UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 10-1318

CAPITOL RADIOLOGY, LLC,

Plaintiff - Appellant,

v.

SANDY SPRING BANK,

Defendant - Appellee.

Appeal from the United States District Court for the District of 

Maryland, at Greenbelt. Deborah K. Chasanow, Chief District 

Judge. (8:09-cv-01262-DKC)

Argued: May 13, 2011 Decided: July 20, 2011

Before GREGORY, WYNN, and DIAZ, Circuit Judges.

Affirmed by unpublished opinion. Judge Diaz wrote the opinion,

in which Judge Gregory and Judge Wynn joined.

ARGUED: Michael John O’Rourke, O’ROURKE & MOODY, Chicago, 

Illinois, for Appellant. James Taylor Heidelbach, GEBHARDT & 

SMITH, LLP, Baltimore, Maryland, for Appellee. ON BRIEF: Steven 

R. Freeman, FREEMAN, WOLFE & GREENBAUM, P.A., Towson, Maryland, 

for Appellant. Patrick J. Madigan, GEBHARDT & SMITH, LLP, 

Baltimore, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
2

DIAZ, Circuit Judge:

Capitol Radiology, LLC (“Capitol”) appeals a decision 

of the district court granting summary judgment in favor of

Sandy Spring Bank (“Sandy Spring”). Capitol sued Sandy Spring 

for breach of contract after Sandy Spring declared Capitol in 

default and accelerated Capitol’s payments on a commercial line 

of credit and equipment loan. Even when viewing the evidence in 

the light most favorable to Capitol, Sandy Spring did not breach 

the loan agreement because the bank had a good faith belief that 

it was insecure. Accordingly, we affirm.

I.

A.

Capitol is a radiology practice formed by Dr. Doriann 

Thomas in January 2005. Shortly after its formation, Capitol 

sought financing from Sandy Spring. In March 2005, Sandy Spring 

issued Capitol a $225,000 equipment loan and a commercial line 

of credit of up to $435,000. The loans were secured by 

Capitol’s inventory, chattel paper, accounts, equipment, and 

general intangibles. As additional collateral, Dr. Thomas 

provided a junior lien against her residence and guaranteed both 

loans.
3

Capitol owed payment in full on the equipment loan by

September 2, 2008, while the line of credit was initially 

payable May 31, 2006. Sandy Spring extended the term of the 

line of credit four times. With each extension, the parties 

executed a new Business Loan Agreement. The final Business Loan 

Agreement was dated October 22, 2007 (“Loan Agreement”). 

Pursuant to the terms of the final extension, Capitol owed 

payment in full on the line of credit by August 31, 2008.

The Loan Agreement enumerated several events of 

default. As is relevant here, the Loan Agreement stated as 

follows:

Each of the following shall constitute an Event of 

Default under this Agreement:

***

Adverse Change. A material adverse change occurs in

Borrower’s financial condition, or Lender believes the 

prospect of payment or performance of the Loan is 

impaired.

Insecurity. Lender in good faith believes itself 

insecure.

J.A. A345.

Capitol made timely payments on the equipment loan and 

the line of credit. The Loan Agreement, however, also required 

Capitol to furnish financial statements or other information as 

requested by Sandy Spring. As early as mid-2006, Capitol either 
4

wholly failed to provide or was delayed in providing such 

information.

Roger Hanson was the Sandy Spring vice president and 

commercial portfolio manager responsible for the Capitol 

relationship. Between April 2006 and May 2008, Hanson sent 

several emails and letters to Capitol and Dr. Thomas requesting

financial information, including tax returns, financial 

statements, and accounts receivable reports. Hanson also 

corresponded with Larry McKenney, Capitol’s chief financial 

officer, regarding the requests. In addition, Hanson met with 

McKenney and Capitol’s accountant on multiple occasions to 

discuss the loans and Sandy Spring’s need for financial 

information.

In an August 2006 email, Hanson explained that Sandy 

Spring was “anxious” for financial information requested weeks 

earlier from Capitol. Id. A325. Hanson warned Dr. Thomas that 

Sandy Spring “may have to start pursuing other measures” if 

Capitol did not timely comply with Sandy Spring’s requests. Id. 

As a result of Capitol’s delay in providing financial 

information, Sandy Spring added Capitol to its watch list of 

risky borrowers in September 2006. A separate “Watch Report”--

prepared by Sandy Spring for borrowers on its watch list--also 

noted that “[d]ebit card purchases on [Capitol’s] corporate 

account appear to not be business related.” Id. A455.
5

In January 2007, Hanson again requested Capitol’s 2006

financial information. Hanson told Capitol’s accountant and Dr. 

Thomas that he had “been waiting most of the latter part of 2006 

for something.” Id. A329. In the same correspondence, Hanson

stated that Sandy Spring could not “renew the line or 

restructure anything until [he] saw how 2006 went.” Id.

