IN THE SUPREME COURT OF
CALIFORNIA
In re THOMAS JOHN SPIELBAUER on Discipline.
S283172
Los Angeles State Bar Court
SBC-19-O-30700
July 16, 2026
Justice Evans authored the opinion of the Court, in which
Chief Justice Guerrero and Justices Corrigan, Liu, Kruger,
Groban, and Castillo* concurred.
*
Associate Justice of the Court of Appeal, Fourth Appellate
District, Division One, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
In re SPIELBAUER
S283172
Opinion of the Court by Evans, J.
In this case, we consider whether the Review Department
of the State Bar Court (Review Department) properly concluded
that attorney and respondent Thomas John Spielbauer
(Spielbauer) should not be required to pay restitution for his acts
of misconduct. The Review Department found Spielbauer
culpable of four counts of misconduct, including failing to comply
with Civil Code section 2943, committing two acts of moral
turpitude by making misrepresentations, and failing to report a
civil fraud judgment to the State Bar. For that misconduct, it
recommended that Spielbauer be placed on probation for two
years including actual suspension for the first six months of his
probation. The Review Department concluded, however, that
requiring payment of restitution would be inappropriate
because the injured party was not a client of Spielbauer’s, the
nonclient’s damages “arose due to causes of action based in tort,”
and under this court’s precedents, “tort damages . . . cannot [be]
use[d] as a justification to impose restitution.”
We find that the Review Department misinterpreted our
precedents and that a restitution order is appropriate in this
case. We therefore order that Spielbauer make restitution in
accordance with the terms set forth at the end of this opinion.
We otherwise adopt the Review Department’s recommended
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discipline.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 2003, Spielbauer’s brother, Dennis Spielbauer,
obtained a $350,000 loan from Curtis Mitchell, a real estate
investor. The loan was secured by three of Dennis’s properties,
including one located at 167 E. William Street in San Jose,
California (167 Property). Because of a preexisting loan,
Mitchell was in second position on the 167 Property. Faramarz
and Afsaneh Yazdani, as trustees of their family trust (Yazdani
Trust), later assumed third position on that property in
connection with a $210,000 loan secured by a deed of trust on
the 167 Property and four other parcels.
In 2007, Dennis obtained a second loan from Mitchell.
That loan, in the amount of $585,000, was secured by Dennis’s
personal residence and two other properties, but not by the 167
property.
Dennis defaulted on both loans from Mitchell. When
Mitchell initiated foreclosure proceedings on Dennis’s residence
and the 167 Property, Dennis filed for bankruptcy. By March
2010, the 167 Property was the only property Dennis still owned
that secured the 2003 loan, and the outstanding balance on that
loan was $7,152.03.
The first week of March 2010, Spielbauer incorporated
Devine Blessings, Inc. (Devine Blessings). Its purpose was to
“secur[e] financing and purchase lien position notes,
particularly on the properties of Dennis Spielbauer” that were
“facing foreclosure.” Spielbauer identified himself as its
president and “sole shareholder.” On March 12, 2010, less than
two weeks before the foreclosure sales, Spielbauer, on behalf of
Devine Blessings, agreed to purchase the 2003 and 2007 loans
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Opinion of the Court by Evans, J.
from Mitchell for $126,000, in exchange for Mitchell’s agreement
to stop the foreclosure proceeding on Dennis’s residence and to
rescind the notice of default. The purchase agreement, which
Spielbauer drafted, stated that the purchase was by “Thomas
Spielbauer or the business entity he is an officer, director, or
managing member of.” At closing, Spielbauer refused to sign
documents confirming that of the total purchase price, only
$7,152.03 — which was the outstanding balance on the 2003
loan — related to the 167 Property, with the rest relating to the
2007 loan secured by Dennis’s residence. He stated, “I don’t
need these,” “I’m satisfied with the agreement we’ve already
signed,” and “I’m not signing them. I have my own reasons for
not signing them. I can’t tell you what they are, but they do not
involve you.” Mitchell, finding Spielbauer’s behavior peculiar
and disconcerting, documented Spielbauer’s statements and had
an escrow officer witness the documentation.
In late March 2010, after the purchase of the notes, the
Yazdani Trust began foreclosure proceedings on the third deed
of trust on the 167 Property. An agent for the Yazdani Trust
subsequently purchased the property at a trustee’s sale, with a
newly formed company called 167 E. William, LLC (William
LLC) taking title to the property. William LLC then sought to
resell the property to a third party. In late April 2010, William
LLC, after entering into an agreement to sell the property to a
third party, asked Spielbauer for a payoff demand statement
pursuant to Civil Code section 2943. 1 Spielbauer responded
1
In 2010, when William LLC requested the payoff demand,
Civil Code former section 2943, subdivision (c)(1) provided: “A
beneficiary, or his or her authorized agent, shall, on the written
demand of an entitled person, or his or her authorized agent,
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Opinion of the Court by Evans, J.
with a written payoff demand of $269,500, comprising $126,000
for purchase of the 167 Property and $143,500 owed for
unspecified “other” items. Spielbauer did not disclose that the
actual outstanding balance on the loan secured by the 167
Property was only $7,152.03. He included in the “other”
category almost $120,000 for attorney fees that Dennis incurred
in trying to prevent foreclosure on his properties and in
bankruptcy proceedings, about $70,000 of which was for legal
services allegedly rendered by Spielbauer himself.
In May 2010, William LLC asked Spielbauer for an
explanation or revision of the demand and for an accounting.
Spielbauer failed to respond. Attorneys for William LLC then
sent a letter to Spielbauer requesting a revised payoff demand
and advising that the inflated payoff demand was jeopardizing
the impending closing of the property’s sale and thus exposing
Spielbauer to civil liability for tortious interference. In a letter
to William LLC’s counsel dated May 28, 2010, Spielbauer stated
that he was “responding . . . on behalf of Devine Blessings,” that
he “need[ed] to investigate the issues” William LLC had raised,
that he had not had sufficient “time” to do so, and that he would
“respond on . . . the next business day,” June 1, 2010.
Spielbauer wrote the letter on letterhead of his law firm — “The
Spielbauer Law Office” — and identified himself on the typed
signature line as “Thomas Spielbauer, Esq.” He never
subsequently provided either an accounting or an explanation.
As a result, William LLC canceled the sale, refunded the third-
prepare and deliver a payoff demand statement to the person
demanding it within 21 days of the receipt of the demand.”
(Stats. 2009, ch. 43, § 5.) Identical language appears in
subdivision (c) of the current version of the statute, which
became operative on January 1, 2014.
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Opinion of the Court by Evans, J.
party buyer’s deposit, and reimbursed the buyer for additional
costs incurred.
In July 2010, William LLC filed a complaint against
Devine Blessings that included causes of action for declaratory
relief, violation of Civil Code section 2943, and interpleader. In
February 2011, after extensive demurrer proceedings, William
LLC filed a second amended complaint adding Spielbauer as a
defendant and alleging causes of action for declaratory relief,
intentional interference with economic advantage, negligent
interference with economic relations, and violations of Civil
Code section 2943. The complaint sought damages based on
Spielbauer’s alleged proffer of an inaccurate payoff demand
statement for the 167 Property. In April 2013, the court, after
a bench trial, allowed William LLC to add (by amendment of the
complaint) a cause of action for slander of title and ruled that
William LLC had proven its claims for slander of title,
intentional interference with economic advantage, and
negligent interference with economic relations. It found that
Spielbauer’s payoff demand was inaccurate and violated Civil
Code section 2943. It also found that “[t]he evidence
compel[led]” the following conclusions: (1) Spielbauer “knew
[the demand] to be false, fully appreciating that [it] would” force
William LLC to pay the amount of the demand “as ransom” if it
wanted the sale of the property to go through; and (2) providing
the knowingly false demand was Spielbauer’s “attempt to force
[William LLC] to pay the unrecoverable attorney fees for Dennis
Spielbauer’s bankruptcy” and “to reimburse [himself] for paying
off the loan on his brother’s residence — even though that loan
had nothing to do with the [167] Property.” Based on these
conclusions, the court also found “by clear and convincing
evidence” that Spielbauer’s “acts were fraudulent within the
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meaning of” the punitive damages statute (Civ. Code, § 3294).
The court rejected Spielbauer’s claim that he believed his
payoff demand was justified by the deed of trust on the property
and an “agreement” between himself and Dennis, entered into
after he “bought the Mitchell note,” that “modif[ied] the note to
include” the claimed “additional sums.” The only evidence of the
alleged modification, the court explained, was Spielbauer’s own
“self-serving” testimony because Spielbauer had: (1) “failed to”
present “the written [modification] document itself” despite
having “had the opportunity to . . . do so”; and (2) “withheld” the
document “during discovery” despite “admit[ting] that it was not
privileged.” In the court’s view, because Spielbauer did not
produce the written agreement or “provide any explanation . . .
as to how the note was supposedly modified,” “[t]here was
simply no evidence” to provide “a factual basis” for the
conclusion “that the note had been modified.” Instead, the court
found, the payoff demand was simply an attempt to “shift” to
William LLC “the financial burden” of both Spielbauer’s work
on Dennis’s bankruptcy proceedings and the $126,000 payment
to Mitchell.
In February 2014, the superior court entered judgment in
favor of William LLC, and against both Spielbauer and Devine
Blessings, for a total amount of $869,276.55, comprising
$332,547.06 in compensatory damages on the claim for slander
of title — which included a $7,152.03 reduction for the amount
still owed on the 167 Property — $163,597.12 in attorney fees,
$40,582.37 in costs, and $332,550 in punitive damages. In 2016,
the Court of Appeal affirmed the judgment and we denied
Spielbauer’s petition for review.
In April 2014, about two months after entry of judgment
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in the civil action, Spielbauer filed for bankruptcy. Three
months later, in July 2014, William LLC filed an adversary
complaint in the bankruptcy matter requesting a determination
that the debt arising from the judgment in the civil action was
not dischargeable because it was based on “fraudulent” acts by
Spielbauer. After William LLC filed an amended complaint
seeking the same relief, Spielbauer filed an answer that
personally attacked Faramarz Yazdani, alleging that Yazdani
was a “hard money, predatory lender[]” who had “loot[ed]” and
“savag[ed]” Dennis through “dishonest and fraudulent actions”
that resulted in Dennis’s “mental and physical breakdown.” The
answer also asserted, among other things, that under California
case law, Spielbauer’s payoff demand was “justified” by the
terms of the operative deed of trust for the property and a
subsequent “modification” agreement with Dennis. In April
2017, the bankruptcy court, giving collateral estoppel effect to
the superior court’s findings in the civil action, granted William
LLC summary judgment on its adversary complaint and entered
a judgment stating that the civil judgment “is excepted from
discharge” and the “debt” arising from it “is non-dischargeable.”
