PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
COMMERCE FUNDING CORPORATION,
Plaintiff,
v.
WORLDWIDE SECURITY SERVICES
CORPORATION,
Defendant-Appellant,
v. No. 00-1040
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: March 1, 2001
Decided: April 20, 2001
Before KING and GREGORY, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed in part, vacated in part, and remanded by published opinion.
Judge Gregory wrote the opinion, in which Judge King and Senior
Judge Hamilton joined.
2 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
COUNSEL
ARGUED: Mark White Byrum, Jr., THE BYRUM LAW OFFICES,
P.C., Alexandria, Virginia, for Appellant. James MacGregor Collins,
DRAPER & GOLDBERG, P.L.L.C., Leesburg, Virginia, for Appel-
lee. ON BRIEF: L. Darren Goldberg, DRAPER & GOLDBERG,
P.L.L.C., Leesburg, Virginia, for Appellee.
OPINION
GREGORY, Circuit Judge:
Worldwide Security Services Corporation ("Worldwide") appeals
from a grant of summary judgment on each of two cross-claims it
asserted against Southern Financial Bank ("Southern") for tortious
interference with contractual relations and tortious interference with
prospective economic advantage in an interpleader action to deter-
mine the entitlement to the proceeds of certain government contracts.
As for the contractual relations claim, the district court ruled that
Southern’s interference was justified or privileged because Southern
acted for the purpose of protecting its own "financial interest."
Regarding the prospective economic advantage claim, the court ruled
that Southern had not engaged in the type of improper conduct that
is actionable under Virginia law. We agree with respect to the pro-
spective economic advantage claim and disagree where the contrac-
tual relations claim is concerned. We therefore affirm in part, vacate
in part, and remand.
I.
In September 1996, the United States Department of Labor
awarded a contract to Denmark Security, Inc. ("Denmark") under
which Denmark was to provide security guard services. The Federal
Bureau of Investigation ("FBI") awarded Denmark two similar con-
tracts in September 1997. In late 1996 and early 1997, however, Den-
mark was in need of capital. Southern loaned Denmark a total of
$80,000.00 and Denmark, in turn, granted Southern a security interest
in, inter alia, accounts receivable of Denmark. Southern properly per-
fected its security interests.
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 3
Denmark continued to experience financial problems. As a result,
Worldwide commenced discussions with Denmark in early 1998
regarding a potential purchase. Although Worldwide and Denmark
first discussed a stock purchase agreement, Worldwide contends that
Denmark misrepresented information regarding its debts, causing
Worldwide to explore the possibility of an asset purchase agreement
instead.
In late April 1998, Denmark, still in search of additional operating
funds, entered into a factor agreement with Commerce Funding Cor-
poration ("Commerce") in which Denmark assigned to Commerce,
inter alia, its accounts receivable, including amounts due under the
two Denmark-FBI contracts. After Commerce properly perfected its
security interests, Commerce, Southern, and Denmark entered into an
inter-creditor agreement under which Southern’s security interests in
Denmark’s receivables were subordinated to those of Commerce.
On or about May 4, 1998, Worldwide entered into a loan agree-
ment with the Bank of Asheville.1 As a part of that transaction,
Worldwide granted the Bank of Asheville a security interest in, inter
alia, its "contract rights." The Bank of Asheville then filed a financ-
ing statement to perfect its security interests.
Worldwide contends that on or about June 2, 1998, the FBI
assigned the two Denmark-FBI contracts to Worldwide in a phone
conversation. On that same day, according to Worldwide, the Depart-
ment of Labor assigned the Denmark-Department of Labor contract
to Worldwide in a separate phone conversation. The evidence shows
that Southern never consented to these transactions.
By June 4, 1998, Worldwide had decided to purchase Denmark’s
assets. The parties entered into an asset purchase agreement, and Den-
mark ceased operations that day. Worldwide began performing the
FBI and Department of Labor contracts (collectively, the "Govern-
ment Contracts") the very next day. Two days later, Denmark, World-
wide, and the Department of Labor entered into a novation agreement
which purported to recognize Worldwide as the successor party to
1
The record before us does not reveal the amount of the Bank of
Asheville-Worldwide loan.