In May 2007, Hanson again wrote Dr. Thomas to express 

his frustration at Capitol’s failure to provide requested 

information. In the letter, Hanson told Capitol that Sandy 

Spring did not intend to renew Capitol’s line of credit:

This letter is to inform you that the bank is not 

interested in renewing the line of credit for another 

year. Over the last year or so we have made repeated 

attempts to collect information on the line of credit 

but have never obtained enough information to renew 

the line. This process involved quite a bit of my 

time and efforts. . . . Please be advised that we 

will issue the last extension on the current line of 

credit for 60 days to allow you to obtain financing of 

your facility elsewhere.

Id. A342.

The parties later met to discuss the relationship and 

a possible extension of the line of credit. Following the 

meeting, Sandy Spring received sufficient financial information

to allow the bank to offer Capitol an extension. Capitol 

accepted the extension--the final one as it turned out--

extending the due date of the line of credit to August 31, 2008.
6

In April 2008, Sandy Spring learned of a judgment 

against Capitol and Dr. Thomas in a Maryland state court case, 

Capital Med. Mgmt. Assocs., LLC v. Thomas, No. 273430-V (Md. 

Cir. Ct. Apr. 18, 2008) (“CMMA judgment”). The CMMA judgment--

including damages, attorneys’ fees, and costs--totaled 

$179,749.16. Sandy Spring also discovered a $28,165 federal tax 

lien against Dr. Thomas’s residence. The Loan Agreement 

required Capitol to provide Sandy Spring written notification of 

any litigation that could materially affect Capitol’s financial 

condition. There is no evidence that Capitol took action to 

notify Sandy Spring of either the CMMA judgment or the tax lien.

On April 28, 2008, following discovery of the CMMA 

judgment and tax lien, Sandy Spring declared Capitol in default 

of its obligations under the Loan Agreement. Sandy Spring

demanded immediate payment of both loans and advised Capitol 

that it would exercise its rights and remedies under the Loan 

Agreement if Capitol failed to pay.

At Capitol’s request, Hanson and his team leader Randy 

McVey met with McKenney on May 9, 2008 to discuss the default.

At the meeting, McKenney asked Sandy Spring to reconsider,

contending that the CMMA judgment would be overturned on appeal 

and that Capitol had sufficient funds to cover the judgment if 

it were ultimately enforced. Following the meeting, Hanson 
7

wrote McKenney and Dr. Thomas requesting additional financial 

information, which he never received.

Sandy Spring subsequently discovered that Capitol’s 

corporate account was overdrawn on several occasions in May and 

June 2008. A review of the account also revealed that Dr. 

Thomas was using it to pay for personal expenses. During her 

deposition, Dr. Thomas acknowledged that she used the Capitol

account to purchase meals, clothing, and tickets for personal 

travel.

On July 30, 2008, CMMA took steps to enforce its 

judgment when it secured a writ of garnishment against Capitol’s 

deposit accounts. The writ of garnishment directed Sandy Spring 

to freeze Dr. Thomas’s and Capitol’s accounts pending further 

direction from the court.

On July 31, 2008, Sandy Spring informed Capitol that 

the bank had elected to exercise its right of setoff--pursuant 

to which Sandy Spring would apply funds in Capitol’s corporate 

accounts to its loan obligations. Sandy Spring reiterated that 

Capitol was in default due to the CMMA judgment and the tax lien

and added that “[t]he judgments represent an adverse change in 

[Capitol’s] financial condition and it is believed that the 

prospect of payment or performance of these Notes are [sic] 

impaired.” Id. A403. Following the notification, Sandy Spring, 

which had first priority over Capitol’s corporate accounts, 
8

began to apply the funds in Capitol’s accounts to its loans. As 

a result of the setoff, Capitol’s loans were paid in full by 

September 2008.

B.

Capitol sued Sandy Spring for breach of contract on 

August 19, 2008 in Maryland state court. On May 14, 2009, 

Capitol amended its complaint to add an allegation that Sandy 

Spring discriminated against Capitol on the basis of race in 

violation of the Equal Credit Opportunity Act (“ECOA”), 15 

U.S.C. §§ 1691–1691f. In response, Sandy Spring removed the 

case to federal court asserting federal question jurisdiction.

On November 11, 2009, Sandy Spring moved for summary 

judgment on both the breach of contract claim and the ECOA 

claim. The district court granted Sandy Spring’s motion. 

Capitol timely appealed, challenging the district court’s order 

on the breach of contract claim only.

II.

We review a district court’s decision granting summary 

judgment de novo, “applying the same standard as the district 

court.” Homeland Training Ctr., LLC v. Summit Point Auto. 

Research Ctr., 594 F.3d 285, 290 (4th Cir. 2010). Summary 

judgment is appropriate “if the movant shows that there is no 
9

genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law.” Fed. R. Civ. P. 

56(a).

A.

Capitol contends that Sandy Spring breached the Loan 

Agreement by declaring Capitol in default and accelerating 

payment of the loans. In support of its claim, Capitol focuses 

on the adverse change and insecurity clauses in the Loan 

Agreement. Capitol argues that there are material issues of 

fact as to whether the CMMA judgment and federal tax lien were 

material adverse changes or rendered Sandy Spring reasonably 

insecure. Because the undisputed facts show that Sandy Spring 

believed in good faith that it was insecure, we affirm the 

judgment of the district court.