A federal district court affirmed the bankruptcy court’s
judgment in March 2018, reasoning that the bankruptcy court
had not abused its discretion in giving preclusive effect to the
findings in the civil action. In November 2019, the Ninth Circuit
Court of Appeals, also giving collateral estoppel effect to the
findings in the civil action, affirmed the orders of the federal
district court and the bankruptcy court, concluding that
Spielbauer: (1) “committed fraud by intentionally
misrepresenting a material fact known to him with the intention
of injuring” William LLC; and (2) “inflicted” a “malicious,”
“deliberate[,] and intentional injury . . . with the actual,
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subjective motive and intent to cause the injury.” Spielbauer
has never made any payment on the judgment.
In June 2014, about four months after entry of judgment
in the civil action and two months after Spielbauer filed for
bankruptcy, an investigator for the Office of Chief Trial Counsel
of the State Bar (OCTC) contacted Spielbauer about the civil
fraud judgment in the William LLC matter. The investigator
stated that OCTC had no record of Spielbauer reporting the
judgment as required by section 6068, subdivision (o)(2) of the
Business and Professions Code. In a written response dated
July 11, 2014, Spielbauer stated that the judgment was not
“reportable” because the “activities” giving rise to it were not
“ ‘committed in a professional capacity’ ” — i.e., “as an
attorney” — but “as a President of” Devine Blessings.
On December 16, 2019, OCTC filed a Notice of
Disciplinary Charges alleging five counts of misconduct by
Spielbauer: (1) violating section 6068, subdivision (a) of the
Business and Professions Code by failing to comply with Civil
Code section 2943; (2) violating section 6068, subdivision (a) of
the Business and Professions Code by committing fraud within
the meaning of Civil Code section 3294; (3) violating section
6106 of the Business and Professions Code by committing two
acts of moral turpitude (misrepresentation); and (4) violating
section 6068, subdivision (o)(2) of the Business and Professions
Code by failing to report the civil fraud judgment. The State Bar
hearing judge found Spielbauer culpable on all but the last count
(failure to report the judgment) and recommended a two-year
suspension with execution stayed and probation for two years
with various conditions, including actual suspension for the first
90 days of the probationary term. The hearing judge declined to
recommend that Spielbauer be required to make restitution,
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citing the following factors: (1) “it has not been established that
Spielbauer’s wrongdoing occurred in the practice of law”; (2)
William LLC was “not a client” and could avail itself of “other
mechanisms . . . to satisfy [the civil] judgment” it had obtained;
(3) “Spielbauer’s conduct merits a modest level of discipline — a
90-day suspension”; and (4) requiring him to pay “nearly one
million dollars” in restitution “prior to returning to active
status . . . would undoubtedly have a far greater impact on his
ability to practice than intended.”
Both Spielbauer and OCTC appealed, with OCTC asking
for a finding of culpability on all five counts and, in terms of
discipline, actual suspension for six months “and until he pays
restitution.” The Review Department found Spielbauer culpable
of only four counts: failing to comply with Civil Code section
2943, two acts of moral turpitude by making
misrepresentations, and failing to report the civil fraud
judgment. For discipline, it recommended that Spielbauer “be
suspended from the practice of law for two years, that execution
of that suspension be stayed, and that he be placed on probation
for two years” subject to various conditions, including actual
suspension “for the first six months of his probation.” Among
the factors the Review Department cited in increasing the
recommended length of the actual suspension were the
following: (1) Spielbauer’s “misrepresentation to William LLC
jeopardized its right to sell the 167 Property and was an attempt
to defraud the company out of” approximately $262,000; (2) his
“misconduct in the superior court” — “submit[ing] to the judge”
a declaration “containing” an intentional “misrepresentation
regarding the payoff demand” — was “related to the practice of
law”; and (3) “his substantial indifference” regarding the
consequences of his misconduct, his “failure to pay the civil
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judgment,” and “[h]is failure to understand the wrongfulness of
his misconduct.”
The Review Department “decline[d] to recommend [that]
Spielbauer be ordered to make restitution to William LLC.”
After noting that William LLC was “a non-client entity,” the
Review Department, quoting our decision in Sorensen v. State
Bar (1991) 52 Cal.3d 1036 (Sorensen), stated that this court “has
explicitly stated that restitution in the disciplinary context is
not a ‘damage award’ ” and “does not ‘approve imposition of
restitution as a means of compensating the victim of
wrongdoing . . . .’ ” Although acknowledging decisions in which
we had ordered restitution to compensate nonclients, the
Review Department found those decisions “distinguishable.”
On OCTC’s motion for reconsideration, the Review
Department affirmed its decision not to recommend restitution,
stating: “The restitution OCTC seeks in this case constitutes a
damages award based in tort, with a substantial portion of the
award — the punitive damages portion — exceeding out-of-
pocket losses, to a business entity to whom [Spielbauer] had no
fiduciary duty. This is beyond the scope of every disciplinary
case in which restitution has been imposed and that involved
parties outside the attorney-client relationship. . . . [¶] OCTC
contends that because this case does not involve an ordinary
tort, but rather, a tort in fraud, restitution must be imposed as
part of discipline, overlooking that the fraud [Spielbauer]
committed was the basis for the punitive damages award, which
is clearly beyond the reach of Sorensen’s restitution for out-of-
pocket losses in a limited situation. [Citation.] OCTC draws a
comparison to misconduct involving moral turpitude as
justification for requiring restitution, but that is of no help. We
previously considered a case that involved misconduct
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Opinion of the Court by Evans, J.
constituting moral turpitude and we declined to impose
restitution as the underlying superior court judgment was
comprised of tort damages. (In re Torres (Review Dept. 2000) 4
Cal. State Bar Ct. Rptr. 138, 152-153.)”
OCTC petitioned for review, raising the following
questions: “In attorney disciplinary cases involving harm to a
non-client, should restitution be precluded simply because the
attorney’s misconduct is grounded in tort? And, in this attorney
disciplinary case, should Respondent be ordered to pay
restitution to a non-client for specific out-of-pocket losses
incurred as a direct result of Respondent’s intentional and
fraudulent misconduct.” We granted the petition.2
II. DISCUSSION
A. Sorensen and other precedents.
“The basic objectives of attorney discipline are the
protection of the public, the preservation of confidence in the
legal profession, and the rehabilitation of errant attorneys
where appropriate.” (Bach v. State Bar (1991) 52 Cal.3d 1201,
1206 (Bach).) Thus, “in imposing discipline, we do not simply
impose retribution and punishment, but seek to protect the
public, to preserve public confidence in the legal profession, and
to maintain and enforce the highest possible professional
standards for members of the bar.” (Coppock v. State Bar (1988)
44 Cal.3d 665, 684 (Coppock).) To accomplish these goals “and
at the same time to rehabilitate the errant attorney” (Brookman
2
Spielbauer filed a separate petition for review raising
numerous issues. We denied his petition. Thus, the only aspect
of the Review Department’s recommendation here at issue is its
conclusion that ordering Spielbauer to make restitution would
be improper.
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v. State Bar (1988) 46 Cal.3d 1004, 1008 (Brookman)), we have
“ ‘the power to impose discipline [that] encourages attorneys to
act honestly and with integrity.’ ” (Coppock, at p. 685.)
Included within this power is the authority to order
restitution. Indeed, as we have explained in the attorney
discipline context, “[r]estitution is fundamental to the goal of
rehabilitation.” (Hippard v. State Bar (1989) 49 Cal.3d 1084,
1094, italics added.) “[I]mposed as a condition of probation,”
restitution “serves the state interest of rehabilitating culpable
attorneys (and protecting the public) by forcing the attorney to
‘confront, in concrete terms, the harm [their] actions have
caused.’ ” (Brookman, supra, 46 Cal.3d at p. 1009; see Bach,
supra, 52 Cal.3d at p. 1207 [“Ordering restitution in cases of
financial injury is a rehabilitative measure designed to further
the state’s disciplinary objectives ‘by forcing [attorneys] to
“confront, in concrete terms, the harm [their] actions [have]
caused” ’ ”].) For this reason, in the attorney discipline context,
“[r]estitution is routinely required . . . in cases of
misappropriation of client funds,” “usually without discussion.”
(Coppock, supra, 44 Cal.3d at p. 684.)
However, as we have explained, “[i]t does not follow . . .
that restitution is appropriate only in” cases involving
misappropriation of client funds, or that attorneys who do not
misappropriate client funds “should not be required to pay
restitution to the victims of [their] culpable acts. [¶] Although
part of the rationale for requiring restitution may be to
prevent . . . attorney[s] from profiting from [their] wrongdoing,
restitution is also intended,” among other things, “to discourage
dishonest and unprofessional conduct.” (Coppock, supra, 44
Cal.3d at p. 685.) In this regard, requiring a disciplined attorney
to pay restitution “is clearly for the benefit of the public at large”
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and does not function “merely [as] compensation to the [victim]
for ‘actual pecuniary loss.’ ” (Brookman, supra, 46 Cal.3d at p.
1009.)
We applied these principles in Sorensen, which was the
linchpin of the Review Department’s analysis. There, attorney
Baldwin, after taking a deposition and obtaining a transcript
from the business entity for which the reporter worked — “a
deposition reporting firm” called “the Los Angeles Court
Reporters” — decided that the “bill [for the transcript] was
excessive” and convinced his client to pay only about half.
(Sorensen, supra, 52 Cal.3d at p. 1038.) To recover the rest, the
owner of the reporting firm — Ms. Brigante — “filed a small
claims action against” Baldwin. (Id. at p. 1039.) In response,
attorney Kerry Sorensen filed on Baldwin’s behalf “a municipal
court [action] against Brigante . . . for ‘fraud and deceit.’ ”
(Ibid.) After dismissal of the fraud action on summary
judgment, a State Bar hearing panel found in a disciplinary
proceeding that Sorensen, by filing the action, had “ ‘willfully
violated’ ” his “ ‘oaths and duties as’ ” an attorney and had
“ ‘abused and misused the process of the court.’ ” (Id. at p. 1040.)
