Multimedia 2000, Inc. v. TAMARA L. ATTARD, PAUL G. ATTARD, and MULTICOM PUBLISHING, INC.

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0206P (6th Cir.)
File Name: 04a0206p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
MULTIMEDIA 2000, INC.,
Plaintiff,
FINOVA MEZZANINE CAPITAL,
INC.,
Plaintiff-Appellant,
v.
TAMARA L. ATTARD, PAUL G.
ATTARD, and MULTICOM
PUBLISHING, INC.,
Defendants-Appellees.
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No. 03-5033
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 00-01182—Aleta A. Trauger, District Judge.
Argued: April 29, 2004
Decided and Filed: July 1, 2004
Before: GUY, GILMAN, and COOK, Circuit Judges.
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_________________
COUNSEL
ARGUED: Christopher E. Thorsen, BOULT, CUMMINGS,
CONNERS & BERRY, Nashville, Tennessee, for Appellant.
Robert L. Sullivan, LOEB & LOEB, Nashville, Tennessee,
for Appellee. ON BRIEF: Christopher E. Thorsen, Thor Y.
Urness, BOULT, CUMMINGS, CONNERS & BERRY,
Nashville, Tennessee, for Appellant. Robert L. Sullivan,
LOEB & LOEB, Nashville, Tennessee, for Appellee.
GILMAN, J., delivered the opinion of the court in which
GUY, J. (p. 11), concurred in the decision to reverse the grant
of summary judgment to the defendants, but for the reasons
set forth in his separate concurrence/dissent. COOK, J.
(p. 12), filed a separate dissenting opinion.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. To secure a loan
to their company—Multicom Publishing, Inc.—Tamara and
Paul Attard granted a security interest in all of their Multicom
stock to the lender, Finova Mezzanine Capital, Inc. (FMC).
The Attards also executed a guaranty agreement promising to
absolutely assign their stock to FMC free of all claims in the
event of Multicom’s default, failing which they agreed to be
personally liable for the debt. When FMC subsequently
notified the Attards that Multicom was in default and
demanded the assignment of their stock, the Attards signed
the appropriate assignment form, but included a letter stating
that the assignment was executed under duress.
FMC filed suit, claiming that, by virtue of the duress letter,
the Attards had not unconditionally assigned their stock and
were therefore personally liable for the balance of the

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No. 03-5033 Multimedia 2000 et al. v. Attard et al. 3
Multicom debt pursuant to the guaranty agreement. The
district court granted summary judgment in favor of the
Attards. For the reasons set forth below, we REVERSE the
judgment of the district court and REMAND for further
proceedings consistent with this opinion.
I. BACKGROUND
A. Factual background
The Attards founded Multicom, a multimedia publishing
company, in 1994. Multicom entered into a $3 million loan
agreement with a predecessor of FMC in 1996. As part of the
loan transaction, Multicom granted FMC a security interest in
substantially all of Mutlicom’s assets.
As further security for the loan, the Attards signed a Stock
Pledge Agreement (Pledge Agreement) on October 3, 1997
that granted FMC a security interest in their Multicom stock,
which was perfected by FMC’s possession of the stock
certificates. The Attards also executed a Conditional
Continuing Guaranty and Assurance (Guaranty), wherein they
agreed that if Multicom defaulted on its obligations to FMC,
the Attards would “absolutely assign” all of their Multicom
stock to FMC within two days following a written demand by
FMC. Section Five of the Guaranty provided that the Attards
agree that if a Designated Default occurs, then, within
two (2) calendar days following the written demand of
Lender, the Attards shall absolutely assign to Lender or
its designee, pursuant to ordinary instruments of
assignment to be prepared by Lender, all of the stock of
Borrower [Multicom] that is then [] pledged to Lender to
secure the Obligations. This conveyance will vest title in
the transferee free of any claim of the Attards and free of
any other encumbrance, and without reduction in the
Obligations that Borrower then owes to Lender.
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In the event that the Attards failed to comply with Section
Five’s absolute assignment of Multicom stock, the Guaranty
provided that they would become personally obligated, both
jointly and severally, for Muticom’s debt to FMC. Section
Six of the Guaranty specifically stated that “[s]hould either of
the Attards fail to comply fully with their obligations in . . .
Section 5 above, . . . the Attards hereby jointly and severally
guarantee to lender the timely payment and performance of all
of the obligations.”
FMC sent a letter to the Attards on November 11, 1997,
advising them that Multicom had defaulted on its obligations
to FMC and demanding “the immediate, absolute conveyance
of the Pledged Stock to [FMC].” The letter also stated that if
the Attards failed to convey the pledged stock by November
18, then they would become personally liable for Multicom’s
obligations. FMC followed up on November 12 with a form
titled “Absolute Assignment of Stock.” On November 17, the
Attards tendered to FMC the completed Absolute Assignment
of Stock form, but accompanied the signed form with a letter
from their counsel expressly reserving certain of the Attards’
rights against FMC. The letter stated, in pertinent part:
Please be advised that my clients forward this document
under duress, in order to mitigate their damages, and with
full and absolute reservation of all of their rights at law
and in equity. These rights include, without any
limitation whatsoever, the right to challenge as null and
void the underlying documents pursuant to which [FMC]
purports to proceed; the right to challenge the alleged
default asserted by [FMC]; and the right to challenge the
activities of [FMC] and Multicom in pursuing
foreclosure of the subject shares of stock . . . .
FMC initially responded with a letter dated November 18,
1997, informing the Attards that FMC was also reserving all
of its rights against them. The next significant event was on
February 2, 1998, when FMC sold all of the assets of
Multicom to Multimedia 2000, Inc. for $2 million. Eight

