need of working capital and Southern Financial agreed to extend a Small Business

Administration ("SBA") loan of $80,000 to Denmark in return for a

security interest in various assets held by Denmark, including the

accounts receivable generated by its government contracts. Southern

Financial did not, however, take a security interest in Denmark’s

"contract rights." J.A. 605, 612. Southern Financial properly perfected

its security interest. 

By March 1998, Denmark was struggling financially and began

discussing the possibility of the acquisition of Denmark by Worldwide Security. On March 21, 1998, Vincent Venegoni, Worldwide

Security’s principal, signed a "Stock Purchase Agreement" with Dennis and Lisa Haas, Denmark’s sole shareholders, whereby Venegoni

agreed to pay $100,000 in exchange for all outstanding shares of Denmark stock. On April 10, 1998, Dennis Haas and Venegoni informed

Michelle Douglas, a loan officer for Southern Financial, that they

were contemplating the potential purchase of Denmark by Worldwide

Security. Douglas informed Venegoni that Southern Financial would

be willing to allow Worldwide Security to assume Denmark’s loan if

it submitted, and Southern Financial approved, an application for the

loan. 

Ultimately, Venegoni and Worldwide Security decided not to close

on the stock purchase agreement after reviewing Denmark’s financial

information, which included Southern Financial’s security interest in

the accounts receivable generated from Denmark’s government contracts. On April 20, 1998, Venegoni sent written notice to Worldwide

Security’s own lender, the Bank of Asheville, that there would be no

stock purchase. However, until May 28, 1998, Worldwide Security

COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 3
continued to represent to Denmark that it was willing to complete the

stock purchase.

On April 21, 1998, still in need of working capital to meet payroll

and other obligations, Denmark entered into a factoring agreement

with Commerce Funding Corporation ("Commerce"). Under this factoring agreement, Commerce contracted to advance funds on the

receivables from Denmark’s government contracts in exchange for a

security interest in and the assignment of Denmark’s accounts receivable. Venegoni signed the factoring agreement on behalf of Denmark

even though the stock purchase was never consummated. 

On May 5, 1998, Commerce and Southern Financial entered into

an "Intercreditor Agreement" under which Southern Financial agreed

to subordinate its security interest to Commerce’s security interest in

the receivables from Denmark’s government contracts. Denmark, as

the debtor, was also party to the Intercreditor Agreement; Venegoni

signed on behalf of Denmark as Chairman of the Board of Directors.

On May 28, 1998, well after Southern Financial had agreed to subordinate its security interest to Commerce, Venegoni notified Denmark that he no longer intended to finalize the purchase of Denmark

stock as a result of what he believed were financial misrepresentations

by Denmark. Instead, on July 4, 1998, Worldwide Security entered an

agreement with Dennis and Linda Haas to purchase the corporate

assets of Denmark, including "all contracts" and "all receivable[s] and

any other moneys . . . due to" Denmark. J.A. 342-43. The asset purchase agreement indicated that Denmark’s assets were "free and clear

of all pledges, liens, security interests, or other encumbrances of any

kind whatsoever." J.A. 343. 

The asset purchase agreement included an addendum clarifying

that the receivables generated from Denmark’s government contracts

had been "pledged" to Commerce "for a period of one year under a

factoring agreement dated April 1998." J.A. 350. Thus, except as

specified in the addendum, Denmark "represent[ed] and warrant[ed]

that [it had] not pledged any of [the] Assets being conveyed and [had]

not executed any instruments evidencing or relating to indebtedness

for borrowing money pursuant to which the business assets are obligated." J.A. 344. As part of its consideration, Worldwide Security

4 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
promised to employ Haas. Venegoni signed on behalf of Worldwide

Security as its president even though he was clearly aware that Southern Financial had extended an SBA loan to Denmark and held an

interest in the receivables to the government contracts, given that he

had signed the Intercreditor Agreement on behalf of Denmark. 

Although the parties closed on the asset purchase agreement on

June 12, 1998, Worldwide Security later issued invoices seeking to

collect for services rendered by Denmark prior to the closing date.