The panel recommended that Sorensen “be required to
reimburse Brigante’s legal fees and expenses” in defending
against the action. (Ibid.) The Review Department deleted this
recommendation, reasoning: “ ‘[S]uch reimbursement would be
an award of damages rather than restitution. The Review
Department has declined to adjudicate or to award damages in
attorney disciplinary proceedings.’ ” (Id. at pp. 1040–1041.)
“Exercising our independent judgment” (Sorensen, supra,
52 Cal.3d at p. 1045), we sided with the hearing panel and
concluded that a restitution award was appropriate. After
explaining that “the sanction” for the misconduct “must
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reflect . . . the harm” it caused (id. at p. 1044), we added:
“Unlike the review department, we do not view restitution in
this context as a ‘damage award.’ Nor do we approve imposition
of restitution as a means of compensating the victim of
wrongdoing. [Citation.] Rather, we consider restitution a
necessary condition of probation designed to effectuate [the
attorney’s] rehabilitation and to protect the public from similar
future misconduct. Although most of our previous cases
requiring restitution as a condition of probation have involved
misuse of client funds [citations] and unearned fees [citations],
we believe the same protective and rehabilitative principles
apply in the case of a party who has been forced to incur legal
fees as a result of an attorney’s violation of [Business and
Professions Code] section 6068, subdivisions (c) and (g). In both
instances, private persons have incurred specific out-of-pocket
losses directly resulting from attorney misconduct. Restitution
of these amounts emphasizes the professional responsibility of
lawyers to account for their misconduct, and thereby serves to
both protect the public and instill public confidence in the bar.”
(Id. at pp. 1044–1045.)
As earlier noted, the Review Department read this
passage from Sorensen as an “explicit[] state[ment] that
restitution in the disciplinary context is not a ‘damage award’ ”
and as our disapproval of imposing restitution “ ‘as a means of
compensating the victim of wrongdoing.’ ” Based on this
reading, the Review Department reasoned that “a civil
judgment in tort . . . cannot serve as the basis for restitution”
because recovery in tort constitutes a damage award to
compensate for injury. And because the “civil judgment [against
Spielbauer] was primarily driven by tort damages,” under
Sorensen, it “cannot [be] use[d] as a justification to impose
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restitution.” The restitution order in Sorensen, the Review
Department declared, constituted only “a limited exception” —
based on “the unique facts of [that] case” — to the rule against
ordering restitution as compensation, which had “extended the
‘protective measures and rehabilitative principles’ of restitution
to compensate” a nonclient for legal fees incurred only in
“defending” against a lawsuit and only when the attorney’s
conduct constitutes a “violation of [Business and Professions
Code] section 6068, subdivisions (c) and (g).” That exception
does not apply here, the Review Department concluded, because
“Spielbauer was not found culpable of violating section 6068,
subdivisions (c) and (g), and the restitution amount comprising
attorney fees and costs arose from William LLC successfully
suing Spielbauer, rather than from William LLC defending
itself in a lawsuit.”
We conclude that the Review Department has misread
Sorensen and our other precedents. Contrary to the Review
Department’s analysis, our order of restitution in Sorensen did
not rest on the fact that the attorney in that case had violated
subdivisions (c) and (g) of Business and Professions Code section
6068, specifically. Nor did it rest on the fact that the funds to be
reimbursed had been incurred in “defending” against a lawsuit
brought by the attorney, rather than in “suing” the attorney.
We reasoned more generally that “the same protective and
rehabilitative principles” that warrant a restitution order when
attorney misconduct “involve[s] misuse of client funds
[citations] and unearned fees” more broadly “apply” whenever
“private persons have incurred specific out-of-pocket losses
directly resulting from attorney misconduct.” (Sorensen, supra,
52 Cal.3d at pp. 1044–1045.) As we went on to explain,
“[r]estitution of these amounts” — i.e., “specific out-of-pocket
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losses directly resulting from attorney misconduct” —
“emphasizes the professional responsibility of lawyers to
account for their misconduct, and thereby serves to both protect
the public and instill public confidence in the bar.” (Id. at p.
1045.) Requiring payment of restitution serves these same
“protective and rehabilitative” goals even when the misconduct
does not involve a violation of the particular statute at issue in
Sorensen — section 6068, subdivisions (c) and (g) — and even
when the legal fees “result[ing]” from the attorney’s misconduct
were “incur[red]” by the victim in suing the attorney rather than
in defending against a meritless lawsuit brought by the
attorney. (Sorensen, at pp. 1044–1045.)
Our comments in Sorensen about “restitution as a means
of compensating the victim” or “as a ‘damage award’ ” (Sorensen,
supra, 52 Cal.3d at p. 1044) must be understood in context. Our
point was not, as the Review Department concluded, that an
award of restitution is impermissible insofar as it
“compensat[es] the victim of wrongdoing.” (Ibid.) Rather, it was
that the primary purposes of ordering “restitution [as] a
necessary condition of probation” in attorney discipline cases are
“effectuat[ing]” the attorney’s “rehabilitation
and . . . protect[ing] the public from similar future misconduct,”
and that compensating the victim through an “award [of]
restitutive monetary relief” is permissible “when doing so is
‘merely incidental to’ ” these “ ‘proper, primary . . . purpose[s].’ ”
(Id. at p. 1044.) By “emphasiz[ing] the professional
responsibility of lawyers to account for their misconduct,”
requiring attorneys to pay for “specific out-of-pocket losses
directly resulting from [their] misconduct . . . serves to both
protect the public and instill public confidence in the bar.” (Id.
at p. 1045.) This reading of Sorensen is fully consistent with our
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statement in Brookman — which we cited in Sorensen — that
requiring payment of restitution “fundamentally serves the
[broader] goal of rehabilitation” and therefore “is not merely
compensation . . . for ‘actual pecuniary loss.’ ”3 (Brookman,
supra, 46 Cal.3d at p. 1009, italics added; see Kwasnik v. State
Bar, (1990) 50 Cal.3d 1061, 1073, quoting Brookman, at p.
1009.)
Amicus curiae Lawyers’ Mutual Insurance Company
(Lawyers’ Mutual) argues that ordering restitution in this case
would “cross the bright line between damages and restitution
drawn in Sorensen.” It “is well-established in the law,” Lawyers’
Mutual asserts, that “ ‘[t]he object of restitution is to restore the
status quo by returning to the plaintiff funds in which he or she
has an ownership interest.’ [Citations.] . . . [I]t ‘is designed to
restore the aggrieved party to his or her former position by
return of the thing or its equivalent in money’ ” and “has
‘primarily been utilized by courts to prevent unjust enrichment’
by forcing a wrongdoer to disgorge ill-gotten gains.” It is both
“distinct from” and “ ‘fundamental[ly] differen[t]’ ” than
damages, in that it “ ‘is measured by the defendant’s gain’ ”
whereas damages are “ ‘measured by the plaintiff's loss.’ ” “Put
3
In several decisions, the Review Department has cited
Sorensen for the proposition that an order requiring an attorney
to pay tort damages as restitution is impermissible. (In the
Matter of Torres (Review Dept. 2000) 4 Cal. State Bar Ct. Rptr.
138, 153 [“we do not construe Sorensen as extending restitution
to cover tort damages”]; In the Matter of Bach (Review Dept.
1991) 1 Cal. State Bar Ct. Rptr. 631, 650 [“It is inappropriate to
use restitution as a means of awarding unliquidated tort
damages for malpractice”].) We disapprove these decisions to
the extent they indicate that a restitution order requiring an
attorney to pay a victim’s losses is improper solely because those
losses may constitute damages in tort.
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simply, the traditional definition of restitution is A returning a
res to B that was improperly taken from B in the first instance.
It is not a substitute for traditional monetary damages.” It does
not include “ ‘ “[c]ompensation for a lost business
opportunity,” ’ ” which “ ‘ “is a measure of damages.” ’ ”
According to Lawyers’ Mutual, “[c]ourts apply this . . . core
definition of restitution in many contexts” and “[t]his court’s
cases imposing restitution as a condition of professional
discipline have largely adhered to [this] traditional definition.”
Lawyers’ Mutual asserts that although the court has “departed
from traditional restitution” in several disciplinary decisions —
including Sorensen — ordering restitution in this case would
“represent[] a greater departure from traditional restitution
than” those decisions.
As previously discussed, in Sorensen, we did not, as
Lawyers’ Mutual argues, draw a “bright line between damages
and restitution.” Rather, we held that when “attorney
misconduct” causes “private persons” to incur “specific out-of-
pocket losses,” a restitution award is proper, and that
“compensating the victim of wrongdoing” through an “award [of]
restitutive monetary relief” is permissible “when doing so is
‘merely incidental to a proper, primary . . . purpose’ ” of
imposing discipline. (Sorensen, supra, 52 Cal.3d at pp. 1044–
1045.) “[I]n this context,” we “view” restitution, not as “a
‘damage award,’ ” but as “a necessary condition of probation
designed to effectuate [the attorney’s] rehabilitation and to
protect the public from similar future misconduct.” (Id. at p.
1044.) “[F]orcing” wayward attorneys, through payment of
restitution, “to ‘confront, in concrete terms, the harm [their]
actions have caused’ . . . fundamentally serves the goal of
rehabilitation.” (Brookman, supra, 46 Cal.3d at p. 1009.)
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Lawyers’ Mutual fails to adequately consider the purposes of
restitution in this context when it argues we should strictly
apply what it asserts is the “core definition of restitution” that
“[c]ourts apply . . . in many [other] contexts.” (Cf. Walnut Creek
Manor v. Fair Employment & Housing Com. (1991) 54 Cal.3d
245, 263 [“[r]estitutive damages,” which agencies may award
when reasonably necessary to effectuate their primary,
legitimate regulatory purposes, include “economic harm
suffered by one party in consequence of another party’s violation
of a law,” i.e., “quantifiable amounts of money . . . to compensate
for the pecuniary loss directly resulting from” a “violation of
law”].)