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No. 03-5033 Multimedia 2000 et al. v. Attard et al. 5
days later, on February 10, 1998, FMC wrote the Attards to
inform them that the duress letter caused their assignment of
Multicom’s stock to not be free of all claims, thus subjecting
them to personal liability under the Guaranty.
B. Procedural background
In April of 2001, FMC sued the Attards for breach of
contract based upon the Attards’ refusal to pay FMC the
balance of Multicom’s loan obligations according to the terms
of the Guaranty. FMC moved for summary judgment on its
breach-of-contract claim in February of 2002. The district
court denied FMC’s motion and sua sponte granted summary
judgment to the Attards. After the district court denied
FMC’s motion for reconsideration or, in the alternative, to
alter or amend the judgment, FMC appealed.
II. ANALYSIS
A. Summary judgment standard
We review a district court’s grant of summary judgment de
novo. Therma-Scan, Inc. v. Thermoscan, Inc. 295 F.3d 623,
629 (6th Cir. 2002). Summary judgment is proper where
there exists no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(c). In considering a motion for summary judgment, the
district court must construe all reasonable inferences in favor
of the nonmoving party. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986). The central
issue is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52
(1986).
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B. The effect of the duress letter on the assignment of the
Attards’ stock to FMC
On appeal, the key issue is whether the Attards fully
complied with their obligations under the Guaranty to
“absolutely assign” all of the stock that they had pledged to
FMC under the Pledge Agreement. The Guaranty explicitly
states that “[t]his conveyance will vest title in the transferee
free of any claim of the Attards and free of any other
encumbrance . . . .” (Emphasis added.) FMC argues that the
Attards’ claim of duress in their November 17, 1997 letter, in
addition to their “full and absolute reservation of all their
rights at law and equity,” does not represent an assignment
“free of any claim of the Attards.” The Attards respond that
the Guaranty did not include or require any disclaimer of
duress or other legal or equitable rights. They also contend
that the November 17 letter did not create an “adverse claim”
rendering the assignment ineffective.
The Guaranty states, and the parties do not contest, that it
shall be interpreted in accordance with Tennessee law. Under
Tennessee law, “[a] contract signed under economic duress is
voidable by the victim, not void.” Cumberland & Ohio Co. of
Texas v. First Am. Nat’l Bank, 936 F.2d 846, 850 (6th Cir.
1991); United States Fidelity & Guar. Co. v. Cassel Bros.,
Inc. (In re McNeil), 22 B.R. 408, 414 (Bankr. E.D. Tenn.
1982) (“A contract or other instrument is voidable under
Tennessee law on the basis of duress . . . .”) “A voidable
contract is one where one or more parties have the power, by
a manifestation of election to do so, to avoid the legal
relations created by the contract, or by ratification of the
contract to extinguish the power of avoidance.” Restatement
(Second) of Contracts § 7 (1981).
The district court recognized that by claiming duress, the
Attards had informed FMC that the Assignment was voidable
under Tennessee law. According to the district court,
however, merely asserting duress, as opposed to actually
rescinding the Assignment, did not constitute a claim on the