Southern Financial received notice that Worldwide Security had

acquired Denmark’s assets rather than full ownership of the company,

but Worldwide Security nevertheless continued to represent that it

intended to satisfy Denmark’s debt obligation to Southern Financial,

which still held a security interest in Denmark’s receivables. 

Worldwide Security, meanwhile, obtained financing of its own.

First, on May 4, 1998, Worldwide Security obtained a loan from the

Bank of Asheville, which took a security interest in Worldwide

Security’s "contract rights." Second, on June 30, 1998, after having

acquired and begun servicing Denmark’s government contracts,

Worldwide Security entered into a factoring agreement with Commerce, as had Denmark. Commerce agreed to finance Worldwide

Security’s receivables, easing cash flow so that Worldwide Security

could meet payroll. In exchange, Commerce took and perfected a

security interest "in all of [Worldwide Security’s] assets either now

owned or hereafter acquired . . . including . . . accounts receivable . . .

[and] contract rights." J.A. 356. Venegoni signed on behalf of Worldwide Security, just as he signed on behalf of Denmark in its factoring

agreement with Commerce, but he did not inform Southern Financial

of the contract. 

By the end of July 1998, Southern Financial’s loan to Denmark

was in default. Southern Financial sent a notice of default to Dennis

Haas, accelerated the outstanding loan balance of $72,337.33, and

demanded immediate payment from Denmark. When the loan

remained in default, Southern Financial began efforts to recoup its

money through Denmark’s assets in which Southern Financial held a

security interest, including Denmark’s accounts receivable. On July

21, 1998, pursuant to the Intercreditor Agreement it had entered with

Commerce and Denmark, Southern Financial notified Commerce that

COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 5
"[a]s the secondary lien holder . . . we are requesting at this time that

any excess paid funds from the receivables assigned to you be sent

directly to . . . Southern Financial." J.A. 362. A few days later, counsel for Southern Financial notified Commerce that Southern Financial

had learned about Worldwide Security’s purported purchase of Denmark’s assets and that it had not approved the transfer of Denmark’s

collateral, as was Southern Financial’s right to do under the terms of

its security agreement with Denmark. Southern Financial asserted that

it was entitled to any funds collected on the government contracts in

excess of those due Commerce, as provided by the Intercreditor

Agreement. 

Worldwide Security responded that, pursuant to the asset purchase

agreement with Denmark, it owned Denmark’s contract rights, including the government contracts, and, necessarily, the receivables flowing from the government contracts then being serviced by Worldwide

Security. Worldwide Security based its position on the fact that

Southern Financial held its security interest only in Denmark’s

accounts receivable, not its contract rights. Thus, Worldwide Security

took the position that Southern Financial was attempting to collect

Worldwide’s receivables, in which it held no security interest. 

As a result of this dispute, Commerce placed a hold on any

advances of funds it collected from the government contracts over and

above that which Commerce was entitled to under its factoring agreement with Worldwide Security. Although Commerce, Southern

Financial, and Worldwide Security agreed to the disbursement of

some funds in mid-August 1998 so that Worldwide Security could

meet payroll obligations, Commerce retained the remainder of the

receivables until the dispute could be resolved. Despite the disbursement of funds, Worldwide Security failed to meet payroll and its

employees walked off of the job on August 21. Worldwide Security

subsequently lost the government contracts. 

In February 1999, Worldwide Security filed a bankruptcy petition

seeking to reorganize under Chapter 11 of the Bankruptcy Code. Its

attempt at reorganization ultimately failed, and the petition was converted to a Chapter 7 liquidation. 

Commerce filed this interpleader action under 28 U.S.C. § 1335

against Worldwide Security, Southern Financial, and the Bank of

6 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
Asheville as claimants to the receivables held by Commerce. Worldwide Security asserted cross-claims against Southern Financial for

tortious interference with contractual relations and tortious interference with prospective economic advantage. On the claim for tortious

interference with contractual relations, Worldwide Security alleged

that Southern Financial’s demand for the receivables generated by the

government contracts caused Commerce to breach its factoring agreement with Worldwide Security by freezing disbursements of funds

collected under the government contracts. 

