Family of Care Real Estate Holding Co., Inc. et al v. Chapman Property LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: FAMILY OF CARE REAL ESTATE:
HOLDING CO., INC. and CHARLES
COUNTY NURSING AND REHABILITATION:
CENTER___________________________
FAMILY OF CARE REAL ESTATE 	:
HOLDING CO., INC., et al.
:
Appellants
:
v. 	Civil Action No. DKC 26-2026
:
CHAPMAN PROPERTY LLC,
:
Appellee
:
MEMORANDUM OPINION
Appellants 	Family 	of 	Care 	Real 	Estate 	Holding 	Co., 	Inc. 	and
Charles 	County 	Nursing 	and 	Rehabilitation 	Center, 	Inc.
(“Appellants”), debtors in the underlying bankruptcy case, appeal
from 	the 	order 	of 	Bankruptcy 	Judge 	Lori 	S. 	Simpson 	overruling 	in
part Appellants’ claim objection and finding that Appellee Chapman
Property 	LLC 	(“Chapman”) 	is 	entitled 	to 	rejection 	damages. 	(ECF
No. 1). 	Chapman has filed a motion to seal an exhibit. 	(ECF No.
16). 	The 	issues 	have 	been 	briefed, 	and 	the 	court 	now 	rules, 	no
hearing 	being 	deemed 	necessary. 	Local 	Rule 	105.6. 	For 	the
following 	reasons, 	the 	order 	of 	the 	bankruptcy 	court 	will 	be
affirmed and the motion to seal granted.
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I. 	Relevant Background1
A. 	Factual Background
This 	appeal 	centers 	around 	a 	contract—the 	asset 	purchase
agreement 	(“APA”)—formed 	between 	Appellants 	and 	Chapman 	on
September 12, 2022. 	(ECF No. 3-58 ¶ 8). 	The APA provided for the
sale 	of 	a 	skilled 	nursing 	facility 	(“SNF”) 	and 	ancillary 	items
from 	Appellants 	to 	Chapman 	for 	a 	price 	of 	$28,200,000. 	(Id.).
The 	deadline 	for 	closing 	the 	sale 	was 	set 	initially 	for 	November
26, 	2022, 	but 	Chapman 	could 	exercise 	two 	thirty-day 	extensions
with the payment of a deposit. 	(ECF No. 3-31, at 6–7).
Execution 	of 	the 	APA 	did 	not 	proceed 	smoothly. 	In 	November
2022, the parties amended the APA to delay closing to December 1,
2022. 	(ECF No. 3-58 ¶ 8). 	Chapman then exercised its two extension
1 	The 	following 	facts 	are 	derived 	from 	the 	record 	in 	this
case. 	(ECF No. 3; ECF No. 4). 	Appellants filed an appendix with
additional exhibits on July 27, 2026. 	(ECF No. 11-1). 	Appellants’
appendix contains two highly relevant exhibits that the Bankruptcy
Court 	received 	in 	evidence 	at 	the 	multi-day 	hearing 	held 	from
October 	22 	to 	November 	6, 	2025, 	which 	appear 	to 	have 	been
mistakenly omitted from the initial record on appeal. 	First is a
January 11, 2023, email sent by Uri Kanahow, (ECF No. 11-1, at 80–
82 (“January 11 Email”)), entered into evidence without objection
as Debtors’ Exhibit 8 on October 22, 2023. 	(See ECF No. 3-61, at
253). 	Second is a January 17, 2023 letter from Catherine Hopkin,
(ECF 	No. 	11-1, 	at 	87–92 	(“Second 	Hopkin 	Letter”)), 	entered 	into
evidence 	without 	objection 	as 	Debtors’ 	Exhibit 	10 	on 	October 	23,
2023. 	(See ECF No. 3-59, at 19). 	Because they are central to the
appeal and their authenticity is not disputed, these exhibits will
be considered as part of the record.
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options, 	pushing 	the 	scheduled 	closing 	date 	to 	February 	1, 	2023.
(Id. ¶ 9).
Around 	January 	2023, 	Uri 	Kahanow, 	an 	executive 	of 	Chapman’s
parent company Tryko,2 began communicating with Appellants’ Chief
Executive Officer Andrea Dwyer about rising costs associated with
the 	purchase 	of 	the 	SNF. 	(ECF 	No. 	3-65, 	at 	31–41). 	Mr. 	Kahanow
requested 	a 	discount 	in 	price 	to 	cover 	the 	increased 	expenses.
(Id. at 33–34). 	Ms. Dwyer asked Mr. Kahanow to send her an email
detailing Chapman’s request, which she would present to the board
of directors (“Board”) of Appellants’ parent organization.3 	(Id.
at 41). 	On January 11, 2023, Mr. Kahanow sent Ms. Dwyer an email
explaining that:
[a]s 	discussed 	we 	heard 	back 	from 	our 	bank
today that they’re [sic] committee is prepared
to move forward with the loan. 	It comes along
with 	thresholds, 	escrows, 	and 	SWAP
requirements 	that 	are 	workable 	but 	do 	impact
the numbers. 	This combined with the impact of
the numbers outlined below which combined have
a total negative impact of more than $4MM over
a 5 year period to our bottom line. 	Internally
we do not plan on being profitable year 1 but
we cannot absorb significant losses. 	We would
need a $1.5MM adjustment in the purchase price
2 	The 	Bankruptcy 	Court 	treated 	Mr. 	Kahanow’s 	communications
as “attributable to Chapman,” and that conclusion is not challenged
by the parties. 	(See ECF No. 1-1, at 14).
3 	The 	parent 	organization 	is 	Family 	of 	Care 	Alliance 	a/k/a
Sagepoint 	Senior 	Living 	Services 	(“FOCA”). 	(ECF 	No. 	3-58 	¶ 	1).
It appears that FOCA had authority over Appellants in this matter.
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to 	move 	forward 	and 	cushion 	some 	of 	the
impact.
If 	this 	is 	acceptable 	the 	only 	two
outstanding 	items 	would 	be 	the 	condo 	docs
which Joe has two outside attorneys working on
and 	the 	timing 	which 	we 	are 	waiting 	on
confirmation if the bank will have everything
they need to close by Feb 1st or if they will
need to push the closing off for 2 weeks. 	We
understand 	this 	hasn’t 	always 	been 	as 	smooth
as 	anticipated 	and 	we 	hope 	you 	could
appreciate 	that 	we 	are 	in 	a 	very 	challenging
capital market[] for turnaround opportunities
with 	more 	then 	[sic] 	half 	of 	the 	traditional
healthcare banks not lending at all. 	The good
news is we believe we have most of the stresses
behind 	us. 	We 	appreciate 	the 	consideration
and look forward to hearing back.
(ECF No. 11-1, at 80).
Later that day, Appellants’ attorney Ms. Hopkin sent a letter
to Chapman’s in-house counsel characterizing the January 11 Email
as follows:
It 	has 	come 	to 	my 	attention 	that 	Uri
Ukahanow [sic] confirmed in writing today his
communication 	to 	Andrea 	Dwyer, 	that 	Chapman
Property 	LLC 	(the 	“Purchaser”) 	has 	not 	(and
will 	not 	be 	able 	to) 	timely 	secure 	funding
necessary 	to 	enable 	it 	to 	pay 	the 	full
purchase 	price 	of 	$28,200,000.00 	(the
“Purchase 	Price”) 	for 	the 	purchase 	of 	the
Property. 	As you know, Purchaser is obligated
to pay the Purchase Price at a closing of the
sale 	of 	the 	Property 	on 	February 	1, 	2023,
pursuant to the Asset Purchase Agreement dated
September 	12, 	2022 	(the 	“APA”), 	and 	there 	is
no 	financing 	contingency 	with 	respect 	to
Purchaser’s 	obligations. 	Mr. 	Ukahanow 	[sic]
has 	stated 	that 	Purchaser 	will 	not 	close 	as
required 	on 	February 	1, 	2023, 	unless 	its
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request 	for 	a 	price 	adjustment 	of 	$1,500,000
is accepted by Seller. [4]
(ECF 	No. 	3-56, 	at 	112 	(“First 	Hopkin 	Letter”). 	The 	letter
explained that “[a]ny such agreement to a Purchase Price adjustment
is solely Seller’s decision.” 	(Id.).