B.

Consistent with the terms of the Loan Agreement, we 

apply Maryland law to Capitol’s claim. A plaintiff asserting a 

claim for breach of contract must show “that the defendant owed 

the plaintiff a contractual obligation and that the defendant 

breached that obligation.” Taylor v. NationsBank, N.A., 776 

A.2d 645, 651 (Md. 2001). Maryland follows an objective theory 

of contract interpretation under which courts apply the plain 
10

meaning of unambiguous contract terms. Ocean Petroleum, Co., 

Inc. v. Yanek, 5 A.3d 683, 690 (Md. 2010). And although the 

issue of good faith is typically a jury question, summary 

judgment is appropriate where there are no material disputes as 

to the facts of the case. David A. Bramble, Inc. v. Thomas, 914 

A.2d 136, 149 (Md. 2007); see also Rite Aid Corp. v. Hagley, 824

A.2d 107, 119–21 (Md. 2003) (affirming summary judgment in favor 

of defendant in case involving allegations that defendant failed 

to act in good faith).

The Loan Agreement provides that the occurrence of any 

event of default terminates Sandy Spring’s obligations and, at 

Sandy Spring’s option, renders the balance of the loans 

immediately due and payable. As is relevant here, Capitol is in 

default under the Loan Agreement if Sandy Spring “in good faith 

believes itself insecure.” J.A. A345. Because the Loan 

Agreement does not define “insecure” we give the term its 

“customary, ordinary and accepted meaning.” Weichert Co. of Md. 

v. Faust, 19 A.3d 393, 400 (Md. 2011). In this context, 

“insecure” means “[h]aving a good-faith belief that the 

possibility of receiving payment or performance from another 

party to a contract is unlikely.” Black’s Law Dictionary 866

(9th ed. 2009).

The trial court concluded as a matter of law that 

Sandy Spring had a good faith belief that it was insecure. We 
11

agree. Sandy Spring declared Capitol to be in default in April 

2008 after learning of the CMMA judgment and federal tax lien. 

Before taking such action, Sandy Spring regularly requested 

information from several representatives of Capitol, including 

Dr. Thomas, McKenney, and Capitol’s accountant. Capitol either 

ignored the requests altogether or neglected to respond 

promptly.

By failing to timely comply with Sandy Spring’s 

requests, Capitol forced the bank to follow up repeatedly for 

the basic financial information necessary to determine whether 

to renew Capitol’s line of credit. As early as September 2006, 

Sandy Spring added Capitol to its watch list of risky borrowers

based on Capitol’s failure to provide requested information, as 

well as the bank’s observation that Dr. Thomas appeared to be 

using Capitol’s corporate account for personal expenses. It is 

in this context of non-compliance that Sandy Spring learned of 

the CMMA judgment and tax lien in April 2008.

On appeal, Capitol contends that Sandy Spring did not 

adequately analyze whether discovery of the CMMA judgment and 

tax lien represented material adverse changes in Capitol’s 

financial condition. Capitol argues that, at the very least, 

whether the CMMA judgment and tax lien were material presents a

genuine issue of fact that precludes summary judgment.
12

Capitol, however, has no adequate answer to Sandy 

Spring’s contention that the bank had a good faith belief that 

it was insecure--a wholly separate ground in the Loan Agreement 

for declaring a default. In fact, Capitol offers no persuasive 

evidence to suggest that Sandy Spring acted other than in good 

faith.

Capitol contends that it assured Sandy Spring that its 

financial condition was secure in the May 9, 2008 meeting 

following the declaration of default. McKenney testified that 

he explained to Sandy Spring that Capitol had sufficient funds 

to cover the $179,749.16 CMMA judgment and that Dr. Thomas was 

working with her accountant to rectify the tax lien. We agree 

with the district court, however, that Sandy Spring was not 

obligated to accept McKenney’s verbal assurances that Capitol 

was financially sound, particularly given Capitol’s failures to 

respond to requests for financial information and to provide 

notice of the CMMA judgment and tax lien.

We consider Sandy Spring’s decision to declare a 

default, accelerate payment, and exercise its right of setoff in 

the context of the events surrounding it. Here, the undisputed 

facts are that Capitol (1) failed repeatedly to honor Sandy 

Spring’s requests for financial information; (2) allowed its 

principal, Dr. Thomas, to use accounts securing the loans to pay 

her personal expenses; (3) did not notify Sandy Spring of the 
13

CMMA judgment; (4) allowed a writ of garnishment to issue on 

that judgment against the accounts securing the loans; and (5)

failed to report that the guarantor of the loans, Dr. Thomas, 

was subject to a federal tax lien.

On these facts, we find as a matter of law that Sandy 

Spring had a good faith belief that it was insecure. 

Accordingly, Sandy Spring did not breach the Loan Agreement when 

it took steps to protect its interests by declaring Capitol in 

default and subsequently exercising its contractual right of

setoff.

III.

For these reasons, we affirm the district court’s 

order granting summary judgment in favor of Sandy Spring.

AFFIRMED