All of the parties moved for summary judgment as to the receivables; the district court determined that the Bank of Asheville was

entitled to the receivables being held by Commerce and granted summary judgment in its favor. The district court also granted summary

judgment to Southern Financial on both of Worldwide Security’s

cross-claims. On the tortious interference with contractual relations

claim, the district court concluded that Southern Financial "was privileged or justified to assert claims on the disputed funds in which it

had a legitimate financial interest." Commerce Funding, 249 F.3d at

209 (internal quotation marks omitted). 

On appeal, we vacated the district court’s ruling. See id. at 214-15.

We held that "a reasonable jury could find that Southern [Financial]

failed to prove that its actions were justified or privileged on the basis

of the financial interest [affirmative] defense." Id. at 212. This holding rested on our conclusion that, under Virginia law, in order to

establish the affirmative defense of justification, the party that is

interfering "must actually possess a financial interest" in the matter,

not merely have a "good faith belief" that it has a financial interest

in need of protection. Id. at 211-12. We also concluded that Worldwide Financial presented sufficient evidence on each element of the

tortious interference claim to survive summary judgment. See id. at

212-13. 

On remand, after conducting a bench trial, the district court entered

judgment in favor of Southern Financial. The court explained that

"[w]hile the Fourth Circuit held that Worldwide provided sufficient

evidence to create a triable issue of fact with respect to the four elements of its prima facie case, Worldwide failed to do so at trial." J.A.

733. Specifically, the court found that "Worldwide failed to prove that

COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 7
[Southern Financial] had knowledge of Worldwide’s factoring agreement with Commerce Funding, that [Southern Financial] intentionally

interfered in such contract causing its breach, or that [Southern Financial] attempted to interfere with the agreement." J.A. 733. Also, the

district court concluded that Worldwide Security failed to offer sufficient proof of any damages relating to Southern Financial’s conduct.

Worldwide Security appeals for a second time, raising essentially

two challenges to the district court’s decision. First, Worldwide

Security argues that the court erroneously applied Virginia law to the

evidence at trial in concluding that Worldwide Security failed to

establish the elements of its claim. Second, Worldwide Security

argues that the district court applied the wrong legal standard in

rejecting its claim for lost profits and other damages, and then ignored

its damages evidence which was sufficient to support an award of

damages, including lost profits. 

II.

In an appeal following a bench trial, our review of the district

court’s legal conclusions is de novo, but we will not disturb the

court’s factual findings unless they are clearly erroneous. See Williams v. Sandman, 187 F.3d 379, 381 (4th Cir. 1999). A district

court’s factual finding is clearly erroneous "when although there is

evidence to support it, the reviewing court on the entire evidence is

left with the definite and firm conviction that a mistake has been committed." Scrimgeour v. I.R.S., 149 F.3d 318, 324 (4th Cir. 1998)

(internal quotation marks omitted). "Where there are two permissible

views of the evidence, the factfinder’s choice between them cannot

be clearly erroneous." Id. (internal quotation marks and alteration

omitted). 

A.

To prevail on its cause of action arising under Virginia law, Worldwide Security was required to prove: "(1) the existence of a valid contractual relationship . . . ; (2) knowledge of the relationship . . . on the

part of the interferor; (3) intentional interference inducing or causing

a breach or termination of the relationship . . . ; and (4) resultant damage to the party whose relationship . . . has been disrupted." Chaves

8 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
v. Johnson, 335 S.E.2d 97, 102 (Va. 1985). Worldwide Security bore

the burden of convincing the district judge, sitting as the trier of fact,

that each element was present. It is undisputed that, as required by the

first element, a valid contract existed between Worldwide Security

and Commerce in the form of the factoring agreement. Therefore, we

turn to the other elements. 

First, Worldwide Security was required to demonstrate "knowledge

of the relationship . . . on the part of the interferor." Id. at 102. The

interferor "must have knowledge of the contract with which he is

interfering and of the fact that he is interfering with the performance

of the contract." Restatement (Second) of Torts § 766, comment i.

The district court concluded, based on its view of the evidence, that

Worldwide Security failed to carry its burden of "prov[ing] that

[Southern Financial] had knowledge of Worldwide’s factoring agreement with Commerce Funding." J.A. 733. The district court explained

that "[n]o evidence was presented that Worldwide ever informed

[Southern Financial] of the factoring agreement it entered into with

Commerce Funding" and that "when [Southern Financial] wrote

Commerce Funding in late July 1998 demanding Denmark’s receivables in excess of the amounts Denmark owed to Commerce Funding,

[Southern Financial] was acting pursuant to . . . its own Inter-creditor

Agreement with Commerce Funding and without knowledge of the

factoring agreement." J.A. 733. 