The First Hopkin Letter then requested that
if 	Purchaser 	has 	secured 	funding 	of 	the
Purchase 	Price, 	and 	is 	prepared 	to 	close 	on
February 	1, 	2023, 	contrary 	to 	Mr. 	Ukahanow’s
[sic] 	statements; 	then 	I 	look 	forward 	to
receiving 	your 	confirmation 	that 	Purchaser
will close under the current terms of the APA,
which 	confirmation 	I 	must 	receive 	in 	writing
no later than 5 p.m. EST on January 13, 2023.
(Id.).
Chapman did not respond immediately to Ms. Hopkin. 	On January
16, 2023, the Board met to discuss the January 11 Email. 	The Board
decided to reject the requested price reduction and authorized Ms.
Hopkin 	to 	make 	a 	counteroffer. 	(ECF 	No. 	3-59, 	at 	64–65). 	Ms.
Hopkin 	sent 	a 	letter 	to 	Chapman 	the 	next 	day, 	January 	17, 	2023,
repeating 	her 	characterization 	of 	the 	January 	11 	Email 	as 	an
admission that Chapman could not secure funding and thus could not
close 	on 	February 	1. 	(ECF 	No. 	11-1, 	at 	87). 	The 	Second 	Hopkin
Letter also addressed Chapman’s failure to respond:
In 	my 	letter 	dated 	January 	11, 	2023, 	I
required 	you 	to 	confirm 	in 	writing 	no 	later
than January 13, 2023 at 5 p.m. that Purchaser
4 	The term “Seller” in the First Hopkin Letter and following
communications refers to Appellants. 	(See ECF No. 3-56, at 117).
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has 	the 	ability 	to 	fund 	the 	entire 	Purchase
Price; 	and 	to 	close 	on 	February 	1, 	2023,
pursuant to the terms set forth in the APA.
Having received no such confirmation from
you, 	together 	with 	Purchaser’s 	actions,
statements 	in 	writing, 	and 	failure 	to 	timely
take requisite actions to ensure closing under
the terms of the APA, Seller sends this notice
of 	default 	of 	Purchaser’s 	obligations 	under
the APA due to Purchaser’s definite, specific,
positive, 	and 	unconditional 	repudiation 	of
Purchaser’s obligations in under the APA.
(Id. at 87–88). 	As approved by the Board, the letter included an
offer to amend the APA and extend closing to March 1, 2023, subject
to an additional deposit and other conditions. 	(Id. at 88–92).
Michael Maloney, counsel for Chapman, responded the next day,
January 	18, 	2023, 	expressing 	that 	Chapman 	was 	“shocked 	and
disappointed” 	by 	the 	First 	and 	Second 	Hopkin 	Letters 	and
representing that:
Seller’s 	notice 	of 	default 	to 	Purchaser 	is
completely 	without 	merit. 	The 	[Second 	Hopkin
Letter] 	relies 	on 	an 	email 	from 	Purchaser
dated January 11, 2023 as the only support for
Seller’s assertion that Purchaser will not be
able 	to 	meet 	its 	funding 	obligations 	at
Closing. 	However, Purchaser never stated any
inability to perform such Closing obligations
nor 	has 	it 	stated 	its 	inability 	to 	fund 	the
acquisition. 	Rather, the email merely refers
to 	market 	conditions, 	etc. 	to 	explain
Purchaser’s business need for the request for
a 	purchase 	price 	reduction. 	Seller’s
convoluted 	understanding 	of 	a 	communication
from Purchaser does not obligate the Purchaser
to 	respond 	to 	Seller’s 	frivolous 	Notice
Letter. 	Purchaser, 	therefore, 	explicitly
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rejects 	and 	repudiates 	Seller’s 	claim 	of
either breach or default.
(ECF 	No. 	3-56, 	at 	117 	(“Maloney 	Letter”)). 	The 	Maloney 	Letter
accused Appellants of being themselves in breach of APA provisions
not relevant here but stated that Chapman “remains willing to work
through 	these 	issues 	and 	negotiate 	in 	good 	faith 	to 	ensure 	the
transaction closes.” 	(Id. at 118).
The 	parties 	were 	unable 	to 	resolve 	their 	differences. 	On
January 	24, 	2023, 	Appellants 	informed 	Chapman 	that 	they 	were
terminating the APA. 	(ECF No. 3-18). 	Negotiations continued for
several 	more 	weeks. 	(See 	ECF 	No. 	3-23). 	On 	March 	1, 	2023,
Appellants filed a breach of contract claim against Chapman in the
Circuit Court for Charles County, Maryland. 	(ECF No. 3-58 ¶ 11).
B. 	Procedural History
The 	matter 	has 	since 	taken 	a 	long 	procedural 	route 	to 	reach
this 	bankruptcy 	appeal. 	In 	brief, 	Chapman 	removed 	the 	Circuit
Court 	case 	to 	this 	court 	on 	March 	2, 	2023. 	Family 	of 	Care 	Real
Estate 	Holding 	Co. 	v. 	Chapman 	Property 	LLC, 	Case 	No. 	23-cv-574-
DKC 	(D.Md. 	Mar. 	2, 	2023) 	(“District 	Court 	Case”). 	Chapman 	filed
counterclaims 	for 	breach 	of 	contract 	against 	Appellants 	on 	March
21, 	2023. 	(District 	Court 	Case, 	ECF 	No. 	22). 	The 	court 	denied
summary judgment as to both parties’ breach of contract claims on
June 	25, 	2024. 	(District 	Court 	Case, 	ECF 	No. 	154). 	Before 	the
District 	Court 	Case 	could 	proceed 	further, 	Appellants 	filed
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bankruptcy 	proceedings 	on 	October 	18, 	2024, 	(ECF 	No. 	3-58 	¶ 	15),
and the District Court Case was administratively closed on October
22, 2024. 	(District Court Case, ECF No. 162).
On 	January 	21, 	2025, 	the 	Bankruptcy 	Court 	issued 	orders
authorizing Appellants to reject the APA and sell SNF to a third-
party buyer. 	(ECF No. 3-33; ECF No. 3-58 ¶ 16); see also 11 U.S.C.
§ 365(g) (permitting the trustee of a bankruptcy estate to reject
any 	“executory 	contract” 	of 	the 	debtor).5 	“The 	rejection 	of 	an
executory 	contract 	constitutes 	a 	breach 	of 	the 	contract.” 	In 	re
Stewart Foods, Inc., 64 F.3d 141, 144 (4 th Cir. 1995). 	As a result
of 	the 	rejection 	of 	the 	APA, 	Chapman 	lost 	“the 	right 	to 	seek
specific performance of the APA to the extent that it had any such
right” at the time Appellants filed for bankruptcy. (ECF No. 3-58
¶ 	18). 	Chapman 	retained 	the 	right 	to 	seek 	monetary 	damages 	for
the breach by filing a proof of claim. 	See In re Fieldstone Mortg.
Co., 427 B.R. 364, 374, 377 (Bankr.D.Md. 2010)
Chapman 	exercised 	that 	right 	on 	February 	21, 	2025, 	filing 	a
proof 	of 	claim 	against 	Appellants 	of 	$7,070,677.30 	in 	damages
5 An executory contract is one where the “obligations of both
the 	bankrupt 	and 	the 	other 	party 	to 	the 	contract 	are 	so 	far
unperformed that the failure of either to complete the performance
would constitute a material breach excusing the performance of the
other.” 	In 	re 	Sunterra 	Corp., 	361 	F.3d 	257, 	264 	(4 th 	Cir. 	2004)
(quoting Gloria Mfg. Corp. v. Int’l Ladies Garment Workers Union,
734 F.2d 1020, 1022 (4 th Cir. 1984)).
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arising from the rejection of the APA. 	(ECF No. 3-53). 	Appellants
objected 	to 	the 	claim, 	arguing 	that 	the 	APA 	was 	not 	an 	executory
contract at the time they filed their bankruptcy petition because
Chapman first (1) anticipatorily repudiated the APA; (2) failed to
give adequate assurances that it would close on February 1, 2023;
and 	(3) 	breached 	the 	implied 	covenant 	of 	good 	faith 	and 	fair
dealing. 	(See 	ECF 	No. 	3-67, 	at 	2–16). 	Appellants 	also 	argued
that 	Chapman 	failed 	to 	carry 	its 	burden 	to 	establish 	(1) 	that
Appellants 	materially 	breached 	the 	APA; 	and 	(2) 	that 	Chapman
fulfilled its duty to exercise good faith and fair dealing. 	(Id.
at 	16-22). 	The 	Bankruptcy 	Court 	“held 	a 	multi-day 	hearing
beginning on October 22, 2025, and concluding on November 6, 2025,
on the merits of the Claim Objection.” 	(ECF No. 1-1, at 11). 	The
parties presented evidence in the form of testimony, depositions,
and exhibits, and provided written closing arguments.
