With no explanation, chose the best option from "A", "B", "C" or "D". of the surety’s divided loyalty to the obligee and the principal, the fiduciary or quasi-fiduciary relationship existing in the one-on-one relationship between insurer and insured in the context of casualty insurance, including a fidelity bond, does not exist between a surety and obligee. A surety’s duty to the obligee is no greater than its duty to the principal. Because a surety has no “enhanced duty” toward the obligee, Olympic Steamship does not apply. ¶77 The extension of Olympic Steamship to surety contracts will have the inequitable effect of imposing liability for attorney fees on p 642 P.2d 1259 (1982) (noting that the general rule limits a surety’s liability for attorney fees to penal sum of the bond); Basic Refractories, Inc. v. Bright, 72 Nev. 183, 298 P.2d 810, 818 (1956) (<HOLDING>). ¶79 As the California Supreme Court observed,

A: holding that obligee can recover from surety attorneys fees that are provided for in obligees subcontract so long as the total recovery against the surety does not exceed the penal amount of the bond
B: holding that the defendant was only permitted to recover attorney fees as an item of special damages with respect to the underlying action in which the defendant was sued and was not permitted to recover attorney fees incurred in the malpractice portion of the case as damages
C: holding that recovery of attorney fees is limited to penal amount of the bond absent contractual provision to the contrary
D: holding that the obligee may recover attorney fees as an element of damages only up to the limit of the penal amount of the bond
D.