Worldwide Security argues that the district court erred in concluding that Southern Financial did not have knowledge of the contractual

relationship because the Southern Financial loan officer responsible

for the loan to Denmark, Michelle Douglas, testified that she was

aware of a contractual arrangement between Commerce and Worldwide Security by the end of July 1998. Worldwide Security also

points to a letter, dated August 6, from its attorney to Southern Financial’s attorney, in which a reference is made to "Worldwide [having]

granted a security interest to [Commerce] in its receivables." J.A. 369.

Although Worldwide Security is correct that this evidence is sufficient to permit the trier of fact to conclude that the knowledge

requirement has been satisfied, it does not require such a conclusion.

Worldwide Security, in effect, is advancing a summary judgment

argument — indeed, we previously concluded that there was suffiCOMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 9
cient evidence, when viewed in the light most favorable to Worldwide

Security, to permit a trier of fact to find in its favor on the elements

of a tortious interference claim. See Commerce Funding, 249 F.3d at

212-13. On remand, however, the issue was no longer whether

Worldwide Security could offer sufficient evidence to establish each

element; rather, the question was whether it could prove its claim by

a preponderance of the evidence to the district court. 

Worldwide Security’s only argument in this regard is that the district court should have been persuaded that Southern Financial knew

about the contract by Douglas’s testimony and the letter to Southern

Financial’s attorney, which is really nothing more than a challenge to

the district court’s contrary factual determination. The district court’s

conclusion that Southern Financial was not aware of the factoring

agreement between Worldwide Security and Commerce is supported

by the evidence. As noted by the court, there was no evidence that

either Worldwide Security or Venegoni informed Southern Financial

of the factoring agreement or its terms or provided a copy of it. John

Geraerdts, who served as counsel for Commerce, testified that Southern Financial was not a party to the arrangement between Worldwide

Security and Commerce and that there was "no reason for them to

even know about that loan." J.A. 165. This testimony was consistent

with Worldwide Security’s position before and throughout the litigation that unlike the factoring agreement between Denmark and Commerce, which required Southern Financial’s participation because of

its interest in Denmark’s receivables, the factoring agreement

between Worldwide Security and Commerce asserted a lien in receivables ostensibly generated from contracts owned by Worldwide

Security. Moreover, as noted by the court, Southern Financial made

its demands for the receivables generated from Denmark’s government contracts pursuant to its contract with Commerce under the

Intercreditor Agreement, without referring to any arrangement Commerce had with Worldwide Security. 

Although Douglas testified that she knew of a contractual arrangement between Worldwide Security and Commerce, she indicated that

her knowledge resulted from an exchange of letters at the end of July.

Specifically, Douglas was referring to a July 21 letter to Commerce

in which she made a demand under the terms of the Intercreditor

Agreement and a July 24 letter drafted by Southern Financial’s attor10 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
ney also seeking to recoup receivables under the Intercreditor Agreement. Neither letter made any reference whatsoever to a contractual

arrangement between Worldwide Security and Commerce; in fact, the

only "new" information that "ha[d] come to [Southern Financial’s]

attention [was] that Mr. Haas has sold the assets of his business . . .

to Worldwide Security." J.A. 363. Therefore, Douglas’s testimony

was far from conclusive regarding Southern Financial’s knowledge of

the contract. Since there was other evidence suggesting that Southern

Financial was unaware of the contract, the district court’s conclusion

did not amount to clear error. See Scrimgeour, 149 F.3d at 324

("[T]he fact-finder’s choice . . . cannot be clearly erroneous" if "there

are two permissible views of the evidence." (internal quotation marks

omitted)). 

B.