On 	May 	6, 	2026, 	the 	Bankruptcy 	Court 	issued 	the 	order
overruling Appellants’ claim objection (“Order”). 	The court found
that Chapman’s actions did not constitute repudiation, failure to
provide adequate assurance, or breach of the implied duty of good
faith and fair dealing, and therefore the APA was executory at the
time 	the 	bankruptcy 	petition 	was 	filed. 	(ECF 	No. 	1-1, 	at 	20).
The 	Bankruptcy 	Court 	did 	not 	reference 	separately 	Appellants’
contention that Chapman failed to establish that it fulfilled the
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duty of good faith and fair dealing, but that argument is addressed
by the holding that Chapman did not breach the duty. 	(Id. at 19–
20). The court treated the rejection of the APA as a breach of the
contract. 	(Id. at 12). 	Accordingly, the court held that “Chapman
is 	entitled 	to 	rejection 	damages” 	arising 	from 	Appellants’
rejection 	of 	the 	APA. 	(Id. 	at 	20). 	The 	court 	reserved 	the
calculation of damages for a later proceeding. 	(Id. at 11, 20).
On May 22, 2026, Appellants filed a notice of appeal to this
court. 	(ECF 	No. 	1). 	Appellants 	filed 	a 	brief 	on 	July 	27, 	2026,
presenting 	only 	three 	issues 	on 	appeal: 	whether 	the 	bankruptcy
court 	erred 	by 	(1) 	assigning 	Appellants 	the 	ultimate 	burden 	of
proof 	as 	to 	Chapman’s 	claim; 	(2) 	concluding 	that 	Chapman 	did 	not
repudiate the APA; and (3) concluding that Chapman did not fail to
provide adequate assurance of performance. 	(ECF No. 11, at 4–5).
Chapman 	filed 	a 	response 	on 	August 	31, 	2026, 	(ECF 	No. 	14) 	and
Appellants filed a reply on September 18, 2026, (ECF No. 19).
Chapman 	attached 	to 	its 	response 	an 	appendix 	of 	additional
exhibits not included in the initial designation of the record on
appeal. 	(ECF No. 14-1).6 	One exhibit, R-42, was filed under seal.
6 Chapman’s appendix contains exhibits that are not relevant
to this appeal or that are duplicative of evidence in the record.
Chapman’s 	appendix, 	therefore, 	need 	not 	be 	considered 	as 	part 	of
the record on appeal. As the appendix appears on the public docket,
however, 	it 	is 	appropriate 	to 	address 	Chapman’s 	confidentiality
concern raised in the motion to seal.
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Chapman 	filed 	a 	motion 	to 	seal 	exhibit 	R-42 	on 	August 	31, 	2026.
(ECF 	No. 	16). 	Neither 	Appellants 	nor 	another 	interested 	party
have filed an objection to the motion to seal.
II. 	Jurisdiction
A district court has jurisdiction to hear appeals “from final
judgments, orders, and decrees . . . of bankruptcy judges entered
in 	cases 	and 	proceedings 	referred 	to 	the 	bankruptcy 	judges 	under
section 	157 	of 	this 	title.” 	28 	U.S.C. 	§ 	158(a)(1). 	A 	district
court 	may 	also 	grant 	leave 	to 	file 	appeals 	from 	“other
interlocutory 	orders 	and 	decrees” 	of 	bankruptcy 	judges. 	Id.
§ 158(a)(3). 	Appellants 	assert 	that 	the 	Order 	is 	final 	under
§ 158(a)(1), 	but 	in 	the 	alternative 	request 	that 	their 	notice 	of
appeal 	be 	construed 	as 	a 	motion 	for 	leave 	to 	appeal 	the 	Order 	as
an 	interlocutory 	order 	under 	§ 	158(a)(3). 	(ECF 	No. 	11, 	at 	7–8).
In its response brief, Chapman does not address Appellants’ request
for leave to appeal.
Final 	orders 	under 	§ 	158(a)(1) 	must 	“‘finally 	dispose 	of
discrete 	disputes 	within 	the 	larger 	[bankruptcy] 	case.’” 	Ritzen
Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. 35, 39 (2020) (quoting
Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015)) (alteration
in original). 	The difficulty lies in determining “the proper scope
of 	the 	proceeding, 	or 	‘discrete 	dispute,’ 	adjudicated 	below.”
Kiviti v. Bhatt, 80 F.4th 520, 529 (4 th Cir. 2023). 	This step in
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the 	analysis 	“is 	perhaps 	the 	hardest, 	if 	only 	because 	it 	is 	the
most novel.” 	Id.
It 	is 	not 	necessary 	to 	decide 	whether 	the 	Order, 	which
adjudicated 	the 	merits 	of 	Chapman’s 	claim 	but 	left 	damages 	to 	be
determined later, ended a discrete dispute. 	But see First Owners’
Ass’n 	of 	Forty 	Six 	Hundred 	v. 	Gordon 	Props., 	LLC, 	470 	B.R. 	364,
370 (E.D.Va. 2012) (“In this matter, because both compensatory and
punitive damages and the amount of the final sanction remain to be
determined, 	there 	has 	been 	no 	final 	resolution 	of 	a 	discrete
dispute.”); 	1 	Collier 	on 	Bankruptcy 	¶ 	5.08[1][b] 	(16 th 	ed. 	2026)
(a 	final 	order 	“must 	completely 	resolve 	all 	of 	the 	issues
pertaining 	to 	a 	discrete 	claim, 	including 	issues 	as 	to 	proper
relief.” 	(quoting 	In 	re 	Integrated 	Res., 	3 	F.3d 	49, 	53 	(2 d 	Cir.
1993)). 	Assuming that the Order is interlocutory, the court will
grant 	Appellants’ 	request 	for 	leave 	to 	appeal. 	Chapman 	does 	not
oppose 	granting 	leave, 	and 	it 	is 	in 	the 	interest 	of 	judicial
economy to decide the appeal now.
III. Standard of Review
In an appeal from Bankruptcy Court, this
Court reviews factual findings for clear error
and conclusions of law de novo. Gold v. First
Tenn. 	Bank 	Nat’l 	Ass’n 	(In 	re 	Taneja), 	743
F.3d 	423, 	429 	(4 th Cir. 	2014). 	A 	finding 	is
clearly erroneous only if, after reviewing the
record, 	the 	reviewing 	court 	is 	left 	with 	“a
firm 	and 	definite 	conviction 	that 	a 	mistake
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has been committed.” 	Klein v. PepsiCo, Inc.,
845 F.2d 76, 79 (4 th Cir. 1988).
Ekweani v. Thomas, 574 B.R. 561, 567 (D.Md. 2017).
Under clear error review, a decision of the trier of fact may
not be reversed so long as it is “plausible in light of the record
viewed in its entirety.” 	Anderson v. City of Bessemer City, N.C.,
470 U.S. 564, 574 (1985). 	“Where there are two permissible views
of 	the 	evidence, 	the 	factfinder’s 	choice 	between 	them 	cannot 	be
clearly erroneous.” 	Id.
When reviewing a mixed question of fact and law,
a 	reviewing 	court 	should 	try 	to 	break 	such 	a
question 	into 	its 	separate 	factual 	and 	legal
parts, 	reviewing 	each 	according 	to 	the
appropriate 	legal 	standard. 	But 	when 	a
question 	can 	be 	reduced 	no 	further, 	we 	have
added that “the standard of review for a mixed
question 	all 	depends—on 	whether 	answering 	it
entails primarily legal or factual work.” U.S.
