J-A24030-18

2019 PA Super 15

AMERICAN SOUTHERN INSURANCE 

CO., INC.

v.

JAMES A. HALBERT, JULIE BETH 

WRIGHT HALBERT, DOUGLAS E. 

HALBERT , DAVID R. HALBERT AND 

VIRGINIA V. HALBERT 

Appellants

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 IN THE SUPERIOR COURT OF

 PENNSYLVANIA

 No. 504 MDA 2018

Appeal from the Order Entered February 22, 2018

In the Court of Common Pleas of Dauphin County Civil Division at No(s): 

2017-CV-298-CV

BEFORE: OTT, J., McLAUGHLIN, J., and FORD ELLIOTT, P.J.E.

OPINION BY McLAUGHLIN, J.: FILED: JANUARY 17, 2019

James A. Halbert, Julie Beth Wright Halbert, Douglas E. Halbert, David 

R. Halbert, and Virginia Halbert (collectively, the Halberts) appeal from the 

order entered February 22, 2018, granting American Southern Insurance Co., 

Inc. (American Southern) summary judgment in this indemnity contract 

dispute. As the terms of the contract are clear and dispositive, and further, as

Halberts’ claims on appeal are devoid of merit, we affirm.

American Southern is in the business of providing performance surety 

bonds, including those related to completion of public improvements. In May 

2006, the Halberts individually signed a general agreement of indemnity in 

favor of American Southern. The agreement set forth the terms of 

indemnification. In relevant part, the Halberts agreed to indemnify American 
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Southern from any claim or liability arising from the issuance of a performance 

bond. See American Southern’s Complaint, 01/10/2017, Exhibit A (“General 

Agreement of Indemnity”) (hereafter, Agreement), ¶ 2. Moreover, the 

Agreement granted American Southern the sole authority to determine 

whether a claim brought pursuant to a performance bond was valid:

The Company [i.e., American Southern] shall have the exclusive 

right to determine for itself and the Indemnitors [i.e., the 

Halberts] whether any claim or suit brought against the Company 

or the Principal upon any such bond shall be settled or defended 

and its decision shall be binding and conclusive upon the 

Indemnitors.

Agreement, ¶ 5. 

Thereafter, and in reliance upon the Agreement, American Southern

issued a performance bond in favor of North Cornwall Township, Pennsylvania, 

in the original amount of $650,580.63, later revised by bond rider to 

$740,000.00, to secure completion of certain subdivision improvements by 

Oaklea Corporation for a local development. See American Southern’s 

Complaint, 01/10/2017, Exhibit B (“Subdivision Performance Bond”)

(hereafter, Performance Bond). Mr. James A. Halbert signed the performance 

bond as president of Oaklea. Id. 

In July 2016, the township advised American Southern that it had made 

a demand upon Oaklea to complete required improvements but had received 

no response or performance. Accordingly, the township demanded the 

improvements or compensation from American Southern, which in turn sent 

notice to the Halberts, who did not respond. 
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In June 2017, American Southern commenced this litigation, seeking 

damages arising from its performance under the surety bond. In response, 

the Halberts answered that the improvements demanded by the township 

were unnecessary. See Halberts’ Answer, 02/07/2017, at ¶¶ 18-27

(unpaginated). In addition, the Halberts pleaded new matter, including several 

affirmative defenses to American Southern’s claims. Id. at “New Matter” ¶¶ 

1-13 (unpaginated). American Southern filed a reply thereto. 

In October 2017, American Southern filed a motion for summary 

judgment, asserting that “[t]here are no genuine issues of material fact in 

dispute and American Southern is entitled to judgment as a matter of law.” 

American Southern’s Motion for Summary Judgment (Motion), 10/31/2017, at 

¶ 24. In their response, the Halberts did not counter American Southern’s 

assertion with evidence of record, choosing instead to reiterate prior 

averments that the improvements demanded by the township were 

unnecessary. See Halberts’ Response in Opposition (Response), 12/04/2017, 

at ¶¶ 11, 16-19, 23-25.1 Further, the Halberts cited no evidence essential to 

any affirmative defense. See generally id.

