UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 05-1009

CHOICE HOTELS INTERNATIONAL, INCORPORATED, a

Delaware corporation,

Plaintiff - Appellee,

versus

SONORA SUN MANAGEMENT LIMITED PARTNERSHIP,

L.L.P., a/k/a Sonora Sun Management, L.L.P.,

an Arizona limited liability partnership;

HUMBERTO LOPEZ; GLENN TOYOSHIMO,

Defendants - Appellants.

Appeal from the United States District Court for the District of

Maryland, at Greenbelt. Alexander Williams, Jr., District Judge.

(CA-04-1825-8-AW)

Argued: December 1, 2005 Decided: January 19, 2006

Before NIEMEYER, WILLIAMS, and SHEDD, Circuit Judges.

Affirmed by unpublished per curiam opinion. Judge Williams wrote

a separate concurring opinion.

ARGUED: Steven K. White, STINSON, MORRISON & HECKER, L.L.P.,

Washington, D.C., for Appellants. Kerry Shanahan McGeever, CHOICE

HOTELS INTERNATIONAL, INCORPORATED, Silver Spring, Maryland, for

Appellee. ON BRIEF: Robert L. (Bo) Eskay, Jr., STINSON, MORRISON

& HECKER, L.L.P., Washington, D.C., for Appellants. 
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Unpublished opinions are not binding precedent in this circuit.

See Local Rule 36(c).
1

The defendants also filed a Notice Clarifying Citation to

Evidence in Oral Argument and a Motion to Amend Judgment. In both

of these filings, the defendants attempted to augment their

arguments or assert new facts. While the district court ruled

against the defendants in both instances, we have considered the

arguments and facts advanced in these documents and find that they

do not preclude our affirmance of the district court’s judgment.

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PER CURIAM:

The district court entered a confession of judgment in favor

of Choice Hotels International, Inc. (“Choice”) and against Sonora

Sun Management Limited Partnership, L.L.P., Humberto Lopez, and

Glenn Toyoshimo (collectively referred to as “the defendants”).

The defendants moved the district court to open, modify, or vacate

the confession of judgment. The district court denied this

motion,1

 and the defendants now appeal. We affirm.

I.

In September 2003, the defendants entered into a Franchise

Agreement with Choice allowing them to operate their hotel property

in Yuma, Arizona, as a Clarion Suites, which is part of the Choice

line of hotels. In conjunction with the Franchise Agreement, the

defendants executed a Minority Developer Incentive Program

Promissory Note in exchange for Choice’s agreement to lend the

defendants $100,000 to be used by the defendants for any purpose

related to the Yuma property. The Note was to mature at the end of

ten years, but Choice agreed to forgive the entire amount of the
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loan if the defendants did not default during the entire ten year

term of the Note. If, however, the defendants defaulted, the Note

provided that Choice would be entitled to obtain a confession of

judgment against the defendants for the remaining balance of the

debt. The Note included as an event of default “if the CLARION

SUITES franchise agreement . . . between [Choice] and [the

defendants] is terminated or is otherwise rendered ineffective.”

J.A. 40.

Less than six months after entering into the Franchise

Agreement and executing the Promissory Note, the defendants began

negotiating the sale of the Yuma property to Young Lim, another

Choice franchisee. Choice was notified of the potential sale and

offered Lim a new Franchise Agreement relating to the defendants’

Yuma property. The proposed Franchise Agreement between Choice and

Lim differed from the Franchise Agreement between Choice and the

defendants in that the proposed Franchise Agreement to Lim provided

for the payment of an affiliation fee of $48,900 and higher royalty

fees throughout the duration of the new Franchise Agreement. Lim

paid the required affiliation fee and executed the new Franchise

Agreement on May 10, 2004. Two weeks later, the defendants closed

on their sale of the Yuma property to Lim. 

Soon after the sale, Choice filed a complaint for confession

of judgment against the defendants, alleging that the Promissory

Note was in default “[d]ue to the termination of the Franchise
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Agreement.” J.A. 7. The district court entered judgment in favor

of Choice.

The defendants thereafter moved the district court to open,

modify, or vacate the judgment. Choice argued two independent

grounds in opposition to the defendants’ motion: (1) the defendants

were in default because their Franchise Agreement terminated; or

(2) the defendants were in default because they transferred the

Yuma property without Choice’s prior written consent. Although the

district court ruled that there was a question of fact regarding

whether the defendants’ Franchise Agreement actually terminated,

the district court agreed with Choice that the defendants were in

default because they did not receive prior written consent from

Choice to transfer the Yuma property to Lim. The defendants now

appeal. 

II.

The defendants argue that the district court erred by denying

their motion to vacate the confessed judgment in favor of Choice.

We disagree. 

The parties agree that their dispute is governed by Maryland

law. Under Maryland law, a confessed judgment must be vacated if

the debtor presents evidence "sufficient to persuade the fair and

reasoned judgment of an ordinary man that there are substantial and

sufficient grounds for an actual controversy as to the merits of
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the case.” Billingsley v. Lincoln Nat’l Bank, 320 A.2d 34, 37 (Md.

1974) (citation omitted); see D. Md. Local R. 108(e) (“If the

evidence presented establishes that there are substantial and

sufficient grounds for an actual controversy as to the merits of

the case, the Court shall order the judgment by confession vacated,

opened, or modified”). The debtor who moves to vacate a confession

of judgment “has the burden of presenting evidence satisfactorily

supporting its purported defense, and the burden is met if persons

of ordinary judgment and prudence could fairly draw different

inferences from the evidence presented.” Garliss v. Key Fed. Sav.

Bank, 627 A.2d 64, 68 (Md. Ct. Spec. App. 1993) (citations

omitted). Confessions of judgment are generally disfavored in

Maryland because of their potential for abuse. Id.

After reviewing the evidence, we conclude that the defendants

have failed to present evidence establishing that a substantial and

sufficient ground for a meritorious defense exists. The Promissory

Note provides that the unpaid balance becomes due if the Franchise

Agreement between the defendants and Choice “is terminated or is

otherwise rendered ineffective.” J.A. 40. The defendants have

failed to present any evidence suggesting that their Franchise

Agreement with Choice was not terminated or was not rendered

ineffective. The undisputed evidence shows that Choice negotiated

a separate Franchise Agreement with Lim, the new owner of the Yuma

property, and that this new Franchise Agreement is now in effect in
2Although the district court ruled in favor of Choice on a

different ground, we may affirm on any basis appearing in the

record. See United States v. McHan, 386 F.3d 620, 623 (4th Cir.

2004).

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place of the defendants’ Franchise Agreement. Although the

defendants argue that they effectively assigned their Franchise

Agreement to Lim, there is no evidence that they assigned their

rights and obligations under their Franchise Agreement to Lim. To

the contrary, the only evidence is that Choice negotiated a

separate Franchise Agreement with Lim containing different terms,

which necessarily terminated or rendered ineffective the

defendants’ Franchise Agreement when Lim’s new Agreement took

effect.2

III.

Because we conclude that the defendants have failed to present

sufficient evidence showing that they have a meritorious defense to

the confession of judgment, we affirm the judgment of the district

court. 

 AFFIRMED

 
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WILLIAMS, Circuit Judge, concurring:

Because I agree that Choice’s entry into a franchise agreement

with Lim “rendered ineffective” its franchise agreement with

Sonora, I concur in the judgment.