Young
Covenant Mutual Insurance v. Young
Opinion
Opinion
Johnson, J.
Facts and Proceedings Below
The appellant in this case, Covenant Mutual Insurance Company (Covenant), issued a bond guaranteeing a contractor. This contractor was constructing a supermarket on the property of one of the respondents, William, Ruby and Kenneth Young (the Youngs). A dispute arose between the Youngs and the contractor. The Youngs hired as their attorneys the other respondents, McCormick, Barstow, Shepard, Coyle and Wayte (MBSCW) and Oliver Wanger (Wanger).
Covenant’s attorneys attempted to settle the dispute. Eventually they were convinced they had arrived at a binding settlement agreement with Youngs’ attorneys, MBSCW and Wanger. After the Youngs refused to sign the purported agreement, Covenant sued not only the Youngs but their lawyers.
Covenant’s complaint included a cause of action for breach of warranty of authority against the two law firms, MBSCW and Wanger. It alleged MBSCW and Wanger represented they had authority to settle the dispute for the Youngs when in fact they did not. As part of this claim, Covenant asked for attorney fees pursuant to Civil Code section 3318.