4 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
Denmark’s contract with the Department of Labor. The asset purchase
agreement closed on June 12, 1998, and Denmark went out of busi-
ness on that date.
On June 30, 1998, Worldwide, also in search of operating capital,
entered into a one-year factor agreement with Commerce.2 In that
agreement, Worldwide assigned to Commerce the proceeds from its
performance under any and all of its contracts.3 Commerce thereafter
collected receivables from those contracts to satisfy Worldwide’s
debts under the factor agreement. Under the terms of the agreement,
if Commerce collected receivables in excess of Worldwide’s then-
current debt to Commerce, then Commerce turned the excess funds
over to Worldwide or its other creditors.
Worldwide contends that by approximately mid-July 1998, Com-
merce had collected receivables sufficient to satisfy Worldwide’s debt
to Commerce. Accordingly, Worldwide expected to receive payments
from Commerce. On July 14, 1998, however, Southern learned of the
Worldwide-Denmark asset purchase agreement. On July 20, 1998,
Southern sent a letter notifying Denmark that it had not complied with
the terms of its loan agreements with Southern, and that full payment
in the amount of $72,337.33 was due. On the next day, Southern sent
a letter to Commerce demanding that Commerce send to Southern, as
a secured creditor of Denmark and the secondary lienholder against
the two Denmark-FBI contracts, "any excess paid funds" from the
receivables Worldwide had assigned to Commerce.
Southern reiterated its claim to Commerce in a letter dated July 24,
1998. Southern asserted that under the terms of its loan and security
agreements with Denmark and its inter-creditor agreement with Com-
merce, it was the secondary lienholder on accounts receivable from
the Denmark-FBI contracts, and it was the primary lienholder on any
proceeds Commerce collected from contracts that were not subject to
2
The term was automatically renewable for successive one-year peri-
ods, unless Worldwide canceled the agreement at least thirty (30) days
prior to the last day of the then-effective term.
3
On June 28, 1998, the FBI issued two notices of assignment, each of
which provided that Worldwide assigned any payments due under the
two FBI contracts to Commerce.
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 5
the Commerce-Southern inter-creditor agreement. Southern also
claimed that its liens were valid because it had neither been given
notice of nor consented to the sale of Denmark’s contracts.
On August 6, 1998, counsel for Worldwide demanded by way of
letter that Southern immediately withdraw its demand that Commerce
pay to Southern funds Commerce held on behalf of Worldwide (the
"Receivables"). In that letter, Worldwide contended that Southern’s
claims had no legal basis. Chief among Worldwide’s stated reasons
were that (a) Southern possessed liens on the receivables of Denmark
rather than those of Worldwide, and (b) Southern’s security agree-
ments were improperly marked and filed. Worldwide also put South-
ern on notice that it needed the Receivables to meet its payroll the
next day, and that it would sue Southern for damages incurred if the
Receivables were not released.
On August 7, 1998, Worldwide and Southern negotiated an agree-
ment that permitted Commerce to release some of the Receivables by
dividing them evenly between Worldwide and Southern. On August
21, 1998, Worldwide failed to meet its payroll, and its employees
refused to report to work. On August 24, 1998, Worldwide and South-
ern negotiated another agreement that permitted Commerce to release
additional funds to Southern and Worldwide. However, on August 28
and September 4, respectively, the FBI and Department of Labor each
terminated its contract with Worldwide.
In a September 11, 1998 letter, Worldwide again attempted to per-
suade Southern to release its claims to the Receivables. In that letter,
Worldwide demanded that Southern immediately contact Commerce
and authorize it to release any funds held in excess of the sums South-
ern claimed it was owed. Southern apparently refused to comply with
that demand. Worldwide’s financial problems then escalated and it
eventually filed a Chapter 11 bankruptcy petition.
On February 19, 1999, Commerce filed an interpleader action
under 28 U.S.C. § 1335 with the United States District Court for the
Eastern District of Virginia, Alexandria Division, naming Worldwide,
Southern, and the Bank of Asheville as defendants and claimants to
the stake. On July 28, 1999, Worldwide answered the complaint and
asserted, inter alia, cross-claims for tortious interference with con-
6 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
tractual relations and tortious interference with prospective economic
advantage against Southern. Worldwide, Southern, and the Bank of
Asheville each moved for summary judgment claiming ownership of
the Receivables. Southern also moved for summary judgment with
respect to Worldwide’s cross-claims.