Next, Worldwide Security challenges the district court’s conclusion

that it failed to prove the third element of the tort — "intentional

interference inducing or causing a breach or termination" of the contract. Commerce Funding, 249 F.3d at 210 (internal quotation marks

omitted). The intent requirement may be satisfied not only when the

defendant "acts for the primary purpose of interfering with the performance of the contract," but also when the defendant "knows that the

interference is certain or substantially certain to occur as a result of

his [or her] actions." Restatement (Second) of Torts § 766 cmt. j; see

Commerce Funding, 249 F.3d at 212-13. The district court concluded

that the evidence showed only that Southern Financial was "attempting to enforce its own rights under its various agreements, including

the Intercreditor Agreement when it attempted to take hold of the

funds," rather than attempting to interfere with the contract between

Worldwide Security and Commerce. J.A. 734. Moreover, given the

court’s finding that Worldwide Security failed to prove the knowledge requirement, the evidence would necessarily fail to show that

Southern Financial knew that interference was certain or substantially

certain to occur as a result of its attempt to exercise its rights under

the Intercreditor Agreement. 

Worldwide Security argues that the district court’s conclusion contravenes our holding in the previous appeal that rejected Southern

Financial’s affirmative defense that any interference was justified by

COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 11
its "financial interest" because "Southern had absolutely no legal

interest whatsoever to protect." Commerce Funding, 249 F.3d at 212.

We explained that in the absence of an actual financial interest, the

defendant may not assert an affirmative defense arguing that interference was justified or privileged. Thus, even if the actor possesses a

good faith belief that he has such an interest in the matter, it is no

defense if he does not actually possess such an interest. See id. at 212.

Worldwide Security contends that the district court ignored our decision to the extent that the court relied on evidence that Southern

Financial was protecting its own financial interest under the Intercreditor Agreement. Thus, Worldwide Security argues that the only

factual question for trial was whether Southern Financial’s actions in

fact interfered with the contract.

Worldwide Security misconstrues our prior decision. In Commerce

Funding we held that good faith, or lack thereof, is not relevant for

purposes of the "financial interest" affirmative defense. An affirmative

defense serves as a "bar to the right of recovery even if the general

complaint were more or less admitted to." Emergency One, Inc. v.

American Fire Eagle Engine Co., 332 F.3d 264, 271 (4th Cir. 2003)

(internal quotation marks omitted). Therefore, the financial interest

affirmative defense can shield from liability a defendant who is otherwise guilty of intentional interference with a contract. Commerce

Funding simply established that a defendant may not intentionally

interfere with a contract and then justify his actions by proving that

he reasonably, albeit mistakenly, believed he was protecting a legal

interest to which he was entitled. See 249 F.3d at 210-12. Such a

defense, of course, assumes that the defendant has otherwise tortiously interfered with the contract — i.e., that the defendant knew

about the contract and knew that his actions were "certain or substantially certain" to interfere with the contract. Id. at 212-13 (internal

quotation marks omitted). By contrast, the decision of the district

court focused not on an affirmative defense but on Worldwide Security’s proof of the elements of its claim. Southern Financial’s pursuit

of Denmark’s receivables under the Intercreditor Agreement was relevant to knowledge of the contract as well as intent and purpose —

elements that Worldwide Security was required to prove in order for

12 COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK
the district court to find that Southern Financial was "otherwise

guilty" of tortious interference.*

III.

Because we affirm the district court’s conclusion that Worldwide

Security failed to prove Southern Financial’s knowledge of or intentional interference with the contract, we need not consider whether

Worldwide Security offered sufficient evidence to support its claim

for lost profits or other damages. Accordingly, we affirm the judgment of the district court. 

AFFIRMED

*In making this argument, Worldwide Security again fails to distinguish between summary judgment and a bench trial. In Commerce Funding, we were reviewing the district court’s disposition of a summary

judgment motion. We concluded that, construing the facts in favor of

Worldwide Security, Southern Financial was not entitled to summary

judgment based on a financial interest affirmative defense because "a

reasonable jury could find that Southern failed to prove that its actions

were justified or privileged on the basis of [its] financial interest." Commerce Funding, 249 F.3d at 212 (emphasis added). The earlier denial of

a summary judgment motion, of course, does not preclude the ultimate

entry of judgment in favor of the party to whom summary judgment was

denied. See Thorpe, 984 F.2d at 545. 

COMMERCE FUNDING v. SOUTHERN FINANCIAL BANK 13