Bank 	N.A. 	v. 	Village 	at 	Lakeridge, 	LLC, 	[583
U. S. 387, 398] (2018).
Google 	LLC 	v. 	Oracle 	Am., 	Inc., 	593 	U.S. 	1, 	24 	(2021). 	A 	mixed
question 	that 	entails 	primarily 	legal 	work 	is 	reviewed 	de 	novo.
Bufkin v. Collins, 604 U.S. 369, 382 (2025). However, some
mixed 	questions 	require 	courts 	to 	resolve
“case-specific 	factual 	issues.” 	[U.S. 	Bank
N.A., 	583 	U.S. 	at 	396 	(2018)]. 	When 	the
tribunal 	below 	is 	“immerse[d]” 	in 	facts 	and
compelled to “marshal and weigh evidence” and
“make 	credibility 	judgments,” 	the 	appellate
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court 	“should 	usually 	review 	a 	decision 	with
deference.” Ibid.
Bufkin, 604 U.S. at 382.7
IV. 	Analysis
A. 	Burden of Proof
The Bankruptcy Code establishes a burden-
shifting framework for proving the amount and
validity of a claim. 	The creditor’s filing of
a 	proof 	of 	claim 	constitutes 	prima 	facie
evidence 	of 	the 	amount 	and 	validity 	of 	the
claim. 	11 	U.S.C. 	§ 	502(a); 	Fed.R.Bankr.P.
3001(f). 	The burden then shifts to the debtor
to 	object 	to 	the 	claim. 	11 	U.S.C. 	§ 	502(b);
[Canal Corp. v. Finnman, 960 F.2d 396, 404 (4 th
Cir. 	1992)]. 	The 	debtor 	must 	introduce
evidence 	to 	rebut 	the 	claim’s 	presumptive
validity. 	Fed.R.Bankr.P. 	9017; 	Fed.R.Evid.
301; 	[4 	Collier 	on 	Bankruptcy 	¶ 	501.02[3][d]
(15th 	ed. 	rev. 	2004)]. 	If 	the 	debtor 	carries
its 	burden, 	the 	creditor 	has 	the 	ultimate
burden 	of 	proving 	the 	amount 	and 	validity 	of
the claim by a preponderance of the evidence.
Id. at ¶ 502.02[3][f].
In re Harford Sands, Inc., 372 F.3d 637, 640 (4 th Cir. 2004). 	At
step two of the burden-shifting framework, the debtor must produce
evidence 	which, 	“if 	uncontravened, 	would 	be 	sufficient 	to 	defeat
the 	legal 	basis 	for 	the 	claim 	asserted.” 	In 	re 	Gates, 	214 	B.R.
467, 472 (Bankr.D.Md. 1997).
7 Appellants cite contradictory cases from the United States
Court 	of 	Appeals 	for 	the 	Fourth 	Circuit 	holding 	that 	mixed
questions of law and fact are reviewed de novo. 	In re J.A. Jones,
Inc., 	492 	F.3d 	242, 	249 	(4 th 	Cir. 	2007); 	In 	re 	Litton, 	330 	F.3d.
636, 	642 	(4th 	Cir. 	2003). 	However, 	the 	more 	recent 	Google 	and
Bufkin decisions control here.
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Appellants 	assert 	that 	the 	Bankruptcy 	Court 	failed 	to 	apply
the 	Harford 	burden-shifting 	framework 	and 	improperly 	placed 	on
them 	the 	“ultimate 	burden 	of 	proof.”8 	(ECF 	No. 	11, 	at 	24).
However, 	“when 	a 	trial 	court 	applies 	the 	wrong 	legal 	test 	or
quantum of proof, an appellate court may resolve the case without
remanding if the evidence would inevitably produce the same outcome
under the correct standard.” 	Humphrey v. Humphrey, 434 F.3d 243,
248 (4th Cir. 2006). 	In a matter to be proved by the preponderance
of the evidence, the allocation of the burden of persuasion “will
have 	bite 	only 	when 	the 	court 	finds 	the 	evidence 	in 	equipoise—a
situation that should rarely arise.” 	Goldman Sachs Grp., Inc. v.
Ark. Tchr. Ret. Sys., 594 U.S. 113, 127 (2021); see also Medina v.
California, 	505 	U.S. 	437, 	449 	(1992). 	Otherwise, 	the 	allocation
of burden is not determinative because the trial court’s “task is
simply 	to 	assess 	all 	the 	evidence” 	and 	determine 	whether 	an
8 “[I]n American law, the term ‘burden of proof’ is understood
to 	encompass 	two 	distinct 	burdens: 	the 	burden 	of 	persuasion 	and
the 	burden 	of 	production. 	See, 	e.g., 	Schaffer 	v. 	Weast, 	546 	U.S.
49, 56[] (2005).” TransCanada Pipelines Ltd. v. USGen New England,
Inc., 	458 	B.R. 	195, 	210 	n.18 	(D.Md. 	2011). 	The 	burden 	of
persuasion determines “which party loses if the evidence is closely
balanced” 	and 	the 	burden 	of 	production 	determines 	“which 	party
bears the obligation to come forward with the evidence at different
points 	in 	the 	proceeding.” 	Schaffer, 	546 	U.S. 	at 	56. 	Harford
places 	the 	burden 	of 	production 	on 	the 	debtor 	at 	step 	two 	of 	the
burden-shifting framework, with the ultimate burden of persuasion
remaining 	on 	the 	claimant. 	See 	In 	re 	Allegheny 	Int’l, 	Inc., 	954
F.2d 167, 174 (3 d Cir. 1992). 	Thus, it is more precise to describe
the 	‘ultimate 	burden 	of 	proof’ 	that 	Appellants 	challenge 	as 	the
burden of persuasion.
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assertion 	is 	more 	likely 	than 	not. 	Goldman 	Sachs, 	594 	U.S. 	at
126–27.
The 	Bankruptcy 	Court 	did 	not 	explicitly 	apply 	the 	Harford
burden-shifting 	framework, 	but 	correctly 	held 	that 	Chapman 	had
established a prima facie claim for breach of contract (step one),
and that the burden thus shifted to Appellants to produce evidence
sufficient 	to 	raise 	an 	objection 	(step 	two). 	(ECF 	No. 	1-1, 	at
12). 	As relevant to this appeal, Appellants objected that Chapman
repudiated 	the 	APA 	and 	failed 	to 	provide 	adequate 	assurances.
Assuming 	that 	Appellants 	carried 	their 	burden 	of 	production 	at
step 	two, 	then 	Chapman 	bore 	the 	ultimate 	burden 	of 	persuasion 	as
to 	those 	objections 	at 	step 	three. 	See 	In 	re 	Gates, 	214 	B.R. 	at
472–73; 	In 	re 	USGen 	New 	England, 	Inc. 	429 	B.R. 	437, 	473
(Bankr.D.Md. 2010), aff’d sub nom. TransCanada Pipelines Ltd., 458
B.R. 195.
Appellants are correct that parts of the Order appear to place
the ultimate burden of persuasion on Appellants. 	(See ECF No. 1-
1 at 13–14; 19). 	There is no need to remand, however, because the
court’s 	ruling 	did 	not 	depend 	on 	the 	allocation 	of 	the 	burden 	of
persuasion. 	The Bankruptcy Court found that the facts definitively
weighed 	in 	Chapman’s 	favor 	as 	to 	both 	repudiation 	and 	adequate
assurance. 	As to repudiation, the court held that “Chapman never
made a ‘positive statement or act’ repudiating the APA.” 	(ECF No.
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17
1-1, 	at 	15). 	Therefore, 	the 	court 	held 	that 	“Chapman 	did 	not
repudiate the APA.” 	(Id. at 16). 	As to the second objection, the
court 	made 	another 	unqualified 	finding 	that 	“Chapman 	provided
reasonable 	adequate 	assurance.” 	(ECF 	No. 	1-1, 	at 	17).
Accordingly, had the court articulated that, at step three of the
Harford 	burden-shifting 	framework, 	the 	burden 	of 	persuasion 	was
placed on Chapman, the “evidence would inevitably produce the same
outcome.” 	Humphrey, 434 F.2d at 248.