Lawyers’ Mutual also misreads some of the other decisions
on which it bases its argument. In Slavkin v. State Bar (1989)
49 Cal.3d 894, 898 (Slavkin), we imposed discipline — including
payment of restitution — on an attorney for, as relevant here,
“wilfully fail[ing] to . . . perform any services” for a client after
being retained, and paid an “advance,” “to take prompt action to
evict a nonpaying tenant.” (Fn. omitted.) According to Lawyers’
Mutual, our discipline order in Slavkin “adhered to the
traditional definition of restitution” by “condition[ing]” the
attorney’s suspension “on repayment of misappropriated client
funds,” i.e., the prepaid legal fee. However, the “items of
restitution” in our restitution order included “the full amount of
[a] judgment” the client had obtained against the attorney in
“[s]mall [c]laims [c]ourt” (Slavkin, at p. 906), and that judgment
required the attorney to pay, in addition to “the prepaid [legal]
fee,” an amount “representing rental losses incurred by [the
attorney’s] inaction” (id. at p. 898, italics added). Thus, Slavkin,
although cited by Lawyers’ Mutual, actually supports a
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Opinion of the Court by Evans, J.
conception of restitution that is broader than the restricted one
Lawyers’ Mutual offers and not limited to out-of-pocket losses.
The Review Department, in addition to its mistaken view
of Sorensen, relied on the fact that William LLC has never been
Spielbauer’s client. However, its analysis is inconsistent with
decisions of this court that the Review Department
acknowledged but declared to be “distinguishable.”
One of those decisions is Galardi v. State Bar (1987) 43
Cal.3d 683, 687 (Galardi), where we imposed discipline —
including payment of restitution — based on an attorney’s
“willful[] breach[]” of “fiduciary duties he owed,” not to his
clients, but “to his joint venturers in various real estate
investment projects.” Although noting that “the misconduct
occurred in the course of [the attorney’s] business dealings and
not during his representation of legal clients” — and citing this
as a reason for reducing the terms of the suspension the Review
Department had recommended — we nonetheless adopted the
Review Department’s recommendation that the attorney be
required to pay, over a five-year period, restitution to “his
coventurers” in the total amount $186,000. (Id. at p. 694.)
The Review Department’s rationale for distinguishing
Galardi — it involved an attorney who “breached his . . .
fiduciary duty and diverted funds or misappropriated money
owed to a non-client” — is not supported by our precedents. In
Sorensen, which we have already discussed, we ordered
payment of restitution even though the attorney had no
fiduciary duty to the owner of the deposition firm and had
neither diverted nor misappropriated money owed to her.
Coppock, which the Review Department did not discuss in
connection with this issue, involved similar facts. There, the
disciplined attorney “allowed a client to use his client trust
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Opinion of the Court by Evans, J.
account in a scheme to defraud the client’s creditors” (Coppock,
supra, 44 Cal.3d at p. 670, italics added), whom the attorney had
“never represented . . . in any capacity” and with whom he “had
no fiduciary relationship” (id. at p. 673). The attorney’s
“conduct,” we concluded, “warrant[ed] discipline” even though
“it did not harm his clients” (id. at p. 683) and the attorney “did
not specifically intend to defraud” his client’s victims (id. at p.
684). “When . . . attorney[s] violate[] [their] professional
duties,” we explained, “disciplinary measures may be
appropriate even absent any intentional dishonesty.” (Ibid.) We
adopted the Review Department’s recommendation that the
attorney be required to pay restitution to his client’s victims,
notwithstanding that he had neither “misappropriate[d] client
funds” nor otherwise “profit[ed] from his wrongful conduct.” (Id.
at pp. 684–685.) The restitution requirement, we explained,
would “not only protect the public, but [it would] also serve to
further the integrity of the profession and encourage high
professional standards of conduct.” (Id. at p. 685) Given
Sorensen and Coppock, the Review Department’s view that
Spielbauer breached no fiduciary duty to William LLC and
neither diverted funds nor misappropriated money owed to
William LLC does not provide a persuasive basis for
distinguishing Galardi.4
In re Morse (1995) 11 Cal.4th 184 (Morse) is the last of our
decisions involving payment of restitution to a nonclient that
4
Notably, the Review Department itself has ordered
payment of restitution on facts analogous to those in Galardi.
(In the Matter of McCarthy (Review Dept. 2002) 4 Cal. State Bar
Ct. Rptr. 364, 385 [ordering actual suspension of attorney who
misappropriated funds of his partner in a land partnership until
payment of restitution to partner].)
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Opinion of the Court by Evans, J.
the Review Department acknowledged but considered
distinguishable. There, the attorney faced discipline for
“mail[ing] to the public approximately four million . . . unlawful,
misleading advertisements” that offered his “assistance in the
filing of homestead declarations.” (Id. at pp. 189–190.) In a
separate civil enforcement action based on the same conduct, a
superior court ordered the attorney “to pay $400,000 in”
restitution, not to those who had paid money in response to the
advertisements or who had a fiduciary relationship with the
attorney, but “to the Consumer Protection Prosecution Trust
Fund.” (Id. at p. 193.) By stipulation of the parties, the amount
of “restitution to [be paid to] the Consumer Protection
Prosecution Trust Fund” was reduced to $170,000, on condition
that the attorney “make any required payment within 120 days
of its due date.” (Id. at p. 194.) In the related disciplinary
matter, “[t]he State Bar hearing judge recommended as an
explicit condition of probation that [the attorney] pay $400,000
in restitution.” (Id. at p. 210.) The Review Department
“deleted” this condition from its recommendation (id. at p. 198),
reasoning that it was “redundant of the superior court judgment
requiring restitution” because that judgment “already had
imposed that sanction” (id. at p. 210). Although noting that the
Review Department was “[p]erhaps” correct “as a technical
matter,” we adopted the hearing judge’s recommendation and
imposed the requirement that the attorney pay “restitution
pursuant to the terms” of the stipulation in the civil enforcement
action. (Ibid.) “[D]oing so,” we explained, “will eliminate any
possible future argument by [the attorney], if the situation
should arise, that the probation condition has not been violated
unless there is a further court order finding such violation. The
making of the payments an explicit condition of probation will
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Opinion of the Court by Evans, J.
allow the State Bar to take whatever action may be appropriate,
independent of further civil court action.” (Id. at pp. 210–211.)
Morse, the Review Department declared in this case, is
“distinguish[able]” because the civil enforcement action there at
issue, unlike William LLC’s action, “was not one based in tort”
and the “ ‘primary purpose’ ” of the “civil money penalties[]”
sought in that enforcement action, “[u]nlike tort damages,” was
“ ‘to secure obedience to statutes and regulations.’ ” In other
words, the Review Department reasoned, the restitution
ordered in Morse was “meant” not “to directly compensate
victims of Morse’s misconduct” but “to benefit the public
generally.” It “was a form of equitable relief as opposed to
damages based on the individual harm to each victim,” whereas
William LLC’s “civil judgment [against Spielbauer] was
primarily driven by tort damages,” which, “per Sorensen,”
“cannot [be] use[d] as a justification to impose restitution.”
The Review Department’s rationale for distinguishing
Morse rests on the same misreading of Sorensen earlier
discussed. Sorensen, properly understood, does not stand for the
proposition that a restitution award may not in any respect
function like “tort damages” by compensating the victim “based
on the individual harm to [the] victim.” It stands for the
proposition that, in the attorney discipline context, any
compensatory aspect of a restitution award “is ‘merely
incidental to’ ” the primary purposes of such an award:
“effectuat[ing]” the attorney’s “rehabilitation,” “protect[ing] the
public from similar future misconduct,” and “instill[ing] public
confidence in the bar.” (Sorensen, supra, 52 Cal.3d at pp. 1044–
1045.) And that proposition rested on our conclusion that the
“protective and rehabilitative principles” warranting restitution
for misuse of client funds and unearned fees “apply” broadly
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Opinion of the Court by Evans, J.
whenever “private persons have incurred specific out-of-pocket
losses directly resulting from attorney misconduct.” (Ibid.)
Brookman, which the Review Department did not
mention, is analogous to Morse. There, we disciplined an
attorney for, among other things, failing to repay funds a client
had provided as a loan, rather than for legal services.
(Brookman, supra, 46 Cal.3d at pp. 1006–1007.) As here
relevant, we ordered payment of restitution to the State Bar
Client Security Fund, which had paid the client the outstanding
amount of the loan. (Id. at pp. 1007–1009.) We explained that
payment of restitution, by “forcing the attorney to ‘confront, in
concrete terms, the harm his actions [had] caused,’ ” would
“fundamentally serve[] the goal of rehabilitation” and was “not
merely compensation to the government for ‘actual pecuniary
loss.’ ” (Id. at p. 1009.)
Notably, this is precisely how the Review Department
itself has twice read Sorensen in concluding that attorneys
should be required to pay restitution to nonclients based on
damages for the tort of fraud. In In the Matter of Katz (Review
Dept. 1995) 3 Cal. State Bar Ct. Rptr. 430, an attorney, in
connection with his client’s purchase of a manufacturing
company, “lied” to the sellers “when he endorsed [his client’s]
false financial statement” knowing “it was false and grossly
exaggerated.” (Id. at p. 434.) After the transaction closed, the
company “became insolvent,” the client filed for bankruptcy, and
one of the sellers obtained from the bankruptcy court “a
nondischargeable judgment against” the attorney — “in the
amount of $8,038.04” — on a “fraud claim” alleging that the
attorney, along with his client, “defrauded” the seller “by giving
him the false financial statement.” (Id. at pp. 434–435.) In a
disciplinary action, the Review Department “conclude[d] that
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Opinion of the Court by Evans, J.
[the attorney] should be required to make restitution of the
$8,038.04 judgment.” (Id. at p. 440.) Citing Sorensen and
Brookman, the Review Department explained: “Restitution is a
method of protecting the public and rehabilitating errant
attorneys because it forces an attorney to confront the harm
caused by his misconduct in real, concrete terms. [Citations.]
Without question, sanction orders are for specific out-of-pocket
losses directly resulting from [the attorney’s] misconduct and,
therefore, proper subjects of a restitution order.” (Ibid.)
Six years later, in In the Matter of Petilla (Review Dept.
