203 A.3d 223
Pa. Super. Ct.2019Background
- In May 2006 the Halberts each signed a General Agreement of Indemnity in favor of American Southern, agreeing to indemnify the insurer for claims arising from issuance of performance bonds and granting the insurer exclusive authority to decide whether bond claims "shall be settled or defended."
- American Southern issued a subdivision Performance Bond to secure Oaklea Corporation’s completion of public improvements; James Halbert signed the bond as Oaklea’s president.
- North Cornwall Township demanded completion or compensation after Oaklea failed to perform; American Southern paid pursuant to the bond and sought indemnity from the Halberts under the Agreement.
- American Southern sued in 2017; it moved for summary judgment after pleadings closed, submitting the Agreement, bond, township demands, and an affidavit of damages.
- The Halberts broadly denied the necessity of the demanded improvements, failed to produce record evidence controverting American Southern’s submissions, and conceded at argument that Paragraph 5 of the Agreement applied.
- The trial court granted summary judgment for American Southern; the Superior Court affirmed, concluding the Agreement’s Paragraph 5 precluded the Halberts’ defense and that the Halberts had not supported their affirmative defenses with evidence.
Issues
| Issue | Plaintiff's Argument (Halberts) | Defendant's Argument (American Southern) | Held |
|---|---|---|---|
| Whether the Agreement is an unenforceable contract of adhesion/unconscionable | Agreement was adhesive and unenforceable; Halberts lacked meaningful choice | Agreement was a commercial, negotiated indemnity among sophisticated parties; no record evidence of adhesion or unconscionability | Rejected — Halberts offered no evidentiary support; court found no unconscionability or adhesive-character facts |
| Whether ECOA/Reg B prevents judgment against Julie Halbert | ECOA/Reg B (15 U.S.C. §1691, Reg B) shields Julie Halbert from liability as an applicant/guarantor | Agreement is not a credit transaction; ECOA inapplicable and Halberts cite no evidentiary basis (marital/creditworthiness facts) | Rejected — ECOA inapplicable to surety bond indemnity; no supporting evidence presented |
| Whether there remained genuine issues of material fact defeating summary judgment | Improvements were unnecessary; factual dispute precluded summary judgment | Paragraph 5 vests exclusive determination of claim validity in insurer; Halberts produced no record evidence to controvert insurer’s submissions | Summary judgment proper — Halberts failed to meet Pa.R.C.P. 1035.3 burden to identify record evidence creating factual issues |
| Whether insurer’s affidavit was insufficient under Nanty-Glo to support summary judgment | (Implied) moving-party affidavits insufficient absent contradictory evidence | Insurer’s submissions and the Agreement established entitlement; Halberts did not preserve or develop a Nanty-Glo challenge | Rejected/waived — Halberts did not preserve or argue Nanty-Glo on appeal with supporting record evidence |
Key Cases Cited
- Estate of Agnew v. Ross, 152 A.3d 247 (Pa. 2017) (standard of review and summary judgment principles)
- Cigna Corp. v. Executive Risk Indem., Inc., 111 A.3d 204 (Pa. Super. 2015) (summary judgment record must show undisputed material facts or insufficient evidence to make out a prima facie claim)
- Shamis v. Moon, 81 A.3d 962 (Pa. Super. 2013) (Nanty-Glo principle about testimonial affidavits and credibility at summary judgment)
- Nanty-Glo v. American Surety Co., 163 A. 523 (Pa. 1932) (affidavits of moving party may be insufficient if credibility is at issue)
- Chepkevich v. Hidden Valley Resort, L.P., 2 A.3d 1174 (Pa. 2010) (definition and framework for adhesion contracts)
- Denlinger, Inc. v. Dendler, 608 A.2d 1061 (Pa. Super. 1992) (unconscionability requires lack of meaningful choice and unreasonably favorable terms)
- Capitol Indem. Corp. v. Aulakh, 313 F.3d 200 (4th Cir. 2002) (a surety bond is not a credit transaction for ECOA purposes)