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1

In several paragraphs, the Halberts also averred that they could not 

challenge the evidence provided by American Southern establishing that it had 

relied upon the Agreement as a condition of issuance for the Performance 

Bond because “[n]o discovery in this matter has been undertaken.” See, e.g., 

Response at ¶ 23(b). This is specious, as no discovery was requested. See 

generally Pa.R.C.P. 4001-25.
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In February 2018, the lower court held argument on the motion for 

summary judgment. At the argument, which was not transcribed, the Halberts 

conceded that Paragraph 5 of the Agreement applied to the improvements 

demanded by North Cornwall Township. See Summary Judgment Order, 

02/22/2018. Nevertheless, the Halberts raised two affirmative defenses not 

previously pleaded. According to the Halberts, (1) the Agreement was a 

contract of adhesion, and (2) the federal Equal Credit Opportunity Act (ECOA), 

15 U.S.C. §§ 1691–1691, precluded any judgment against Ms. Julie Halbert.

See Statement in Absence of Transcript, 03/26/2018. Following argument, 

the court granted summary judgment, concluding that Paragraph 5 of the 

Agreement “negates [the Halberts’] sole defense that the requested 

improvements were not necessary.” Summary Judgment Order at 1. In 

addition to this ruling, the court explicitly rejected the Halberts’ assertion that 

the Agreement was unconscionable as a contract of adhesion; however, it did 

not address the Halberts’ purported ECOA argument. Id. at 2.

The Halberts timely appealed and filed a court-ordered Pa.R.A.P. 

1925(b) statement. In response, the lower court issued a statement directing 

our attention to its prior order. See Pa.R.A.P. 1925(a) Opinion, 04/25/2018.

On appeal, the Halberts raise the following issues:

1. Whether the trial court erred by ruling the contract at issue was 

not a contract of adhesion.

2. Whether the trial court erred by ruling Julie Halbert did not have 

a defense under the Equal Credit Opportunity Act, (“ECOA”) [sic] 

15 U.S.C. §1691, and Regulation B (“Reg B”), 12 C.F.R., Part 202, 

et seq.
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Halberts’ Br. at 2.

Before we address the Halberts’ arguments, we note the following. 

Summary judgment is appropriate where the record clearly 

demonstrates there is no genuine issue of material fact and the 

moving party is entitled to judgment as a matter of law. When 

considering a motion for summary judgment, the trial court must 

take all facts of record and reasonable inferences therefrom in a 

light most favorable to the non-moving party. Whether there are 

no genuine issues as to any material fact presents a question of 

law, and therefore, our standard of review is de novo and our 

scope of review plenary. 

Estate of Agnew v. Ross, 152 A.3d 247, 259 (Pa. 2017) (citations omitted).

The Pennsylvania Rules of Civil Procedure recognize two species of 

summary judgment:

After the relevant pleadings are closed, but within such time as 

not to unreasonably delay trial, any party may move for summary 

judgment in whole or in part as a matter of law

(1) whenever there is no genuine issue of any material fact 

as to a necessary element of the cause of action or defense 

which could be established by additional discovery or expert 

report, or

(2) if, after the completion of discovery relevant to the 

motion, including the production of expert reports, an 

adverse party who will bear the burden of proof at trial has 

failed to produce evidence of facts essential to the cause of 

action or defense which in a jury trial would require the 

issues to be submitted to a jury.

Pa.R.C.P. 1035.2. Thus, we have previously remarked, “a record that supports 

summary judgment will either (1) show the material facts are undisputed or 

(2) contain insufficient evidence of facts to make out a prima facie cause of 

action or defense and, therefore, there is no issue to be submitted to the jury.” 
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Cigna Corp. v. Executive Risk Indem., Inc., 111 A.3d 204, 210-11 

(Pa.Super. 2015) (citation omitted).

Here, following the close of pleadings, American Southern sought 

summary judgment of the first species, asserting that “[t]here are no genuine 

issues of material fact in dispute and American Southern is entitled to 

judgment as a matter of law.” Motion at ¶ 24. It supported this assertion with 

evidence of record, setting forth the terms of the Agreement, the Performance 

Bond, the township’s demands for performance, American Southern’s 

invocation of the Agreement, the Halberts’ failure to perform and breach of 

the Agreement, and American Southern’s resulting damages. Id. at 2, 7, 8, 

9, 10, 12, 14, 19-23.

2

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2 We note that American Southern supported its assertion of damages by 

affidavit. See Motion, ¶¶ 20-22, 23(h), Exhibit A (Affidavit of Jerry 

Underwood, Vice President of American Southern). The Halberts challenged 

these assertions by averring that “[n]o discovery has been undertaken to 

determine the veracity” of the affidavit, Response at ¶¶ 20-22, and “[t]he 

demands for [sic] improvements were unnecessary.” Id. at ¶ 23(e). It is not 

clear from these averments whether the Halberts sought relief pursuant to 

Nanty-Glo v. American Surety Co., 163 A. 523 (Pa. 1932). Further, 

although they cited Nanty-Glo in their supporting brief, the Halberts 

presented no argument premised upon it. See Halberts’ Response 

Memorandum, 12/04/2017, at 2-3. Rather, the Halberts again denied that the 

improvements were necessary and suggested that it was unclear whether the 

Performance Bond issued in reliance upon the Agreement. Id. at 3. 