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No. 03-5033 Multimedia 2000 et al. v. Attard et al. 7
stock that made the Assignment invalid. We respectfully
disagree. By claiming that they executed the Assignment
under duress, the Attards put FMC on notice that they were
retaining the right to rescind the assignment of their stock.
Their letter in effect materially modified the terms of the
Assignment. See Restatement (Second) of Contracts,
§ 202(2) (1981) (“A writing is interpreted as a whole, and all
writings that are part of the same transaction are interpreted
together.”).
FMC supports its argument that the Attards’ letter
constituted a claim in violation of the Guaranty by relying
upon the definition of an “adverse claim” in Tenn. Code Ann.
§ 47-8-102(a)(1) (hereinafter referred to as UCC § 8-
102(a)(1)). Section 8-102(a)(1) defines an adverse claim as
“a claim that a claimant has a property interest in a financial
asset and that it is a violation of the rights of the claimant for
another person to hold, transfer, or deal with the financial
asset.” The Official Comment to this section explains that the
definition of an adverse claim is comprised of two parts:
First, the term refers only to property interests. Second,
the term means not merely that a person has a property
interest in a financial asset but that it is a violation of the
claimant’s property interest for the other person to hold
or transfer the security or other financial asset. . . . The
term adverse claim is not, of course, limited to ownership
rights, but extends to other property interests established
by other law. . . . An adverse claim might . . . be based
upon principles of equitable remedies that give rise to
property claims. It would, for example, cover a right
established by other law to rescind a transaction in
which securities were transferred.
(Emphasis added.)
Although FMC has not cited any cases—and we have
found none—that apply § 8-102(a)(1) to a factual situation
analogous to the present case, the very definition of an
8 Multimedia 2000 et al. v. Attard et al. No. 03-5033
adverse claim appears to describe the instant situation. The
Official Comment plainly states that an adverse claim may be
based upon the right “to rescind a transaction in which
securities were transferred.” This is precisely what happened
in the present case. By claiming that they completed the
Absolute Assignment of Stock under duress, the Attards have
reserved their right to rescind the transaction. Accordingly,
under UCC § 8-102(a)(1), their claim of duress impinged
upon FMC’s freedom to alienate the stock, because the
existence of an adverse claim means “that it is a violation of
the rights of the claimant for another person to hold, transfer,
or deal with the financial asset.” UCC § 8-102(a)(1).
The Attards’ duress letter thus clouded title to the stock that
they purported to transfer absolutely to FMC, contrary to the
Guaranty’s requirement that the stock be assigned “free of
any claim of the Attards and free of any other encumbrance
. . . .” Even though FMC could have theoretically given good
title to a “protected purchaser” of the Attards’ stock by not
disclosing their claim of duress, see UCC § 8-303 (defining
the term “protected purchaser”), FMC would have been
unable to warrant that the stock was being conveyed free of
all claims. And a truthful disclosure of the Attards’ claim
would of course have prevented any buyer from having
protected-purchaser status. FMC’s contractual right to the
stock free and unencumbered was therefore thwarted by the
Attards’ duress letter.
C. The Attards’ personal liability
As previously set forth, Section Six of the Guaranty
provided that the Attards’ failure to assign their Multicom
stock free and clear of all claims would result in the Attards
becoming personally liable for the Multicom debt. Their
action in clouding title may well have been an unwise
decision on their part, because FMC had the right to sell all of
Multicom’s assets under a separate security agreement that
was not dependent upon the Attards’ personal guaranty. This
in fact was precisely what FMC did on February 2, 1998.