B. 	Anticipatory Repudiation
Under Maryland law, a party may treat a contract as abandoned
when 	the 	other 	party 	engages 	in 	anticipatory 	repudiation 	of 	the
contract. 	Weiss 	v. 	Sheet 	Metal 	Fabricators, 	Inc., 	206 	Md. 	195,
203–04 	(1955). 	“Ordinarily, 	in 	order 	to 	constitute 	anticipatory
repudiation, 	there 	must 	be 	a 	definite, 	specific, 	positive, 	and
unconditional repudiation of the contract by one of the parties to
the 	contract.” 	W.M. 	Blomquist 	& 	Co. 	v. 	Cap. 	Area 	Realty 	Invs.,
270 Md. 486, 494 (1973). 	In other words, “there must be a definite
and 	unequivocal 	manifestation 	of 	intention 	on 	the 	part 	of 	the
repudiator 	that 	he 	will 	not 	render 	the 	promised 	performance 	when
the 	time 	fixed 	for 	it 	in 	the 	contract 	arrives.” 	Harrell 	v. 	Sea
Colony, 	Inc., 	35 	Md.App. 	300, 	306 	(1977) 	(quoting 	4 	Corbin 	on
Contracts Section 973 (1951).
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In 	Harrell, 	the 	then 	named 	Court 	of 	Special 	Appeals 	of
Maryland held that “[a] mere request for a change in the terms or
a request for cancellation of the contract is not in itself enough
to constitute a repudiation.” 	Id. (quoting 4 Corbin on Contracts
Section 	973). 	Therefore, 	a 	party 	under 	contract 	to 	buy 	a
condominium 	did 	not 	repudiate 	the 	contract 	despite 	informing 	the
seller that he “‘wanted to cancel the contract’ and ‘did not want
to 	proceed 	with 	settlement’ 	because 	his 	‘personal 	financial
situation 	. 	. 	. 	was 	such 	that 	he 	felt 	he 	could 	not 	proceed 	with
the purchase of this unit.’” 	Id. at 307.
The 	Bankruptcy 	Court 	assessed 	whether 	“Chapman’s 	statements
and/or actions were objectively a definite repudiation.”9 (ECF No.
1-1, 	at 	13–14). 	The 	court 	concluded 	that 	“considering 	the
surrounding 	circumstances, 	neither 	the 	January 	11 	Email 	nor 	any
other 	actions 	or 	statements 	attributable 	to 	Chapman 	provide 	the
requisite, 	definitive 	repudiation” 	of 	the 	APA. 	(Id.). 	This
9 	The 	Bankruptcy 	Court 	also 	concluded 	that 	anticipatory
repudiation 	involves 	a 	“subjective 	element” 	that 	required
Appellants 	to 	“show 	that 	they 	understood 	the 	statements 	and/or
actions 	of 	Chapman 	as 	a 	definite 	repudiation.” 	(ECF 	No. 	1-1, 	at
13). 	The 	parties 	below 	and 	the 	court 	presumably 	relied 	on
Blomquist for this proposition. 	This may be an overreading of the
section discussing Corbin on Contracts: “A statement of inability
to 	perform 	. 	. 	. 	may 	be 	so 	made 	as 	to 	justify 	the 	other 	party 	in
understanding 	it 	as 	a 	definite 	repudiation.” 	270 	Md. 	at 	495.
However, 	the 	court’s 	finding 	that 	Appellants 	“did 	not 	interpret
the January 11 Email as a definitive repudiation” provides further
support 	for 	the 	conclusion 	that 	objectively 	the 	email 	did 	not
definitively repudiate the APA. 	(ECF No. 1-1, at 15).
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finding 	will 	be 	reviewed 	for 	clear 	error 	because 	it 	is 	primarily
a question of fact.
The 	court 	analyzed 	the 	words 	of 	the 	January 	11 	Email,
concluding that the email did not “definitively and unequivocally
manifest 	an 	intention” 	to 	repudiate 	the 	APA. 	(ECF 	1-1, 	at 	15).
The 	court 	found 	that 	the 	language 	of 	the 	January 	11 	Email 	spoke
“merely of prudential constraints” and did not “state that Chapman
[did] 	not 	have 	the 	funds 	to 	close 	or 	that 	there 	were 	definitive,
insurmountable hurdles to closing.” 	(Id.).
This 	conclusion 	is 	not 	clearly 	erroneous. 	The 	language 	of
the January 11 Email is far from “definitive, specific, positive,
and 	unconditional.” 	Blomquist, 	270 	Md. 	at 	494. 	The 	strongest
language 	in 	the 	email 	is 	the 	claim 	that 	Chapman 	“would 	need 	a
$1.5MM adjustment in the purchase price to move forward and cushion
some of the impact.” 	(ECF No. 11-1, at 84). 	However, this language
is 	immediately 	qualified 	as 	subject 	to 	Appellants’ 	approval: 	“If
this 	is 	acceptable . . . .” 	(Id.). 	The 	message 	ends 	with 	the
statement 	“we 	appreciate 	the 	consideration 	and 	look 	forward 	to
hearing 	back,” 	further 	demonstrating 	that 	Chapman 	was 	not 	making
an unequivocal or unconditional repudiation. 	(Id.). 	The January
11 Email thus can be read plausibly as a “mere request for a change
in terms” of the APA. 	Harrell, 35 Md.App. at 306. 	Therefore, the
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Bankruptcy Court’s view of the evidence is permissible and cannot
be clear error. 	See Anderson, 470 U.S. at 574.
Appellants argue that the January 11 Email contained “a clear
statement that [Appellants’] only option to proceed to closing was
to accept less than the APA required.” 	(ECF No. 11, at 31). 	They
compare 	the 	email 	to 	the 	facts 	of 	a 	recent 	Maryland 	case, 	St.
Charles Towne Plaza, LLC v. Sanahed, Inc., in which landlords told
a tenant it had only two options: vacate the property a year before
the 	conclusion 	of 	its 	lease, 	or 	sign 	a 	new 	five-year 	lease
agreement. 	No. 1153, Sept. Term, 2023, 2025 WL 814810, at *9 (Md.
App. Ct. Mar. 14, 2025). 	The court in St. Charles concluded that
the landlords’ statement was an anticipatory breach because it was
a clear demonstration that they would not comply with the term set
out in the lease agreement. 	Id.
Even 	without 	giving 	due 	deference 	to 	the 	findings 	of 	the
Bankruptcy Court, Appellants’ argument is at odds with the text of
the 	January 	11 	Email. 	The 	language 	that 	Chapman 	“would 	need” 	a
price reduction falls short of a clear refusal to comply with the
APA. 	Nor did Chapman suggest that its performance was conditioned
on receiving a price reduction. 	Accordingly, the January 11 Email
is 	closer 	to 	the 	request 	for 	changed 	terms 	in 	Harrell, 	in 	which
the 	buyer 	expressed 	that 	his 	finances 	were 	such 	“that 	he 	felt 	he
could not proceed,” than the ultimatum given in St. Charles.
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The 	Bankruptcy 	Court 	bolstered 	its 	interpretation 	of 	the
January 11 Email by considering the “surrounding circumstances” of
negotiations 	between 	Appellants 	and 	Chapman. 	(ECF 	No. 	1-1, 	at
14). 	The 	court 	noted 	that 	Mr. 	Kahanow 	and 	Ms. 	Dwyer 	were
“sophisticated” 	businesspeople 	and 	negotiators, 	and 	that 	the
January 	11 	Email 	was 	part 	of 	an 	ongoing 	conversation 	between 	the
two. 	(Id.). 	The 	court 	also 	gave 	weight 	to 	the 	fact 	that 	Mr.
Kahanow 	sent 	the 	email 	“[a]t 	Ms. 	Dwyer’s 	insistence” 	so 	that 	she
could present Chapman’s request to the Board. 	(Id. at 14). 	Thus,
the 	Bankruptcy 	Court 	concluded 	that 	“[t]he 	January 	11 	Email 	was,
objectively, 	a 	transparent 	negotiating 	tactic” 	as 	opposed 	to 	a
definitive repudiation. 	(Id. at 16).