The Nanty-Glo rule provides that “[t]estimonial affidavits [or depositions] of 

the moving party or [its] witnesses, not documentary, even if uncontradicted, 

will not afford sufficient basis for the entry of summary judgment, since the 

credibility of the testimony is still a matter for the factfinder.” Shamis v. 

Moon, 81 A.3d 962, 965 (Pa.Super. 2013). Thus, it may be relevant to this 

case. Nevertheless, the Halberts failed to preserve any such claim for relief in 
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Pennsylvania Rule of Civil Procedure 1035.3 governs a non-moving 

party’s response to a motion for summary judgment and provides in relevant 

part:

[T]he adverse party may not rest upon the mere allegations or 

denials of the pleadings but must file a response within thirty days 

after service of the motion identifying

(1) one or more issues of fact arising from evidence in the 

record controverting the evidence cited in support of the 

motion or from a challenge to the credibility of one or more 

witnesses testifying in support of the motion[.]

Pa.R.C.P. 1035.3(a).

In their response, the Halberts cited no “evidence in the record 

controverting” the evidence cited by American Southern. Id. Further, though 

permitted by rule to do so, the Halberts made no effort to “supplement the 

record or set forth the reasons why” they could not do so. Pa.R.C.P. 1035.3(b).

Rather, the Halberts merely reiterated the denial repeatedly set forth in their 

answer, that the improvements were unnecessary. Compare Halberts’ 

Response at ¶¶ 11, 16, 17, 18, 19, 23, with Halberts’ Answer, at ¶¶ 18-27. 

Rule 1035.3 explicitly prohibits a party from “rest[ing] upon the mere 

allegations or denials of the pleadings.” Pa.R.C.P. 1035.3(a). Thus, the 

Halberts’ Response was deficient, and summary judgment was properly 

entered against them. See Pa.R.C.P. 1035.3(d).

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their Pa.R.A.P. 1925(b) statement, nor do they attempt to argue the claim on 

appeal. Accordingly, we deem it waived. Id. at 971 n.10; Lineberger v. 

Wyeth, 894 A.2d 141, 149 (Pa.Super. 2006). 
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Moreover, the Halberts conceded during oral argument that the terms 

of the Agreement applied to the improvements demanded by North Cornwall 

Township. See Summary Judgment Order at 1; see also Response at ¶ 23(a) 

(admitting that each of the Halberts had executed the Agreement). Paragraph 

5 of the Agreement grants American Southern the exclusive right to determine 

whether claims such as the one brought by the township “shall be settled or 

defended.” Agreement at ¶ 5. As noted by the lower court, “[t]his [provision] 

negates [the Halberts’] sole defense that the requested improvements were 

not necessary.” Accordingly, as we discern no error in the court’s decision, we 

shall affirm the order granting American Southern summary judgment.

We now address the Halberts’ arguments on appeal. According to the 

Halberts, summary judgment was inappropriate because (1) the Agreement 

was a contract of adhesion and (2) the ECOA, as enforced by federal 

regulation, precluded any judgment against Ms. Julie Halbert.

Both of these arguments raise affirmative defenses. See Pa.R.C.P. 

1030, 1032. “An affirmative defense is distinguished from a denial of facts 

which make up the plaintiff's cause of action in that a defense will require the 

averment of facts extrinsic to the plaintiff's claim for relief.” Coldren v. 

Peterman, 763 A.2d 905, 908 (Pa.Super. 2000).

Generally, failure to properly plead an affirmative defense constitutes a 

waiver of that defense. See Charles v. Henry, 334 A.2d 289, 291 (Pa. 1975). 

However, this Court has declined to find waiver if an opposing party fails to 

object to an improperly pleaded affirmative defense. See Pollina v. Dishong, 
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98 A.3d 613, 617 n.3 (Pa.Super. 2014). While the Halberts did not raise these 

claims in their Answer to American Southern’s Complaint, and they did not 

seek leave to amend their pleadings, the certified record does not reveal 

whether American Southern raised an objection with the lower court. See

American Southern’s Br. at 4 n.2 (acknowledging the Halberts raised these 

claims during argument but failing to cite where in the record any objection 

was preserved); see also Pa.R.A.P. 1923 (defining procedure supplementing 

record where no transcript is available). Thus, we decline to find waiver based 

on this procedural error. Pollina, 98 A.3d at 617 n.3.