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No. 03-5033 Multimedia 2000 et al. v. Attard et al. 9
Perhaps an earlier sale of Multicom’s stock would have
yielded no more than the $2 million that FMC eventually
received from the sale of Multicom’s assets in February of
1998. But the Attards knew that they had a choice under the
Guaranty to either assign their stock free of all claims or, by
not doing so, become personally liable for the balance due
FMC. The fact that they may have made a poor choice is not
a basis to disregard the contractual consequences of their
action. Courts are not permitted to rewrite contracts, Perez v.
Aetna Life Ins. Co., 150 F.3d 550, 557 (6th Cir. 1998), and
each party must be given the benefit of his bargain. Bucyrus-
Erie Co. v. General Products Corp., 643 F.2d 413, 421 (6th
Cir. 1981).
In sum, I believe that the Attards are bound by the bargain
they made and the actions they took. Thus, in my opinion,
they are personally liable to FMC for the balance of the
Multicom debt, subject to any affirmative defenses available
to them. This conclusion, however, is not shared by either of
my judicial colleagues, and therefore is not the holding of this
court.
D. Potential affirmative defenses
My conclusion that the Attards have exposed themselves to
personal liability for Multicom’s debt does not preclude their
right on remand to present any affirmative defenses that may
be available to them. FMC, for example, had a duty to
mitigate its damages. The record evidence shows that the
Attards sent the Absolute Assignment of Stock form,
accompanied by the duress letter, in November of 1997.
FMC waited until February of 1998, however, to advise the
Attards that their assignment of the Multicom stock was not
“sufficient performance” and that FMC was exercising “its
right to declare the Attards to be personally jointly and
severally liable for all obligations of Multicom.” Whether
this delay constituted a failure on the part of FMC to mitigate
its damages is an open question that has yet to be developed.
10 Multimedia 2000 et al. v. Attard et al. No. 03-5033
“It is a well established rule in Tennessee that the party
injured by the wrongful act of another has a legal duty to
exercise reasonable and ordinary care under these
circumstances to prevent and diminish the damages. One is
not required, however, to make extraordinary efforts. The
burden of showing that losses could have been avoided by the
plaintiff by a reasonable effort to mitigate damages after
defendant's breach of contract is on the defendant who
breached the contract.” ACG, Inc. v. Southeast Elevator, Inc.,
912 S.W.2d 163, 169 (Tenn.App. 1995); see also 24 Samuel
Williston and Richard A. Lord, Williston on Contracts
§ 64:27 (4th ed. 2002) (“[T]he principle of mitigation of
damages . . . frequently involves a determination as to
whether the [injured party] acted reasonably under the
circumstances. . . . What is a reasonable effort to avoid the
injurious consequences of a breach is a question of fact.”).
The application of these principles and of any other defenses
that the Attards might have to their personal liability,
including waiver and estoppel, is left for development in the
district court upon remand.
III. CONCLUSION
For all of the reasons set forth above, we REVERSE the
judgment of the district court and REMAND for further
proceedings consistent with this opinion.

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No. 03-5033 Multimedia 2000 et al. v. Attard et al. 11
1I agree with Judge Gilman’s conclusion that the Attards may assert
affirmative defenses on remand. I do not agree, however, that they are
limited to defenses only as to damages.
_____________________________________________
CONCURRING IN PART, DISSENTING IN PART
_____________________________________________
GUY, Circuit Judge, concurring in part and dissenting in
part. I concur in the decision to reverse the summary
judgment that was entered in favor of the defendants. I do not
believe on the record that was before the district judge that it
was appropriate to rule, as a matter of law, that the Attards
did not breach the guaranty agreement. I also believe,
however, for the same reason, that it is inappropriate for this
court to decide the breach issue in favor of the plaintiffs at
this juncture. Once that decision is made the Attards are
limited to affirmative defenses that would impact only the
amount of the judgment plaintiffs might obtain.1
By holding that the letter accompanying the assignment did
not constitute a breach of the duty to make the assignment
free of all claims, the district court apparently felt no need to
consider other defenses the Attards may have that would
impact upon their liability including waiver by the plaintiffs
to proceed under the assignment. As the record now stands
before this court, it appears the plaintiffs proceeded to realize
all of the monetary value possible from the failed company by
the sale of its assets and now seeks what amounts to a
deficiency judgment for the balance of the debt. By relying
on the claim that the Attards breached the assignment
agreement, the plaintiffs arguably put themselves in a better
position than they would have been had there been an
unqualified assignment. This seems to me to be anomalous,
and I would remand for further development of the record and
trial if necessary.
12 Multimedia 2000 et al. v. Attard et al. No. 03-5033
______________
DISSENT
______________
COOK, Circuit Judge, dissenting. Because I disagree with
the conclusion that the Attards failed to assign their stock“free
of all claims,” I respectfully dissent. The Attards signed the
stock assignment exactly as Multimedia drafted. The letter
the Attards sent with the assignment, complaining that they
were executing the assignment under conditions of economic
duress, does not meet any legal definition of a “claim” against
the stock. Thus, the district court correctly concluded that the
Attards fulfilled their contractual obligations to Multimedia.
I would therefore affirm the district court’s judgment, for
the reasons stated in that court’s memoranda of April 26,
2002 and May 23, 2002.

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