2001) 4 Cal. State Bar Ct. Rptr. 231 (Petilla), the Review
Department similarly relied on Sorensen and Brookman as
authority for awarding restitution to a nonclient in the amount
of damages caused by the attorney’s fraud. The attorney
obtained cash advances on credit cards “without intending to
repay them,” “used and lost those cash advances while
gambling,” and “[a]lmost immediately” afterwards “attempted
to discharge the debts in bankruptcy.” (Id. at p. 236.) In the
bankruptcy proceeding, the court, based on its finding that the
attorney’s conduct constituted “actual fraud,” “entered a
judgment declaring [the attorney’s] debts to [the credit card
company] nondischargeable.” (Id. at p. 240.) In a disciplinary
proceeding involving the same conduct, the Review Department
found that the attorney had committed “ ‘act[s] of dishonesty’ ”
(id. at p. 241) and it concluded he should “be required to make
restitution to” the credit card company in the amount of the
unpaid advances (id. at p. 248). Citing Brookman and Sorensen,
the Review Department reasoned that payment of restitution
was neither “a form of debt collection” nor “a means of
compensating the victim of wrongdoing,” but was an
“appropriate,” “necessary,” and “important part of rehabilitation
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Opinion of the Court by Evans, J.
and public protection,” in that it would “force[]” the attorney “to
confront, in concrete terms, the harm that [his] misconduct
ha[d] caused.” (Petilla, at p. 248.) Consistent with our earlier
discussion, the Review Department’s decisions in Petilla and In
the Matter of Katz — rather than its decision in this case, which
mentioned neither of those earlier decisions — represent correct
applications of our restitution jurisprudence in general and our
Sorensen decision in particular.
We note one last decision demonstrating that under our
precedents, William LLC’s nonclient status is not a basis for
declining to order Spielbauer to make restitution. In Frazer v.
State Bar (1987) 43 Cal.3d 564, 566 (Frazer), we disciplined an
attorney for acts of misconduct in connection with several loans
he had obtained. Two of those loans were “from a nonclient”
(ibid.) — Marcy McCann — who had learned through a mutual
friend that the attorney needed “money to use in a real estate
development.” (Id. at pp. 572–573.) In obtaining these loans,
the attorney “knowingly and intentionally misrepresented to
McCann that she was to receive a second deed of trust when in
fact there were already two deeds of trust against his residence.”
(Id. at p. 573.) As part of a five-year probation period, we
ordered the attorney’s actual suspension “during the first 18
months of said period . . . and until he [made] restitution to” the
nonclient for the amount she lent him “plus interest at the legal
rate from” the date of the first loan.5 (Id. at p. 580.) The Review
Department’s emphasis, in declining to recommend payment of
5
Our order of discipline in Frazer also provided that the
attorney’s actual suspension would continue “until he makes
restitution” — including “interest at the legal rate” — to several
clients for money they had given him as a personal loan rather
than for legal services. (Frazer, supra, 43 Cal.3d at p. 580.)
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Opinion of the Court by Evans, J.
restitution, on the fact that William LLC was never one of
Spielbauer’s clients is inconsistent with this decision.
B. Spielbauer’s remaining arguments.
Spielbauer offers several other arguments in support of
his claim that a restitution order in this case would be improper.
One of those arguments, which he makes for the first time in
this court, is that the judgment in the William LLC matter “has
now expired.” Under Code of Civil Procedure sections 683.020
and 683.130, he reasons, a judgment expires and becomes
unenforceable unless renewed within 10 years of its entry. The
judgment in the William LLC action was entered on February
20, 2014, and was not renewed “as of February 20, 2024.”
Therefore, it “is no longer enforceable” and any “liability . . . to
make any payments on [it] expired by February 21, 2024.”
According to Spielbauer, there is “no rational reason” to base a
restitution award on an expired judgment, and OCTC’s request
for an award of restitution constitutes an “improper . . . attempt
to resurrect” the expired judgment.
Even were Spielbauer correct that the civil judgment is no
longer enforceable — an issue on which we express no
opinion6 — his attempt to tie the propriety of a restitution
6
Regarding the civil judgment’s alleged unenforceability,
Spielbauer does not cite to evidence in the record but merely
asserts in his supplemental brief that “[t]his Court can, and
should, take judicial notice of the fact that the [j]udgment was
never renewed.” It bears repeating that we “will not consider” a
request for judicial notice “unless a party” complies with the
California Rules of Court by filing and serving a separate motion
requesting judicial notice and attaching to the motion copies of
the matter to be noticed. (United Teachers of Los Angeles v. Los
Angeles Unified School Dist. (2012) 54 Cal.4th 504, 528; see Cal.
Rules of Court, rules 8.520(g) [“[t]o obtain judicial notice by the
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Opinion of the Court by Evans, J.
award to the judgment’s enforceability fails under our
precedents. In Brookman, supra, 46 Cal.3d at page 1009, we
held that a restitution award was appropriate “even [though]
the underlying subject of the restitution ha[d] previously been
discharged in bankruptcy, and thus [could not] be collected as a
debt as such.” Applying Brookman, in Bach, supra, 52 Cal.3d at
page 1206, we rejected an attorney’s argument that an award of
restitution would simply be “a means of enforcing [an]
arbitrator’s fee award to” the attorney’s client for unearned fees,
and that we had “no jurisdiction” to make such an award
“because the arbitrator . . . lacked jurisdiction to adjudicate the
fee dispute.” The argument, we explained, was “frivolous”
because it “fundamentally misapprehend[ed] the source and
objective of [our] disciplinary jurisdiction over members of the
State Bar. [¶] . . . This court does not sit in disciplinary matters
as a collection board for clients aggrieved over fee matters; nor
is our jurisdiction derivative of fee arbitration proceedings. The
administration of attorney discipline, including such remedial
orders as restitution, is independent of any remedy that an
aggrieved client may pursue.” (Id. at pp. 1206–1207, italics
added.) Just three weeks before issuing Bach and consistent
with its analysis, we stated in Sorensen that “restitution in this
context” should be viewed not “as a ‘damage award’ ” but as “a
necessary condition of probation designed to effectuate
petitioner’s rehabilitation and to protect the public from similar
future misconduct.” (Sorensen, supra, 52 Cal.3d at p. 1044.)
Supreme Court . . . a party must comply with rule 8.252(a)”],
8.252(a)(1) [“To obtain judicial notice by a reviewing court under
Evidence Code section 459, a party must serve and file a
separate motion with a proposed order”], (3) [“attach to the
motion a copy of the matter to be noticed”].)
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Opinion of the Court by Evans, J.
The Review Department’s prior decisions are in accord
with these precedents. In In the Matter of Distefano (Review
Dept. 1991) 1 Cal. State Bar Ct. Rptr. 668, 674, the Review
Department, citing Brookman, stated that “[r]estitution is
not . . . limited to legally enforceable claims” and that attorneys
“may therefore be required to make restitution as a moral
obligation even when there is no legal obligation to do so.” In
Petilla, supra, 4 Cal. State Bar Ct. Rptr. at page 247, the Review
Department applied Brookman, Sorensen, and Distefano to
reject a disciplined attorney’s argument that it was “illegal” to
base a restitution award on unpaid cash advances constituting
gambling debts that were “not enforceable” under California
law. “[R]estitution in attorney disciplinary proceedings,” the
Review Department explained, “is not a form of debt collection,”
but “is an important part of rehabilitation and public protection
because it forces errant attorneys to confront, in concrete terms,
the harm that their misconduct has caused. [Citation.] Because
the responsibilities of a lawyer differ from those of a lay[person],
a lawyer may be required to make restitution as a moral
obligation even when there is no legal obligation to do so.” (Id.
at p. 248.) Spielbauer’s argument based on the alleged
expiration of William LLC’s civil judgment is fundamentally at
odds with these precedents.
Likewise at odds with our precedents is Spielbauer’s
separate argument, in direct conflict with his assertion that the
civil judgment is unenforceable, that an award of restitution
would be improper because “the civil judgment provides for
other processes for the LLC to obtain its payment of its
judgment.” As we explained in Bach, supra, 52 Cal.3d at page
1207, “[t]he administration of attorney discipline, including
such remedial orders as restitution, is independent of any remedy
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Opinion of the Court by Evans, J.
that an aggrieved [victim] may pursue.” (Italics added.)
Consistent with this principle, as earlier explained, we ordered
payment of restitution in Morse, supra, 11 Cal.4th at page 210,
even though doing so was “redundant of [a] superior court
judgment requiring restitution” that “already had imposed that
sanction.” And as earlier noted, in Slavkin, supra, 49 Cal.3d at
page 906, we ordered that a disciplined attorney’s actual
suspension continue “until” she paid restitution to a former
client for “the full amount of [a] judgment” the former client had
obtained in “[s]mall [c]laims [c]ourt,” “plus interest at the legal
rate accruing on any unpaid balance from and after” the date of
the judgment’s entry. (See Lipson v. State Bar (1991) 53 Cal.3d
1010, 1023 [actual suspension conditioned on payment of
restitution of amounts included in an “unsatisfied judgment
that the client recovered against” the attorney for failing to
repay a loan].)
Nor do any of Spielbauer’s remaining arguments provide
a persuasive legal basis for declining to require restitution.
Spielbauer asserts that at the time he committed the acts
underlying this disciplinary matter, he “believed” his conduct
“was justified.” The Review Department, giving collateral
estoppel effect to the superior court’s findings in William LLC’s
civil action, rejected this claim, finding that Spielbauer: (1)
“committed fraud within the meaning of Civil Code section 3294,
subdivision (a)” by “intentionally present[ing] an inaccurate
payoff demand, knowing it was false, to deprive William LLC of
its property”; and (2) made “an intentional misrepresentation”
to the superior court in the William LLC civil action by stating
in a filed declaration, under penalty of perjury, that the payoff
demand was “ ‘accurate’ . . . when, in fact, [he] knew it was not,”
in order “to mislead the court and secure an advantage in
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Opinion of the Court by Evans, J.
litigation.” We denied Spielbauer’s petition to review the
Review Department’s application of collateral estoppel, and we
find Spielbauer’s arguments on the issue, which merely repeat
those he has previously made, to be unpersuasive.
Spielbauer next revives the argument from his July 2014
written response to OCTC’s investigator that the “activities”
giving rise to the civil judgment against him were not
“ ‘committed in [his] professional capacity’ ” — i.e., “as an
attorney” — but “as a President of” Devine Blessings. He
asserts in his brief that he “was acting,” “not . . . for the benefit
of” William LLC “or any client,” but only “for himself.” Lawyers’
Mutual relatedly argues that under Kwasnik, “the public
interest in restitution is lessened” in this case because
“Spielbauer’s misconduct at least substantially fell outside his
professional capacity as attorney.” According to Lawyers’
Mutual, “[i]t is undisputed that the precipitating event was a
payoff demand Spielbauer issued as a business owner,” and that
act “did not require that he be an attorney or rely on his license
to practice law.” “Indeed,” Lawyers’ Mutual further asserts, “the
hearing judge found that Spielbauer was not acting in a
professional capacity when he presented the inaccurate payoff
demand to the LLC and to the superior court,” and “[t]he Review
Department, in turn, found only that some of Spielbauer’s
misconduct — his submission of a declaration to the superior
court — was ‘related to the practice of law,’ although it also
noted that ‘Spielbauer was not the primary attorney litigating
the case.’ ”
The record, which we have a “duty to independently
examine” (Connor v. State Bar (1990) 50 Cal.3d 1047, 1055),
paints a different picture. To begin with, the hearing judge did
not, as Lawyers’ Mutual asserts, make an affirmative finding
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Opinion of the Court by Evans, J.
