For There To Be An Agency Relationship, Principal Must Have Authorized Agent to Represent or Bind It


Agency relationships among defendants tend to be liberally alleged in professional liability cases. However, conclusory allegations of agency may not survive close scrutiny by the court. For example, in Hawkins v. First Horizon Home Loans, an Eastern District of California action (2010 U.S. Dist. LEXIS 124529), the plaintiff borrowers alleged various claims against a mortgage lender and broker relating to the making of a construction loan that was to be used to finance construction of a home. These claims included a claim for breach of fiduciary duty against the lender. The borrowers’ theory was that the broker had a fiduciary relationship with the borrowers, and the broker was the agent of the lender. This purportedly made the lender vicariously liable for the broker’s alleged breach of fiduciary duty.

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