On November 30, 1999, the district court granted the Bank of
Asheville’s motion regarding entitlement to the Receivables and
denied those of Worldwide and Southern. The court also granted
Southern’s motion for summary judgment on Worldwide’s cross-
claims. As to the tortious interference with contractual relations
claim, the court ruled that Southern was privileged or justified "to
assert claims on the disputed funds in which it had a legitimate finan-
cial interest." (J.A. at 173.) Regarding the prospective economic
advantage claim, the court ruled that Worldwide did not "set forth
facts which establish that Southern engaged in any intentional mis-
conduct." Id. at 174. Worldwide now appeals the district court’s rul-
ings.
II.
We review the district court’s grant of summary judgment de novo.
Kubicko v. Ogden Logistics Servs., 181 F.3d 544, 551 (4th Cir. 1999).
Summary judgment is appropriate only in those cases where the
pleadings, affidavits, and responses to discovery "show that there is
no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A material fact
is one "that might affect the outcome of the suit under the governing
law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
disputed fact presents a genuine issue "if the evidence is such that a
reasonable jury could return a verdict for the non-moving party." Id.
III.
In this diversity action, it is undisputed that Worldwide’s claims
arise under Virginia law. Although under Virginia law the elements
of a prima facie case for tortious interference with contractual rela-
tions and for tortious interference with prospective economic advan-
tage are generally very similar, they differ in respects material to this
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 7
case. We will therefore discuss each claim separately. We turn, first,
to Worldwide’s claim for tortious interference with contractual rela-
tions.
A.
To make a claim of tortious interference with contractual relations
in Virginia a plaintiff must prove the following elements: "(1) the
existence of a valid contractual relationship . . .; (2) knowledge of the
relationship . . . on the part of the interferor; (3) intentional interfer-
ence inducing or causing a breach or termination of the relationship
. . .; and (4) resultant damage to the party whose relationship . . . has
been disrupted." Chaves v. Johnson, 335 S.E.2d 97, 102 (Va. 1985).
An interferor may escape liability, however, by proving that the inter-
ference was justified or privileged because the interferor acted for the
purpose of protecting its own "financial interest." Id. at 103.4 The bur-
den rests on the interferor to prove that the interference is justified or
privileged. Id.
To survive summary judgment, Worldwide must demonstrate that
a reasonable jury could find that both (a) Worldwide presented a
prima facie case, and (b) Southern failed to prove that the interference
was justified or privileged on the basis of Southern’s financial inter-
est. We will discuss the prima facie elements and the financial interest
defense separately. Since the district court based its ruling on South-
ern’s ability to use the financial interest defense, we shall begin our
discussion there.
1.
The district court ruled that Southern was privileged to assert
claims "on the disputed funds in which it had a legitimate financial
interest." The court’s ruling seems to be grounded in the theory that
4
Chaves specifically provided five grounds for the use of the affirma-
tive defense of justification or privilege: "legitimate business competi-
tion, financial interest, responsibility for the welfare of another, directing
business policy, and the giving of requested advice." Chaves, 335 S.E.2d
at 103 (citing Calbom v. Knudtzon, 396 P.2d 148, 151 (Wash. 1964)).
8 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
Southern was legally entitled to assert its financial interest in the
Receivables. Worldwide contends, however, that the court’s ruling
was inconsistent insofar as the court held that while Southern had no
legal claim to the Receivables, it was nevertheless privileged or justi-
fied in asserting its claims.
We have found no Virginia cases that clearly define the parameters
of the financial interest defense. The Virginia courts do, however,
refer us to the discussion in the Restatement (Second) of Torts
§§ 768-772 (1977) regarding the affirmative defenses applicable to
tortious interference claims. Chaves, 335 S.E.2d at 103. It is clear that
to invoke the defense one must act for the purpose of protecting a
financial interest that one actually possesses. See Restatement (Sec-
ond) of Torts § 769 (applying the financial interest defense to "[o]ne
who, having a financial interest," intentionally interferes with another
and a third party’s contractual relations) (emphasis added); see also
Zoby v. American Fidelity Co., 242 F.2d 76, 79 (4th Cir. 1957)
(applying the financial interest defense "[w]here the alleged interferer
is a financially interested party and such interest motivates his con-
duct . . . .") (emphasis added). In general, the defense is "based upon
the relationships between the parties and the balance to be struck
between the social desirability of protecting the business relationship,
on one hand, and the interferor’s freedom of action on the other."