Although Appellants dispute this interpretation of the email,
(ECF 	No. 	11, 	at 	31), 	“merely 	disagree[ing] 	with 	[a 	judge’s]
characterizations 	of 	the 	facts” 	does 	not 	amount 	to 	clear 	error.
Klein, 845 F.2d at 79. 	The Bankruptcy Court’s characterization is
plausible 	in 	light 	of 	negotiations 	between 	Mr. 	Kahanow 	and 	Ms.
Dwyer leading up to the January 11 Email. 	Accordingly, it was not
clear 	error 	to 	find 	that 	the 	email 	was 	a 	transparent 	negotiation
tactic, and this finding supports the conclusion that the January
11 Email was not an anticipatory repudiation.
Appellants also argue that Chapman’s lack of funds to close,
in 	combination 	with 	other 	signs 	of 	unpreparedness 	to 	take 	over
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operations 	of 	the 	SNF, 	constituted 	a 	breach 	of 	the 	APA 	by
manifesting an “existing appearance of inability” to perform under
the 	APA. 	(ECF 	No. 	11, 	at 	33). 	Appellants 	assert 	that 	“Chapman
was not prepared, or even trying to prepare, to close on February
1, much less pay the $28,200,000 contract price.” 	(ECF No. 11, at
34). 	The other signs of unpreparedness included that Chapman “had
no 	employment 	contract 	with 	[Appellants’] 	medical 	director, 	whom
Chapman indicated it would ask to continue serving after the sale,”
and 	that 	“[n]o 	appraiser 	had 	visited 	the 	[SNF], 	as 	needed 	for
Popular Bank’s loan underwriting process, nor had any title agent
contacted Appellants to complete the significant paperwork needed
for 	closing.” 	(Id. 	at 	35–36). 	Appellants 	concede 	that 	“the 	APA
did not require these items.” 	(Id.).
Appellants’ 	argument 	rests 	on 	a 	legal 	misunderstanding.
Appellants cite Blomquist for the rule that
[t]here 	may 	be 	cases 	in 	which 	expressions 	of
inability 	by 	one 	party 	or 	an 	existing
appearance of inability on his part to perform
will justify the other party in nonperformance
of 	his 	part 	of 	the 	contract 	or 	in 	materially
changing 	his 	position 	so 	as 	to 	make
performance 	impossible, 	without 	at 	the 	same
time operating as an anticipatory breach, for
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23
which 	an 	action 	for 	damages 	could 	be
maintained.
270 Md. at 494 (quoting 4 Corbin on Contracts Section 974 (1951)).10
However, 	Blomquist 	related 	this 	rule 	to 	Section 	323 	of 	the
Restatement of Contracts, titled “Effect of Apparent Inability or
of 	Expressions 	of 	Doubt 	Followed 	by 	Change 	of 	Position, 	which
states:
(1) 	Where 	a 	party 	to 	a 	contract
materially changes his position in reasonable
reliance on the other party’s
(a) 	manifestations 	of 	unjustified 	lack
either of intention or of ability, or
(b) 	apparent inability without justification
to 	perform 	a 	condition 	or 	a 	promise 	for 	an
agreed 	exchange, 	a 	subsequent 	tender 	of
correct 	performance 	by 	the 	latter 	party 	is
inoperative 	to 	prevent 	the 	occurrence 	of 	a
breach 	of 	contract 	by 	him 	at 	the 	time 	when
performance becomes due.
Restatement of Contracts, Section 323 (A.L.I. 1932). 	Section 323
is specific to instances where a suggestion of inability to perform
prompts 	the 	other 	party 	materially 	to 	change 	position, 	such 	as
entering a substitute contract with a third party. 	See id. illus.
3.
10 An updated version of this section appears as Section 59.16
in the revised edition. 10 Corbin on Contracts Section 59.16 (Rev.
ed. 2026).
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The comments to Section 323 explain that an apparent inability
to perform does not necessarily amount to a breach or anticipatory
repudiation. 	Id. 	cmts. 	a, 	b. 	So 	too 	does 	the 	quoted 	language
from 	Blomquist, 	which 	states 	that 	an 	expression 	or 	appearance 	of
inability 	to 	perform 	may 	justify 	nonperformance 	or 	a 	change 	in
position 	“without 	at 	the 	same 	time 	operating 	as 	an 	anticipatory
breach.” 	270 Md. at 494. 	This language from Blomquist thus does
not 	support 	the 	Appellants’ 	position 	that 	Chapman’s 	apparent
inability to close on February 1, 2023, constituted an anticipatory
breach.
Moreover, 	Appellants’ 	argument 	runs 	contrary 	to 	String 	v.
Steven Dev. Corp, 269 Md. 569 (1973). 	String involved a contract
to 	build 	a 	home. 	After 	several 	months 	of 	inactivity 	at 	the
building site, the buyer concluded that it would be impossible for
the 	builder 	to 	complete 	construction 	by 	the 	anticipated 	date 	and
informed the builder that the contract was “breached and null and
void.” 	Id. 	at 	571–72. 	The 	builder 	responded 	that 	it 	hoped 	to
complete 	construction 	in 	time 	but 	received 	no 	reply. 	Litigation
followed, 	in 	which 	the 	buyer 	claimed 	the 	builder’s 	delay
constituted an anticipatory breach. 	Id. at 574.
The 	then 	named 	Court 	of 	Appeals 	of 	Maryland 	held 	that 	there
is a distinction “between a mere failure to prepare for performance
and a specific anticipatory repudiation.” 	Id. at 579. 	The court
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explained that “failure to take preparatory action before the time
when 	any 	performance 	is 	promised 	is 	not 	an 	anticipatory 	breach,
even though such failure makes it impossible that performance shall
take 	place, 	and 	though 	the 	promisor 	at 	the 	time 	of 	the 	failure
intends not to perform his promise.” 	Id. (quoting Restatement of
Contracts Section 318, cmt. i (A.L.I. 1932)); see also Stefanowicz
Corp. 	v. 	Harris, 	36 	Md.App. 	136, 	146 	(1977). 	Accordingly,
Chapman’s 	purported 	failure 	to 	secure 	funds 	and 	undertake 	other
preparations 	prior 	to 	closing 	did 	not 	amount 	to 	an 	anticipatory
breach under Maryland law.
Appellants raise two further arguments, which fail as a matter
of 	law. 	First, 	Appellants 	contend 	that 	the 	January 	11 	Email
functioned as a counter-offer and quote the general principle that
“a counter-offer is a rejection, not an acceptance.” 	(ECF No. 11,
at 	29) 	(quoting 	Grp. 	Home 	on 	Gibson 	Island, 	LLC 	v. 	Gibson 	Island
Corp., 144 F.4th 522, 534 n.7 (4 th Cir. 2025)). 	However, this rule
applies to the rejection of offers, not repudiation of an existing
contract. 	See Ebline v. Campbell, 209 Md. 584, 591, modified, 209
Md. 584 (1956).
Second, 	Appellants 	argue 	that 	the 	Bankruptcy 	Court 	should
have 	applied 	a 	different 	set 	of 	rules 	to 	the 	APA 	because 	of 	the
nature of the work performed at the SNF:
[Appellants] were responsible for 100 patients
who required around-the-clock skilled nursing
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care. 	Had 	[Appellants] 	not 	terminated 	on
January 	24, 	and 	Chapman 	been 	unable 	to 	close
on February 1, [Appellants] would have had to
reverse 	the 	cancellation 	of 	all 	operating
contracts 	to 	ensure 	continuity 	of 	care 	in 	a
highly 	regulated 	environment—including
pharmaceutical 	supplies, 	ambulance
transportation, 	food, 	employee 	contracts 	and
health care, medical supplies, utilities, and
a 	plethora 	of 	licensing 	for 	commercial
kitchen, 	pharmaceutical 	and 	other 	highly
regulated services.
(ECF 	No. 	11, 	at 	36–37). 	Appellants 	do 	not 	cite 	any 	Maryland 	law
for 	the 	proposition 	that 	skilled 	nursing 	facilities 	require 	a
different 	legal 	standard 	and 	simply 	speculate 	that 	the 	Supreme
Court 	of 	Maryland 	would 	rule 	in 	their 	favor. 	(Id. 	at 	37–39).