“that Spielbauer was not acting in a professional capacity when
he presented the inaccurate payoff demand.” Instead, it
declined to make a finding that he was acting in a professional
capacity, reasoning in relevant part that OCTC “carrie[d] the
burden” on this issue and the evidence was “inconclusive,” with
“some indication that Spielbauer was acting in his capacity as
an attorney . . . and other evidence that he was not.” Nor,
contrary to the suggestion of Lawyers’ Mutual, did the Review
Department make a finding that “only . . . some of Spielbauer’s
misconduct — his submission of a declaration to the superior
court — was ‘related to the practice of law.’ ” Although the
Review Department stated that it “consider[ed]” Spielbauer’s
submission to the trial court of a declaration containing an
intentional misrepresentation to be “ ‘related to the practice of
law,’ ” it made no finding as to whether it considered any of
Spielbauer’s other misconduct — including issuing the
knowingly false payoff demand in the first place — to be related
to the practice of law.
More significantly, to the extent Spielbauer and Lawyers’
Mutual are correct that the appropriateness of restitution
depends on whether Spielbauer’s misconduct was related to the
practice of law — a point we do not address — the record
contains clear and convincing evidence that it was. (See In re
Bradshaw (2025) 17 Cal.5th 1095, 1107 [in disciplinary
proceedings, OCTC has the burden “to prove culpability by clear
and convincing evidence”].) First, regarding the payoff demand
itself, Spielbauer’s signature appears in the blank designated
for Devine Blessings as “Beneficiary.” His printed name
appears on the next line, underneath “Devine Blessings” and
beside the word “By,” but the space for indicating the capacity
in which he signed the document for Devine Blessings —
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Opinion of the Court by Evans, J.
designated by the word “its” — is left blank. Thus, nothing in
the document itself indicates that Spielbauer signed the
document in his capacity as an officer or owner of Devine
Blessings, rather than as counsel.
Next, when William LLC’s counsel requested a revised
payoff demand, Spielbauer sent a letter in reply on the
letterhead of his law firm — “The Spielbauer Law Office” —
stating that he was “responding . . . on behalf of Devine
Blessings” and identifying himself on the typed signature line
as “Thomas Spielbauer, Esq.” The same day, he sent a second
letter to William LLC’s counsel also on the letterhead of “The
Spielbauer Law Office” and identifying Spielbauer on the typed
signature line as “Thomas Spielbauer, Esq.”
Moreover, throughout the civil action, Spielbauer acted as
counsel of record, first for Devine Blessings alone when it was
the only named defendant, and then for both Devine Blessings
and himself after William LLC, in an amended complaint, added
Spielbauer as a named defendant. He was sole counsel for the
first 15 months of that litigation — from July 2010 when
William LLC filed the original complaint until October 2011,
when he and Devine Blessings notified the court that they were
“associat[ing]” another attorney “as counsel of record” to “be lead
counsel.” During those 15 months, Spielbauer signed and filed,
among other things, multiple demurrers, motions to strike, and
oppositions to William LLC’s request for a preliminary
injunction. Even after associating another attorney, and
throughout the rest of the litigation, Spielbauer continued to
sign and file pleadings as counsel for himself and Devine
Blessings, including a cross-complaint in which he and Devine
Blessings sued William LLC. On this record, insofar as
Spielbauer and Lawyers’ Mutual assert that restitution is not
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Opinion of the Court by Evans, J.
appropriate unless Spielbauer’s misconduct was related to the
practice of law, we have no trouble finding that it was.
Spielbauer next argues that an award of restitution would
be improper because William LLC suffered “no ‘out of pocket’
loss.” He reasons as follows: Tort claimants seeking recovery of
attorney fees “are not entitled to recover more money then [sic]
actually paid.” Thus, “[o]nly evidence of attorney fees actually
paid [is] . . . admissible into evidence” in tort actions, and “no
evidence was introduced” in the civil action that William LLC
“or its principal actually paid its attorney any money, as opposed
to granting its counsel a contingency fee for its services.”
“Disciplinary proceedings cannot be used to compel an attorney
to pay bills for fees that are not even admissible in evidence in
a court of general jurisdiction,” and “no evidence was introduced
in the State Bar Court regarding the attorney fees paid.”
Therefore, an award of restitution may not be based on William
LLC’s attorney fees in the civil action.
Spielbauer’s argument is inconsistent with precedent. In
West Coast Development v. Reed (1992) 2 Cal.App.4th 693, the
Court of Appeal rejected the argument that an order pursuant
to Code of Civil Procedure section 128.5 to pay the attorney fees
“incurred by [a] party” as a result of frivolous or delay tactics
was improper because “there was no showing that [the party]
actually had paid the fees charged by” the attorney. (West Coast
Development, at p. 707.) “[T]his argument,” the court explained,
“has no legal authority or reason to support it.” (Ibid.) Although
“[i]t is perhaps true that the payment of an attorney fee by a
client may be some evidence that the fee was both due and
reasonable,” “the fact that a fee was not paid is no evidence that
it has not been earned and that the client is not obligated to pay
it.” (Ibid.) Consistent with this decision, we reject Spielbauer’s
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argument that a restitution order here would be improper
because “no evidence was introduced” in the civil action that
William LLC “or its principal actually paid its attorney any
money.” The propriety of a disciplinary order requiring an
attorney to pay restitution to a victim who has “incur[red] legal
fees as a result of [the] attorney’s” misconduct (Sorensen, supra,
52 Cal.3d at p. 1044) does not depend on whether the victim has
yet paid the incurred fees.
The decision Spielbauer cites in support of his contrary
argument — Howell v. Hamilton Meats & Provisions, Inc. (2011)
52 Cal.4th 541 (Howell) — is not inconsistent with the authority
discussed above. Howell involved a principle that is not at issue
here: the “collateral source rule,” which precludes deducting
from an injured person’s damage recovery compensation the
injured person received from sources independent of the
tortfeasor. (Id. at p. 548.) The question before us in Howell was
whether this rule applies where the plaintiff’s medical provider,
“pursuant to a preexisting contract with the [plaintiff’s] health
insurer,” “accepts as full payment” for medical services a
discounted amount that is “less than that stated in the
provider’s bill” to the plaintiff. (Ibid.) In holding that the rule
does not apply in that context — and that such plaintiffs may
not recover more than the discounted amount — we noted: (1)
an earlier decision in which “we suggested . . . that the collateral
source rule applies to unpaid services . . . rendered ‘with the
expectation of repayment out of any tort recovery’ ”; (2) “the
widely held view,” “reflect[ed]” in the Restatement Second of
Torts, “that the collateral source rule applies to gratuitous
payments and services”; and (3) an appellate decision that,
based on “other California cases, the law of sister states, and the
policy of encouraging charitable action,” had applied the
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Opinion of the Court by Evans, J.
collateral source rule broadly to the provision of gratuitous
services. (Id. at pp. 557–558, italics added.) We “neither
approved nor disapproved” application of the collateral source
rule in these contexts (id. at p. 558), finding them
distinguishable. We concluded that reducing damages by
collateral compensation that plaintiffs receive as a gift would
produce “a windfall for” tortfeasors and that relieving them of
the full cost of their negligence or wrongdoing would “distort”
tort law’s “deterrent function.” (Id. at p. 560.) This principle
arguably applies where a medical provider initially bills the
plaintiff for its services but “later ‘writes off’ ” all or part of its
bill because of the plaintiff’s inability to pay. (Id. at p. 559.) By
contrast, where the medical provider “has agreed, before
treating the plaintiff, to accept a certain amount in exchange for
its services . . . [t]hat amount constitutes the provider’s price,”
which the plaintiff is “obligated to pay without any writeoff.”
(Ibid.)
In this case, Spielbauer, who concedes in his briefing that
the fee awarded in the civil action was “based on [actual] bills,”
points to no evidence in any relevant record — from the civil
action, his bankruptcy action, or this disciplinary proceeding —
suggesting that William LLC’s attorneys in the civil matter,
before providing legal services, agreed to accept in exchange for
those services a lower amount than the amount billed. Nor, as
far as our review of those records discloses, did Spielbauer assert
in any of those proceedings — before he filed a supplemental
brief in this court — that the amount billed was overstated, that
William LLC was not obligated to pay the billed amount, or that
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Opinion of the Court by Evans, J.
there can be no attorney fee award absent proof of actual
payment.7
On the contrary, in his written closing argument to the
hearing judge in this disciplinary matter, he characterized the
“attorney fees” awarded in the civil action as “damages incurred
by” William LLC. Earlier, in a letter to the State Bar explaining
why he failed to report the civil judgment, he similarly
characterized the “attorney fees awarded” in the civil action as
“fees incurred,” and he asserted that “[t]he only evidence
received at the [civil] trial which pertained to attorney fees were
those paid to” William LLC’s counsel. (Italics added.) In his
new trial motion in the civil action, he repeatedly referred to the
fees in question as fees “incurred,” and he asserted in his appeal
in that action that “[a]ll of [those] fees were spent pursuing
damage claims long after the April 27, 2010 [payment] demand
had expired.” (Italics added.)
Spielbauer’s representations were fully consistent with
both the superior court’s decision in the civil action and the
evidence submitted in that civil action. The superior court, in
setting forth the damages that William LLC “proved” it had
“suffered,” stated: “Plaintiff submits proof that it spent
$336,484.09 on fees in this case to eliminate the cloud on title
caused by the false payoff demand.” (Italics added.) In
declarations submitted to the superior court, one of William
LLC’s attorneys stated under penalty of perjury that her “time
7
Spielbauer’s argument about the absence of evidence of
actual payment is, in addition to being unmeritorious,
“untimely.” (Bercovich v. State Bar (1990) 50 Cal.3d 116, 126;
see Blair v. State Bar (1989) 49 Cal.3d 762, 774 [attorney
forfeited argument that delay in instituting proceeding was a
mitigating circumstance by failing to “raise[] any objection in
the proceedings before the State Bar based on alleged delay”].)