Chaves, 335 S.E.2d at 103.
Worldwide argues that Southern could not have been privileged or
justified to assert claims to the Receivables because it in fact had no
financial interest in them. Southern contends that Denmark trans-
ferred to Worldwide the contracts in which Southern had a security
interest, and that its liens were still valid following the transfers
because it had not consented to them. Federal law clearly prohibits
any party to a contract with the United States government from trans-
ferring that contract, or any interest therein, to any other party. 41
U.S.C.A. § 15 (West Supp. 2000).5 If any such transfer is consum-
5
41 U.S.C.A. § 15 (West Supp. 2000) provides that "No contract or
order, or any interest therein, shall be transferred by the party to whom
such contract or order is given to any other party, and any such transfer
shall cause the annulment of the contract or order transferred, so far as
the United States is concerned." This statute has not been amended since
1996.
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 9
mated, then the transferred contract is annulled so far as the United
States is concerned. Id.
Here, it is immaterial whether or not the FBI and the Department
of Labor assigned the Government Contracts to Worldwide in trans-
actions distinct from the Worldwide-Denmark asset purchase agree-
ment. If this occurred, then Denmark never transferred the
Government Contracts to Worldwide, in which case Southern had no
reason to assert claims with Commerce, because Denmark’s debts to
Southern remained with Denmark. If, on the other hand, Denmark
transferred some or all of the Government Contracts to Worldwide,
as Southern contends, then the obligations to make payments under
the Government Contracts were annulled, in which event the Receiv-
ables were extinguished entirely. In either event, it was legally impos-
sible for Denmark to transfer the Government Contracts to
Worldwide in a manner that preserved Southern’s financial interests
in the Receivables. For this reason, Southern cannot invoke the finan-
cial interest defense.6
Southern nevertheless argues that its good faith, albeit mistaken,
belief that it possessed an interest in the Receivables is sufficient to
prove the financial interest defense. However, this argument miscon-
strues the requirements of the defense. As is noted above, one must
actually possess a financial interest in the business of a third person
to justify interference with the business relationship of another and
the third person. See Restatement (Second) of Torts § 779. In this
regard, whether or not one acted on the basis of a good faith belief
6
There is another reason Southern cannot argue that it possessed an
interest in the Receivables. The district court, in ruling that the Bank of
Asheville was entitled to the Receivables, found that Southern’s financ-
ing agreement with Denmark had no bearing whatsoever on the Bank of
Asheville’s interests in the accounts receivable of Worldwide. (J.A. at
172.) Because Southern’s security interests were filed first in time, if
Southern had any legal interest in the Receivables, its interests would
have taken priority over those of the Bank of Asheville. The court’s rul-
ing that the Bank of Asheville was entitled to the funds therefore means
that Southern had absolutely no legal claim to them. Southern did not
appeal that portion of the district court’s ruling. Res judicata principles
therefore instruct that Southern cannot now argue that it possessed a
legal interest in the Receivables.
10 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
is simply irrelevant when it is determined that he or she does not in
fact possess a legally protected financial interest.
It is beyond dispute that Southern had absolutely no legal interest
whatsoever to protect. Under these circumstances, the balance should
be struck in favor of protecting the valid business relationship
between Worldwide and Commerce. We therefore conclude that a
reasonable jury could find that Southern failed to prove that its
actions were justified or privileged on the basis of the financial inter-
est defense.7
2.
It is unclear whether the district court found that Worldwide
presented a prima facie case for tortious interference with contractual
relations in granting summary judgment for Southern. In any event,
to survive summary judgment Worldwide must demonstrate that a
reasonable jury could conclude that it did. There is no genuine dispute
that Worldwide presented evidence sufficient to find that (a) a valid
contract existed; (b) Southern knew both of the contract’s existence
7
We also note that it is not entirely clear under Virginia law whether
the financial interest defense can be invoked at all in cases concerning
interference with a contract that is not terminable at will. The Chaves
court, in dealing with such a contract, identified the financial interest
defense as one of the applicable affirmative defenses. See Chaves, 335
S.E.2d at 102-03. However, the court also rejected the defendant’s use
of the defense, and in so doing stated that "Some jurisdictions have held
that a competitor is justified by economic self-interest in causing a third
person not to enter into a prospective business relationship with another
competitor, or not to continue an existing contract terminable at will . .