Nevertheless, this does not eliminate the Halberts’ obligation to support 

their claims with evidence, and they have failed to do so. See Pa.R.C.P. 

1035.3(a)(1).

“An adhesion contract is a standard-form contract prepared by one 

party, to be signed by the party in a weaker position, usually a consumer, who 

adheres to the contract with little choice about the terms.” Chepkevich v. 

Hidden Valley Resort, L.P., 2 A.3d 1174, 1190 (Pa. 2010). The manner in 

which a party may establish that a contract is one of adhesion is dependent 

upon “the particular circumstances and parties involved.” Denlinger, Inc. v. 

Dendler, 608 A.2d 1061, 1067 (Pa.Super. 1992). The Halberts have failed to 

cite any evidence of record, detailing circumstances or the parties involved,

that would support a finding that the Agreement was a contract of adhesion. 

See generally Halberts’ Response; see also Summary Judgment Order at 2 
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(observing that parties entered Agreement for commercial purposes and were 

not “unsophisticated consumers who require protection”).

Not every contract of adhesion is unenforceable. Denlinger, 608 A.2d 

at 1066. The doctrine of unconscionability provides an affirmative defense to 

an adhesion contract’s enforcement. Id. at 1067 (“[T]he party challenging the 

contract or provision bears the burden of affirmatively pleading and proving 

the unconscionability ...”). There are two requirements. “First, for a contract 

or a term to be unconscionable, the party signing the contract must have 

lacked a meaningful choice in accepting the challenged provision. Second, the 

challenged provision must ‘unreasonably favor’ the party asserting it.” Id. at 

1068. The Halberts cite no evidence of record that would establish either of 

these requirements. See generally Halberts’ Response; see also, e.g., 

Denlinger, 608 at 177-78 (suggesting there must be evidence a contract’s 

terms were non-negotiable or that terms were dictated by “an exclusive 

supplier of rare or much-sought-after goods”).

The Halberts’ ECOA claim fares no better. 

The ECOA was enacted to ensure fairness in creditors' 

consideration of credit applications. Through the ECOA, Congress 

chose to protect women from credit discrimination by requiring 

that creditors treat all credit applicants—male and female, married 

and unmarried—in an identical manner. On the other hand, 

Congress did not enact the ECOA to permit permissibly bound 

debtors to escape contractual liability when called upon to 

perform. 

Guarantors are considered “applicants,” and thus are protected by 

the ECOA. A guarantor may assert an ECOA violation as a defense 

to a state-court confession of judgment. If the defense is 
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successful, the guarantor's obligation is voided, but the underlying 

debt and any other guarantees are not voided.

Sw. Pa. Reg’l Council, Inc. v. Gentile, 776 A.2d 276, 281-82 (Pa.Super. 

2001) (internal punctuation and formatting modified; citations omitted).

However, the Agreement signed by the Halberts was not a credit agreement—

it did not provide a right to defer payment on a debt. Rather, it created a 

contractual obligation for the Halberts to compensate American Southern for 

losses it might incur due to Oaklea’s failure to complete improvements 

required by the Performance Bond. See Capitol Indem. Corp. v. Aulakh, 

313 F.3d 200, 201 (4th Cir. 2002) (“[A] surety bond does not constitute a 

credit transaction.”).3 Thus, an ECOA defense has no relevance in this matter.

Further, even if we were to accept the Halberts’ claim as relevant, they 

have failed to cite evidence of record that would support such a claim. For 

example, federal regulations provide, in part, that “a creditor shall not require 

the signature of an applicant’s spouse or other person, other than a joint 

applicant, on any credit instrument if the applicant qualifies under the 

creditor’s standards of creditworthiness for the amount and terms of the credit 

requested.” 12 C.F.R. 202.7(d)(1). However, the record includes no evidence 

documenting the marital status of Ms. Julie Halbert or anyone else, nor does 

it document whether any of the Halberts, including Mr. James Halbert, meet 

the necessary “standards of creditworthiness.” Id.

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3 Huber v. Etkin, 58 A.3d 772, 779 n.7 (Pa.Super. 2012) (en banc) (noting 

we may rely on federal precedent to the extent we find it persuasive).
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Lacking any evidence to support their claims on appeal, the Halberts are 

due no relief.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 01/17/2019