Because 	it 	has 	no 	grounding 	in 	Maryland 	law, 	this 	argument 	lacks
merit. 	Moreover, 	Appellants 	could 	have 	contracted 	to 	include
safeguards 	in 	the 	APA 	to 	avoid 	these 	risks. 	Appellants’ 	failure
to account for their own circumstances when entering the APA does
not justify a change in governing law.
C. 	Adequate Assurance
The Restatement (Second) of Contracts, Section 251, provides
that:
(1) Where reasonable grounds arise to believe
that 	the 	obligor 	will 	commit 	a 	breach 	by
nonperformance 	that 	would 	of 	itself 	give 	the
obligee 	a 	claim 	for 	damages 	for 	total 	breach
under 	§ 	243, 	the 	obligee 	may 	demand 	adequate
assurance 	of 	due 	performance 	and 	may, 	if
reasonable, suspend any performance for which
he 	has 	not 	already 	received 	the 	agreed
exchange until he receives such assurance.
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(2) The obligee may treat as a repudiation the
obligor’s 	failure 	to 	provide 	within 	a
reasonable 	time 	such 	assurance 	of 	due
performance 	as 	is 	adequate 	in 	the
circumstances of the particular case.
(A.L.I. 1981). 	Appellants contend that this is part of Maryland
law, that they properly sought reasonable assurance, and that the
bankruptcy 	court 	erred 	in 	finding 	that 	Chapman 	had 	provided
reasonable assurance.
Maryland 	courts 	have 	not 	adopted 	Section 	251. 	(See 	ECF 	No.
1-1, at 17); Rock Spring Plaza, II, LLC v. Invs. Warranty of Am.,
LLC, No. 25-1736, 2026 WL 1679031, at *14 (4 th Cir. June 10, 2026)
(per 	curiam) 	(unpublished). 	In 	this 	situation, 	this 	court 	must
“predict” how the state’s highest court would rule. 	Near v. Enerco
Grp., Inc., 182 F.4th 341, 353 (4 th Cir. 2026). 	But, as noted in
Rosser 	By 	& 	Through 	Brown 	v. 	Wal-Mart 	Stores, 	Inc., 	947 	F.Supp.
903, 906 (E.D.N.C. 1996), “[a] federal court sitting in diversity
must 	apply 	the 	law 	of 	the 	state 	as 	it 	exists, 	and 	cannot
participate 	in 	an 	attempt 	to 	change 	or 	expand 	state 	substantive
law. Burris Chem. v. USX Corp., 10 F.3d 243, 247 (4 th Cir. 1993).”
In other words,
The 	court 	must 	therefore 	tread 	a 	difficult
path 	between, 	on 	the 	one 	hand, 	interpolating
the development of state law and applying that
law as would the North Carolina Supreme Court,
and on the other hand, avoiding application of
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state law in such a manner as to change North
Carolina law.
Id.
As 	the 	Appellate 	Court 	of 	Maryland 	recently 	explained, 	the
Restatement
is not binding upon this Court or any other in
Maryland. 	The 	Restatement 	(Second) 	of
Contracts—and 	every 	other 	Restatement—is
merely 	a 	secondary 	source 	providing 	a 	survey
of 	trends 	in 	common 	law 	on 	a 	national 	scale.
See 	Black’s 	Law 	Dictionary 	(11th 	ed. 	2019)
(defining 	a 	Restatement 	as 	“[o]ne 	of 	several
influential 	treatises 	published 	by 	the
American 	Law 	Institute 	describing 	the 	law 	in
a 	given 	area 	and 	guiding 	its 	development”).
As 	Black’s 	Law 	Dictionary 	states, 	“Although
the Restatements are frequently cited in cases
and commentary, a Restatement provision is not
binding 	on 	a 	court 	unless 	it 	has 	been
officially 	adopted 	as 	the 	law 	by 	that
jurisdiction’s highest court.” Id.
In 	re 	Featherfall 	Restoration 	LLC, 	261 	Md.App. 	105, 	137 	(2024)
(alterations in original), rev’d on other grounds sub nom. Matter
of 	Featherfall 	Restoration, 	LLC, 	491 	Md. 	586 	(2025). 	Therefore,
failure to provide adequate assurance is not a viable objection to
Chapman’s claim under Maryland law.11
11 The Bankruptcy Court noted that a federal court applied the
concept of adequate assurance in a dispute over the assignment of
a 	lease 	agreement 	under 	Maryland 	law. 	Rock 	Spring 	Plaza, 	LLC 	v.
Invs. Warranty of Am., LLC, No. 20-cv-01502-JRR, 2025 WL 1504850,
at 	*17 	(D.Md. 	May 	27, 	2025), 	aff’d 	sub 	nom. 	2026 	WL 	1679031.
However, 	that 	case 	dealt 	primarily 	with 	Section 	317 	of 	the
Restatement (Second), which the court interpreted to allow a party
to seek “appropriate information” as to whether its interests are
at risk when a contract is assigned to a third party. 	Id. at *3,
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29
The 	Bankruptcy 	Court 	declined 	to 	decide 	whether 	Section 	251
applied 	to 	the 	APA, 	reasoning 	that 	even 	if 	Section 	251 	applied,
“Chapman 	provided 	reasonable 	adequate 	assurance.” 	(ECF 	No. 	1-1,
at 17). 	Assuming that Section 251 does apply, the Bankruptcy Court
did not err in this conclusion.
Whether 	an 	assurance 	is 	adequate 	“depends 	on 	what 	it 	is
reasonable 	to 	require 	in 	a 	particular 	case 	taking 	account 	of 	the
circumstances 	of 	that 	case.” 	Restatement 	(Second) 	of 	Contracts,
Section 	251 	cmt. 	e. 	Thus, 	the 	conclusion 	that 	Chapman 	provided
adequate 	assurance 	is 	a 	fact-specific 	determination 	that 	will 	be
reviewed 	for 	clear 	error. 	See 	In 	re 	Lonestar 	Indus., 	Inc.,
Concrete R.R. Cross Ties Litig., 776 F. Supp. 206, 228 (D.Md. 1991)
(whether 	assurances 	are 	adequate 	is 	a 	question 	of 	fact 	under 	the
parallel provision of the Uniform Commercial Code (“U.C.C.”)).
The Bankruptcy Court found that, if Section 251 applied, the
January 11 Email was “an expression of doubt” that gave Appellants
“reasonable grounds to believe that Chapman would not or could not
close by the time and at the price required under the APA.” 	(ECF
No. 	1-1, 	at 	16, 	17). 	Accordingly, 	it 	was 	appropriate 	for
*15; see also Rock Springs Plaza II, LLC v. Invs. Warranty of Am.,
LLC, 618 F.Supp.3d. 262, 270–73 (D.Md. 2022). 	Reference to Section
251 	was 	brief. 	See 	Rock 	Springs 	Plaza, 	2025 	WL 	1504850 	at 	*17.
On appeal, the Fourth Circuit did not hold that Section 251 applies
under Maryland law. Rock Spring Plaza, II, 2026 WL 1679031 at *13–
14.
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Appellants 	to 	demand 	adequate 	assurance 	that 	Chapman 	would
perform. 	Appellants 	did 	so 	in 	the 	First 	Hopkin 	Letter 	sent 	on
January 11, 2023, requesting confirmation that Chapman “will close
under the current terms of the APA.” 	(ECF No. 3-56, at 112).
The 	Bankruptcy 	Court 	next 	concluded 	that 	the 	First 	Hopkin
Letter was not “a reasonable demand for adequate assurance” because
Appellants 	demanded 	that 	Chapman 	respond 	within 	two 	days. 	(ECF
No. 	1-1, 	at 	17–18). 	It 	is 	not 	clear, 	however, 	that 	Section 	251
requires that the demand be reasonable. 	It appears sufficient, at
least under the parallel provision of the U.C.C., that the demand
provides a “clear understanding” that the demanding party intends
to 	suspend 	its 	performance 	or 	terminate 	the 	contract 	unless 	it
receives 	adequate 	assurances. 	Rocheux 	Intern. 	of 	N.J., 	Inc. 	v.