. . His conduct is tortious, however, if he induces the third party to breach
an existing contract which is not terminable at will." Id. at 103 (emphasis
added) (citations omitted). This language may indicate that the financial
interest defense can never be used in cases involving contracts not termi-
nable at will. Such a policy would be consistent with the Restatement
(Second) of Torts, which provides that the financial interest defense is
inapplicable to the causing of a "breach of contract." See Restatement
(Second) of Torts § 769. Because we find that Southern’s attempt to use
the financial interest defense on the merits must fail as a matter of law,
it is unnecessary for us to resolve the larger ambiguity in Virginia law.
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 11
and of the fact that it was interfering with Commerce’s performance
of the contract; and (c) Worldwide suffered damages as a result. We
will therefore focus on the third element of the tortious interference
with contractual relations claim - intentional interference inducing or
causing a breach or termination of the relationship. This third element
speaks to both intent and causation. We first discuss the matter of
Southern’s intent.
a.
Southern argues that it asserted its claims to the Receivables not for
the purpose of interfering with the Worldwide-Commerce relation-
ship, but rather to protect what it in good faith believed were its own
legal interests. According to Southern, the intent to protect one’s own
interests falls short of that required to subject one to liability. Here
again, Southern’s argument misconstrues the law. Liability certainly
attaches where an interferor acts with the purpose of, or a partial
desire to, interfere with the performance of another’s contract. Tor-
tious interference claims are not, however, restricted to these circum-
stances. The requisite level of intent also exists if the interferor
"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.
Here, Southern contacted Commerce directly at least twice in July
of 1998 in an effort to persuade Commerce that Southern rather than
Worldwide was entitled to the Receivables. The very purpose of those
efforts, which were undertaken only six days after Southern learned
of the Worldwide-Denmark asset purchase agreement, was to affect
the performance of the Worldwide-Commerce contract. In its August
6, 1998 letter, Worldwide then specifically put Southern on notice
that Commerce was withholding funds from Worldwide because
Southern had staked a claim to those funds. By this time, there can
be no dispute that Southern was at least substantially certain that it
had interfered with the Worldwide-Commerce contract, and that it
would continue to do so if it refused to retract its demand that Com-
merce pay all or part of the Receivables to Southern. In these circum-
stances, a reasonable jury could easily conclude that Southern either
(a) acted for the purpose of, or with the desire to, cause Commerce
to withhold the Receivables from Worldwide; or (b) knew the subse-
12 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
quent withholding of the Receivables from Worldwide was substan-
tially certain to occur.
b.
Regarding the causation portion of the third element, Worldwide
maintains that but for Southern’s interference, Worldwide would not
have failed to meet its payroll, its employees would not have failed
to report to work, and Worldwide would not, therefore, have lost the
Government Contracts. In light of the district court’s ruling that the
Bank of Asheville stood in front of Worldwide and was entitled to the
Receivables, it is not entirely clear why Worldwide expected to obtain
the Receivables immediately from Commerce. However, the factual
record before us is insufficient to resolve that issue. What is clear is
that Worldwide has otherwise easily demonstrated evidence sufficient
to show that Southern actually caused Commerce to withhold the
Receivables, and that the withholding of those funds was, at the very
least, a substantial factor in Worldwide’s loss of the Government
Contracts.
In light of the foregoing analysis regarding the intent and causation
portions of the third element, we conclude that a reasonable jury
could find that Worldwide presented a prima facie case for tortious
interference with contractual relations. We now discuss the district
court’s grant of summary judgment on Worldwide’s claim for tortious
interference with prospective economic advantage.
B.