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Opinion of the Court by Evans, J.
was billed in this case at the rate of $395” per hour — discounted
from her “standard billing rate [of] $450 per hour” — and
another of William LLC’s attorneys stated, also under penalty
of perjury, “I have . . . been billing . . . William LLC at [the] rate
of . . . $395 per hour,” “reduced” from his “current billable rate
for new clients [of] $425 per hour.” (Italics added.)
Insofar as Spielbauer now speculates — contrary to the
evidence just cited and without any evidentiary support — that
William LLC’s attorneys in the civil action may have agreed to
work only for “a contingency fee,” his view that this would make
an award of restitution improper is not supported by Howell. As
noted above, Howell acknowledged, and did not reject, an earlier
decision of this court suggesting “the collateral source rule
applies to unpaid services . . . rendered ‘with the expectation of
repayment out of any tort recovery.’ ” (Howell, supra, 52 Cal.4th
at p. 558.) On the facts of this case, refusing to award restitution
based on the asserted absence of evidence in the record that
William LLC actually paid the attorney fees would, in the words
of Howell, “result in a windfall for” Spielbauer and “distort the
deterrent function of” restitution in the discipline context by
providing him relief from the financial “cost of his . . .
wrongdoing.” (Id. at p. 560.)
Spielbauer’s secondary argument regarding the asserted
absence of out-of-pocket losses is also unpersuasive. According
to Spielbauer, William LLC actually “made substantially more
money” as a result of his actions — issuing a payment demand
that “compelled” William LLC “to keep the property” and to sue
to clear the resulting cloud on title — because “during the
litigation,” William LLC “retained all the rents on the property”
and the property’s value “appreciated substantially.” However,
the record is devoid of any evidence to support Spielbauer’s
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Opinion of the Court by Evans, J.
assertions. Moreover, given the substantial litigation costs
associated with clearing the cloud on title, as discussed above,
Spielbauer’s argument about the absence of out-of-pocket losses
fails even if, as he asserts, William LLC made money “by being
compelled to keep the property” during that litigation. Under
California law, “the expense of clearing title is a proper element
of damages in [a slander of title] action.” (Glass v. Gulf Oil Corp.
(1970) 12 Cal.App.3d 412, 438; see Sumner Hill Homeowners’
Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th
999, 1030–1031; Seeley v. Seymour (1987) 190 Cal.App.3d 844,
865; Hill v. Allan (1968) 259 Cal.App.2d 470, 489.)
Finally, Spielbauer asserts that he “does not” — and “did
not” — “have the ability to pay the $869,276.55 judgment.” In
support of his assertion, he cites his numerous representations
to the hearing judge that he lacked funds to pay the judgment.
These self-serving assertions, considered in light of the
record of all the related proceedings in this case, are an
insufficient basis for declining to order payment of any
restitution. In the civil action, the superior court discussed
Spielbauer’s financial situation at length as part of setting the
amount of the punitive damages award. According to its
statement of decision: The only evidence Spielbauer submitted
on the subject in the civil action was his own testimony, and that
testimony was “not . . . credible.” Spielbauer “was evasive in his
answers, even to very straightforward questions,” and he
“refused to answer” questions even after the court overruled his
objections. Although he “claim[ed] he own[ed] no interest in any
real property,” “other evidence suggest[ed] he ha[d] control over
real property assets and ha[d] used them as his own, actually
converting value to his own use.” Although he made an
“assertion” about the level of his monthly income, he “provided
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Opinion of the Court by Evans, J.
no means to test [his] assertion” and “bank statements show[ed]
monthly transactions consistently in excess of [the asserted]
amount, in some months very substantially in excess.” During
discovery, he “withheld responsive information,” “refused to
disclose documentation of [his] financial condition,” and
“extensively redacted” documents he produced without claiming
that “redaction was authorized by any [court] order.” By
“fail[ing] to produce accurate and complete financial
information,” he “ ‘improperly deprived plaintiff of the
opportunity to meet [its] burden of proof on the issue’ ”
regarding his financial condition. Given his failure to provide
“accurate indications of [his] ability to pay,” a punitive damages
award “approximately equivalent to the amount of
compensatory damages” was “appropriate to accomplish the
goals of punishment and protection and [was] not
disproportionate to [his] ability to pay.”
The Court of Appeals affirmed the punitive damages
award. It found that “the trial court did not err” by “infer[ring],”
“[b]ased on the evidence presented during the hearing on
punitive damages,” that Spielbauer had been “deceptive, had
withheld complete documentation of [his] finances, and had
more assets than [he] claimed.” “Therefore,” the appellate court
continued, “we cannot conclude . . . the punitive damages award
was so disproportionate to [Spielbauer’s] wealth to render it
excessive, exceeding what was necessary to properly punish and
deter.” “[T]he award,” the court went on to state affirmatively,
“was not disproportionate compared to [Spielbauer’s] ability to
pay.” Consistent with these findings, the hearing judge, after
noting that Spielbauer “made a bare remark at trial that he was
unable to” pay the civil judgment, found that “the record
contains no documentary evidence to justify [Spielbauer’s]
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Opinion of the Court by Evans, J.
failure to pay even a modest amount.” Given this record,
Spielbauer’s self-serving testimony before the hearing judge
that he did not have the money to pay the civil judgment is not
a convincing basis for declining to award restitution. (See
Galardi, supra, 43 Cal.3d at p. 694 [ordering payment of
restitution as a condition of disciplinary suspension
notwithstanding “concerns regarding [the attorney’s] ability to”
pay].)
C. The terms of the restitution award.
We now turn to the terms of the restitution award.
Regarding the six-month period of actual suspension that the
Review Department recommended, OCTC asserts that we
should further order that Spielbauer “remain suspended until
he pays restitution for specific, out-of-pocket losses
(compensatory damages, attorney fees and costs) in the amount
of $536,726.49, plus interest.” It argues as follows: “[T]his case
involves intentional acts of dishonesty. [Spielbauer] breached
his duty of good faith and fair dealing to those with whom he
was transacting business, causing an innocent victim to suffer a
tangible pecuniary loss; and, when the victim was forced to seek
judicial intervention to clear the slander of title caused by
[Spielbauer’s] fraudulently inflated payoff demand, [Spielbauer]
dragged out the litigation, submitted a false declaration stating
that the payoff demand was accurate, and breached his duty of
candor to the court.”
Spielbauer offers little in response to OCTC’s discussion.
Many of his arguments — the judgment has expired and is
unenforceable; he believed he was justified in his conduct;
William LLC was never his client and he owed it no fiduciary
duties; William LLC had no out-of-pocket losses and actually
made money as a result of his actions — have been earlier
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Opinion of the Court by Evans, J.
addressed and rejected. Regarding the Review Department’s
finding that he made “an intentional misrepresentation” to the
court in the civil action, Spielbauer continues to deny all
culpability, emphasizing that the “verification” in the
declaration he submitted “contain[ed] the word[] ‘belief’’ ” — i.e.,
“ ‘to the best of my knowledge, information and belief’ ” — and
that he “believed he was justified in his conduct at the time.”
(Italics added.) Beyond that, he blames others — including the
victim of his conduct, William LLC — for William LLC’s costs in
the civil action. In this regard, he asserts: (1) William LLC and
the Yazdanis “were not ‘innocent victims,’ ” but obtained Dennis
Spielbauer’s properties through foreclosure “with peppercorn
bids”; (2) William LLC prolonged resolution of the matter and
“inflated [its] attorney fees and costs” by pursuing a slander of
title claim when it could have brought “a declaratory judgment
action” regarding the amount of the payoff demand; and (3) the
“large judgment” resulted, not from his own “ ‘egregious
behavior’ ” in “submitting an excessive payoff demand,” but from
his trial counsel’s “erroneous advice” to “refuse[] to provide an
accounting [that] described the basis of his [payoff] demand.”
Finally, he asserts that his conduct, which “happened well over
14 years ago,” “is not likely to recur” because, among other
things, he will “be far more circumspect about his conduct in the
future.”
These arguments are well answered by the comments of
both the hearing judge and the Review Department in
concluding that Spielbauer’s “indifference” to the nature and
consequences of his misconduct merit “substantial weight” as an
aggravating factor. In a written decision, the hearing judge,
who personally observed Spielbauer testify, stated: “Spielbauer
fails to recognize the magnitude of his transgressions or accept
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Opinion of the Court by Evans, J.
responsibility for them, continuing to insist . . . that his payoff
demand statement was accurate and ‘justified,’ ” “even though”
his arguments “were unequivocally rejected by the superior and
appellate courts in” the civil action and “this court granted
collateral estoppel on the very issue of whether Spielbauer
intentionally proffered an inaccurate payoff demand
statement.” He “insists that the superior court’s findings were
wrong because [that] court never saw” key “exculpatory
evidence” — the “modification agreement” that allegedly
“establish[es]” justification for his payoff demand — but, as he
himself has “admitted,” “it was his choice to withhold that
document from the courts for his own purposes.” His “attitude
during the disciplinary proceeding reveals an absence of
remorse and understanding of his ethical responsibilities as an
attorney. Substantial weight is assigned to his lack of insight
as it makes him an ongoing danger to the public and legal
profession.” (Italics added.)
The Review Department, like the hearing judge, found
that “Spielbauer is unable to recognize the wrongfulness of his
misconduct.” He has not “accept[ed] responsibility for [his]
wrongful acts and come to grips with [his] culpability,” “which
demonstrates his lack of insight. Despite the superior court’s
civil fraud judgment, [he] maintains that his actions were
supported under the law, and he has done nothing wrong.”
“[H]is conduct goes beyond” proper defense of his actions and
“reveal[s] a complete failure to understand the wrongfulness of
his actions regarding the fraudulent payoff demand.
Particularly troubling is his continued attempt . . . to relitigate
the findings of the superior court [in the civil action], which were
affirmed by the Court of Appeal and are fully supported by the
record. [Citation.] [His] actions show indifference to the nature
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Opinion of the Court by Evans, J.
and consequences of his misconduct.” “His failure to understand
the wrongfulness of his misconduct, underscored by his
attempts to relitigate a fully adjudicated proceeding, is of
particular concern that similar misconduct may recur and calls
for strong preventive measures.”