U.S. Merchants Fin. Grp., Inc., 741 F.Supp.2d 651, 673(D.N.J. 2010)
(collecting 	cases). 	The 	demand, 	however, 	cannot 	define 	what
constitutes 	reasonable 	assurance. 	The 	Bankruptcy 	Court
independently held that Chapman provided adequate assurance. 	(ECF
No. 1-1, at 18). 	That finding is not clearly erroneous.
The Bankruptcy Court held that the Maloney Letter “explicitly
rejected [Appellants’] interpretation of the January 11 Email” and
“affirmed that it ‘never stated any inability to perform . . .[or]
fund 	the 	acquisition.” 	(ECF 	No. 	1-1, 	at 	18). 	Furthermore, 	the
Maloney Letter stated that Chapman “remains willing to work through
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31
these issues and negotiate in good faith to ensure the transaction
closes.” 	(Id.). 	Although 	the 	letter 	was 	“drafted 	in 	lawyer-
speak,” the Bankruptcy Court attributed this to the fact that “both
parties 	were 	anticipating 	litigation.” 	(Id.). 	Taking 	all 	these
factors 	together, 	the 	Bankruptcy 	Court 	concluded 	that 	the 	letter
was an adequate “assurance of due performance.” 	(Id.).
The 	assurance 	that 	Chapman 	“never 	stated 	any 	inability 	to
perform” 	or 	“to 	fund 	the 	acquisition,” 	despite 	being 	worded
awkwardly 	in 	the 	negative, 	was 	responsive 	to 	Appellants’ 	concern
that 	Chapman 	could 	not 	secure 	funding 	for 	the 	purchase 	price 	and
would 	not 	close 	on 	February 	1. 	Moreover, 	the 	Maloney 	Letter
explained 	that 	the 	January 	11 	Email 	“merely 	refer[red] 	to 	market
conditions, 	etc. 	to 	explain 	Purchaser’s 	business 	need 	for 	the
request for a purchase price reduction.” 	(ECF No. 3-56, at 117).
This statement provided a valid explanation for Chapman’s conduct
that 	refuted 	the 	implication 	that 	Chapman 	would 	fail 	to 	procure
funding 	or 	close 	on 	time. 	Thus, 	based 	on 	the 	language 	of 	the
Maloney 	Letter, 	the 	Bankruptcy 	Court 	could 	reasonably 	conclude
that Chapman provided adequate assurance.
D. 	Motion to Seal
“[T]he public and the press have a qualified right of access
to 	judicial 	documents 	and 	records.” 	Doe 	v. 	Public 	Citizen, 	749
F.3d 	246, 	266 	(4 th 	Cir. 	2014). 	Public 	access 	to 	court 	documents
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“serves 	to 	promote 	trustworthiness 	of 	the 	judicial 	process, 	to
curb 	judicial 	abuses, 	and 	to 	provide 	the 	public 	with 	a 	more
complete understanding of the judicial system, including a better
perception 	of 	fairness.” 	Id. 	(quoting 	Littlejohn 	v. 	Bic 	Corp.,
851 F.2d 673, 682 (3d Cir. 1988).
In recognition of the public’s right to access, when sealing
court documents the district court
must (1) provide public notice of the request
to 	seal 	and 	allow 	interested 	parties 	a
reasonable opportunity to object, (2) consider
less 	drastic 	alternatives 	to 	sealing 	the
documents, 	and 	(3) 	provide 	specific 	reasons
and 	factual 	findings 	supporting 	its 	decision
to 	seal 	the 	documents 	and 	for 	rejecting 	the
alternatives. 	See 	[In 	re 	Knight 	Publ’g 	Co.,
743 F.2d 231, 235–36 (4 th Cir. 1984)]; see also
[Stone 	v. 	Univ. 	of 	Md. 	Med. 	Sys. 	Corp., 	855
F.2d 	178, 	181 	(4 th 	Cir. 	1988)]. 	These
procedures 	“must 	be 	followed 	when 	a 	district
court 	seals 	judicial 	records 	or 	documents.”
Stone, 855 F.2d at 179–80, 182.
Ashcraft 	v. 	Conoco, 	Inc., 	218 	F.3d 	288, 	302 	(4 th 	Cir. 	2000).
Likewise, 	when 	filing 	a 	motion 	to 	seal 	in 	this 	district 	a 	party
must 	provide 	“(a) 	proposed 	reasons 	supported 	by 	specific 	factual
representations to justify the sealing and (b) an explanation why
alternatives to sealing would not provide sufficient protection.”
Local 	Rule 	105.11. 	The 	court 	will 	not 	rule 	on 	the 	motion 	for 	at
least 	fourteen 	days 	to 	allow 	“the 	filing 	of 	objections 	by
interested parties.” 	Id.
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33
Chapman seeks to seal Exhibit R-42 (“R-42”) of its appendix,
(ECF 	No. 	14-1, 	at 	69), 	but 	makes 	only 	a 	cursory 	attempt 	to 	meet
the requirements of Local Rule 105.11. 	R-42 contains the minutes
of the Board meeting held on January 16, 2023, in which the Board
considered the January 11 Email and directed Ms. Hopkin to reject
Chapman’s proposed price reduction and make a counteroffer to amend
the APA. 	(See ECF No. 1-1, at 8 (describing the Board meeting in
general terms)). 	Chapman’s only provided reason for sealing R-42
is 	that 	it 	falls 	“under 	the 	terms 	of 	the 	Confidentiality 	and
Protective Order previously entered” in the earlier District Court
Case. 	(ECF 	No. 	16-2, 	at 	2). 	That 	order 	allowed 	the 	parties 	to
designate 	certain 	documents 	disclosed 	during 	discovery 	as
confidential and barred the disclosure of such documents to third
parties. 	(See District Court Case, ECF No. 66-1 at 3–6). 	However,
the court order explicitly noted that:
whenever 	materials 	subject 	to 	the
confidentiality order (or any paper referring
to them) are proposed to be filed in the court
record 	under 	seal, 	the 	party 	making 	such
filing must simultaneously submit a motion and
accompanying order which includes (a) proposed
reasons 	supported 	by 	specific 	factual
representations to justify the sealing and (b)
an 	explanation 	why 	alternatives 	to 	sealing
would 	not 	provide 	sufficient 	protection 	(see
Local Rule 105.11).
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34
(District 	Court 	Case, 	ECF 	No. 	69). 	Accordingly, 	the
confidentiality 	order 	does 	not 	provide 	an 	independent 	basis 	for
sealing an exhibit.
Despite 	the 	insufficiency 	of 	Chapman’s 	motion, 	it 	is
appropriate 	to 	seal 	R-42 	because 	all 	the 	relevant 	information 	it
contains has been publicly disclosed in the appellate record. 	The
pertinent details of the January 16 Board meeting are described in
the Order, which is not sealed. 	(ECF No. 1-1, at 8). 	The record
also 	contains 	significant 	portions 	of 	unsealed 	testimony
describing 	the 	meeting 	and 	the 	contents 	of 	R-42. 	(ECF 	No. 	3-59,
at 64–70, 114–17; ECF No. 3-61, at 152–59, 178–83). 	Thus, to the
extent 	that 	the 	contents 	of 	R-42 	were 	considered 	in 	this 	appeal,
the 	public 	has 	access 	to 	those 	contents, 	and 	the 	public 	interest
in overseeing and understanding the judicial process is satisfied.
Any 	remaining 	confidential 	information 	within 	R-42 	can 	be
rightfully protected without harm to the public.
The other requirements for sealing a document are satisfied.
The 	public 	had 	notice 	and 	a 	reasonable 	amount 	of 	time 	to 	object—
about 	six 	weeks 	since 	the 	filing 	of 	the 	motion 	to 	seal—and 	there
are 	no 	sufficient 	alternatives 	to 	preserve 	whatever 	confidential
information remains in R-42. 	Accordingly, R-42 will be filed under
seal. 	Because 	this 	sealing 	is 	only 	appropriate 	because 	of 	the
unusual 	circumstance 	that 	the 	exhibit 	is 	practically 	irrelevant,
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Chapman 	is 	reminded 	to 	provide 	“proposed 	reasons 	supported 	by
specific 	factual 	representations” 	in 	any 	future 	motion 	to 	seal.
Local Rule 105.11.
V. 	Conclusion
For the foregoing reasons, the order of the Bankruptcy Court
will be affirmed. 	A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
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