As we noted above, under Virginia law the elements required to
establish tortious interference with prospective economic advantage
are quite similar to those required to establish tortious interference
with contractual relations. In general, a claimant must: (1) demon-
strate the existence of a business relationship or expectancy, with a
probability of future economic benefit; (2) prove knowledge of the
relationship or expectancy; (3) show that it was reasonably certain
that absent intentional misconduct, the claimant would have contin-
ued in the relationship or realized the expectancy; and (4) show that
it suffered damages from the interference. Levine v. McLeskey, 881
F.Supp. 1030, 1057 (E.D. Va. 1995), aff’d in part, vacated in part,
COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES 13
and remanded, 164 F.3d 210, 211 (4th Cir. 1998) (citing Glass v.
Glass, 321 S.E.2d 69, 77 (Va. 1984)).
There is one critical difference, however, between a prospective
economic advantage and a contractual relations claim in Virginia. In
the prospective economic advantage context a plaintiff must also
demonstrate that the defendant employed "improper methods." See
Maximus, Inc. v. Lockheed Info. Sys., Inc., 493 S.E.2d 375, 378-379
(Va. 1997); see also Duggin v. Adams, 360 S.E.2d 832, 836 (Va.
1987). In Duggin v. Adams, 360 S.E.2d 832 (Va. 1987), the Virginia
Supreme Court identified methods of interference that are considered
"improper." Among the most egregious examples of improper con-
duct are those "that are illegal or independently tortious, such as vio-
lations of statutes, regulations, or recognized common-law rules."
Duggin, 360 S.E.2d at 836 (citation omitted). Other egregious forms
of interference "include violence, threats or intimidation, bribery,
unfounded litigation, fraud, misrepresentation or deceit, defamation,
duress, undue influence, misuse of insider or confidential information,
or breach of a fiduciary relationship." Id. Less egregious improper
methods include violations of "an established standard of a trade or
profession . . ., unethical conduct . . ., sharp dealing, overreaching, or
unfair competition . . . ." Id. at 837.8
Worldwide argues that Southern’s conduct constitutes the type of
"improper conduct" necessary to make a prima facie case under Vir-
ginia law because it was "unethical." We disagree. Worldwide has not
presented evidence of any allegedly "improper" conduct other than
Southern’s assertion of claims to funds in which it had no legal inter-
est. In pursuing its claims to the Receivables, Southern proceeded
solely on the basis of a good faith belief that it had a legally protected
interest in the Receivables. Indeed, Worldwide concedes in its brief
that "Southern believed itself to be, as a secured creditor of Denmark,
8
Southern argues that improper conduct only includes that which is
illegal or independently tortious. However, the Virginia Supreme Court
made it clear in Maximus that this is not the case. See Maximus, 493
S.E.2d at 379 (stating that "[w]hile we have identified actions as
improper which were also independently tortious or illegal, . . . we have
also identified actions as improper which are not themselves tortious or
illegal, such as unfair competition or unethical conduct.").
14 COMMERCE FUNDING CORP. v. WORLDWIDE SECURITY SERVICES
entitled to the funds Worldwide earned performing U.S. Government
contracts." Appellant’s Br. at 11. Moreover, Southern detailed in its
brief many of the reasons it believed itself to be entitled to the
Receivables, including that (a) Southern’s financing statements were
filed first in time; (b) Southern did not consent to the transfer or
assignment of Denmark’s contracts with the federal government; (c)
the Bank of Asheville’s financing statement contained at least one
defect; and (d) Southern was unaware of the federal law prohibiting
the transfer of contracts with the federal government.
Under these circumstances, Southern’s conduct does not rise to the
level of "improper conduct" contemplated by Virginia law. Although
Southern’s actions were unwise, its conduct was not "unethical," and
it certainly did not rise to the level of any of the more egregious forms
of improper conduct identified in Virginia law. The district court
therefore correctly granted summary judgment to Southern on World-
wide’s claim for tortious interference with prospective economic
advantage.
IV.
In summary, we conclude that Southern’s interference with the
Worldwide-Commerce relationship was not justified or privileged,
and further that Worldwide presented evidence sufficient to proceed
on its tortious interference with contractual relations claim. We also
conclude that because Southern did not engage in any "improper con-
duct," Worldwide has failed to present genuine issues of fact that
would allow it to proceed on its tortious interference with prospective
economic advantage claim. Accordingly, the judgment of the district
court is affirmed in part, vacated in part, and remanded for further
proceedings not inconsistent with this opinion.
AFFIRMED IN PART, VACATED
PART, AND REMANDED