In this court, Spielbauer continues to demonstrate
indifference to the nature and consequences of his actions, a
refusal to take responsibility for those actions, and a lack of
insight and remorse. He has doubled-down on the same excuses
and explanations that have been rejected by every tribunal to
consider them, and he has continued to blame others —
including his victim, William LLC — for the predicament in
which his own actions have left him. And he attempts to turn
his own failure to make any payment on the civil judgment for
over a decade — since entry of the civil judgment in 2014 — into
yet another argument for avoiding responsibility: purported
expiration of the civil judgment due to William LLC’s failure to
renew it.
On this record, we agree with the hearing judge that
Spielbauer’s “lack of insight . . . makes him an ongoing danger
to the public and legal profession.” We also agree with the
Review Department that Spielbauer’s “failure to understand the
wrongfulness of his misconduct” gives rise to “concern that
similar misconduct may recur and calls for strong preventive
measures.” Spielbauer’s misconduct was not garden-variety
civil misbehavior, but was fraudulent activity, which raises
questions about his ability to represent clients in a manner
consistent with his professional obligations. Like OCTC, we
therefore find that Spielbauer should be required to pay
restitution in the amount of $536,726.55, plus interest, which
reflects William LLC’s damages and the out-of-pocket costs it
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Opinion of the Court by Evans, J.
incurred in the civil action as a result of Spielbauer’s
misconduct.8 Given all the circumstances, we find this level of
discipline appropriate to protect the public.
Nevertheless, we are mindful of the hearing judge’s
concern about the potential “impact on [Spielbauer’s] ability to
practice” of requiring him to pay the entire amount of restitution
“prior to returning to active status.” We have previously noted
similar concerns in fashioning the terms of restitution. For
example, in Beery v. State Bar (1987) 43 Cal.3d 802, 816, after
finding that a restitution requirement “in the amount of
$35,000” was “appropriate” given the facts of the case, we
declined to require “completion of restitution . . . during the
period of actual suspension” given “the financial hardship [that
actual] suspension [was] likely to cause.” “It will be sufficient,”
we concluded, that “restitution is made a condition of probation”
(ibid.), and we included as a probation condition that the
attorney make “restitution according to a payment program
approved by the State Bar Court” (id. at p. 817).
Galardi is also relevant on this issue. There, the Review
Department’s recommended discipline included “actual
suspension for at least one year and until [the attorney paid]
restitution totaling $186,000 to his joint venturers.” (Galardi,
supra, 43 Cal.3d at p. 687.) Based on the attorney’s personal
circumstances — he “ha[d] gone through bankruptcy liquidation
8
The amount OCTC requested — $536,726.49 — appears
to be off by six cents. As earlier noted, the judgment, exclusive
of punitive damages, included $332,547.06 in compensatory
damages, $163,597.12 in attorney fees, and $40,582.37 in costs,
which totals $536,726.55. The State Bar expressly does not seek
punitive damages “as part of [the] restitution condition” and, for
that reason, OCTC declines to discuss them in its briefing. For
the same reason, we decline to discuss them.
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Opinion of the Court by Evans, J.
proceedings” — we found it “unlikely” he “would be able to
comply with the restitution requirement . . . were [he] unable to
practice law,” and we expressed “concern[]” that actual
suspension “until he repa[id]” the entire amount therefore
“would prevent him from ever returning to the practice of law.”
(Id. at p. 694.) It was nevertheless “reasonable,” we concluded,
“to expect” that he could “repay” all the money he owed “within
five years.” (Ibid.) Therefore, along with actual suspension for
the first 30 days of a five-year probationary term, we ordered
the attorney to pay “one-fifth of the [total amount of]
restitution . . . each year for the next five years, with the first
installment[] due one year after [our] decision [became] final
and the remaining installments due on the same date in each
subsequent year during the five-year probationary period.” (Id.
at pp. 694–695.)
Our decisions reveal still other approaches regarding
ability to pay restitution. In Prantil v. State Bar (1979) 23
Cal.3d 243, 245, we ordered payment of the total restitution
amount — $4,500 plus interest — “in monthly installments of
$200 or more,” and we specified that “the stay of execution of the
suspension order [would] be lifted if [the attorney] misse[d] two
consecutive payments.” In several cases, we have ordered
payment within a specified period of time that was more than
the period of actual suspension but less than or coextensive with
the length of the probationary term. (Lipson v. State Bar, supra,
53 Cal.3d at p. 1023 [actual suspension for two years and
payment of restitution “within the five-year probationary
period”]; Coppock, supra, 44 Cal.3d at p. 687 [actual suspension
for 90 days and payment of restitution “within the first year” of
two-year probationary period]; Waysman v. State Bar (1986) 41
Cal.3d 452, 459 [no actual suspension, “complete restitution” to
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Opinion of the Court by Evans, J.
be “made by the end of the one-year probationary period,” and if
not paid within one year, probation extended “for another two
years or until restitution is made in full, whichever comes first”];
Demain v. State Bar (1970) 3 Cal.3d 381, 383 [actual suspension
for six months and payment of restitution “within the first two
years” of five-year probationary period].)
In Morse, we took yet another approach. The time period
we specified for payment of $350,000 in restitution and civil
penalties — “within the first 90 days of” a five-year probationary
period — was much shorter than the three-year actual
suspension we imposed. (Morse, supra, 11 Cal.4th at p. 212.)
However, we went on to set forth a detailed procedure for
seeking an extension if the attorney “contend[ed]” he was
“unable to pay this amount” by the 90-day deadline: He “must
submit to his probation monitor within the first 90 days of the
probation period a written plan for prompt payment of as much
of the amount as [he] is able to pay. The submission of any such
plan . . . must include satisfactory proof of [his] financial
condition and the amount he is able to pay. The State Bar Court
is authorized to review de novo any decision by the monitor
either to approve or to reject any payment plan proposed by [the
attorney]. If, within two years, [he] pays in full the [entire
amount] . . . he shall be entitled to have the State Bar Court
reduce the period of actual suspension from three years to two
years.” (Ibid.)
In Petilla, the Review Department, citing Morse, took a
similar approach. After recommending actual suspension for 60
days and a restitution payment of approximately $12,000 plus
interest “[w]ithin 90 days after the effective date of the Supreme
Court order in this matter,” the Review Department added: “If
Petilla contends that he is unable to pay this amount, he must
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Opinion of the Court by Evans, J.
(1) ask, within the first 30 days after the effective date of the
Supreme Court order in this matter, the State Bar’s Probation
Unit in Los Angeles to assign to him a probation monitor referee
and (2) submit to that referee, within 30 days after being
notified of the referee’s assignment, a written plan for the
prompt payment of as much of the amount as he is able to pay.
The submission of any such plan by Petilla must include
satisfactory proof of his financial condition and the amount he
is able to pay. On the motion of Petilla or the State Bar, any
decision by the referee to approve or reject any payment plan
proposed by Petilla is subject to de novo review by the State Bar
Court.” (Petilla, supra, 4 Cal. State Bar Ct. Rptr. at p. 251.)
Considering all the circumstances in this case, we
conclude that an approach modeled on Morse and Petilla is
appropriate and would best promote the goals of restitution: “to
effectuate [Spielbauer’s] rehabilitation and to protect the public
from similar future misconduct.” (Sorensen, supra, 52 Cal.3d at
p. 1044.) On the one hand, the amount of restitution — over
$500,000, plus interest — is substantial and, as the hearing
judge observed, requiring Spielbauer to pay the entire amount
“prior to returning to active status” could significantly “impact”
his “ability to practice.” On the other hand, the judgment in the
civil action was entered over 12 years ago — in February
2014 — and Spielbauer has made no payments on it during that
period even though it was affirmed on appeal and we declined to
review it in 2016, the bankruptcy court found it
nondischargeable in 2017, and that decision was affirmed in
2018 by a federal district court and again in 2019 by the Ninth
Circuit Court of Appeals. Nor, in this disciplinary proceeding,
has Spielbauer shown any inclination or willingness to pay what
he owes, or even the smallest portion of what he owes.
48
In re SPIELBAUER
Opinion of the Court by Evans, J.
Moreover, regarding his ability to pay, he thwarted the efforts
of William LLC and the superior court in the civil action to
determine his financial condition, and he has offered no
evidence on the subject in these disciplinary proceedings other
than brief, conclusory, self-serving statements during his
testimony.
III. DISPOSITION
Based on the above, we order that Thomas John
Spielbauer, State Bar No. 78281, be suspended from the practice
of law for two years, that execution of that suspension be stayed
as set forth below, and that he be placed on probation for two
years with the following conditions:
1. Spielbauer must be actually suspended from the
practice of law for the first six months of his probation and until
he makes restitution to William LLC in the amount of
$536,726.55 plus interest at the legal rate per annum dating
from February 14, 2014 (the date the superior court rendered
judgment) and presents satisfactory proof thereof to the State
Bar. If he contends he is unable to pay this amount within the
first six months of his probation period, he must submit to his
assigned probation case coordinator within the first 90 days of
the probation period a written plan for prompt payment of as
much of the amount as he is able to pay. Along with the plan,
he must submit satisfactory proof of his financial condition and
the amount he is able to pay. The State Bar Court is authorized
to review de novo any decision by the probation case coordinator
either to approve or to reject any payment plan Spielbauer
proposes. If Spielbauer adequately demonstrates his inability
to pay, obtains approval of a repayment plan, and makes
49
In re SPIELBAUER
Opinion of the Court by Evans, J.
payments consistent with that repayment plan, then he may be
reinstated before making full restitution.
Spielbauer’s failure to submit, within the first 90 days of
the probation period, both (1) a written plan for prompt payment
of as much of the amount as he is able to pay and (2) satisfactory
proof of his financial condition and the amount he is able to pay,
shall constitute a forfeiture of any option to request or have a
payment plan, such that he is bound to pay the full amount of
restitution before being reinstated. The probation case
coordinator shall have discretion to grant relief from the
forfeiture upon a showing by Spielbauer of good cause, subject
to the State Bar Court’s de novo review of any decision by the
probation case coordinator regarding relief from default. If
Spielbauer has not obtained approval of a payment plan within
the first six months of his probation period, his actual
suspension will continue until a payment plan is approved.
Payments Spielbauer makes on the civil judgment,
excluding payments to satisfy the punitive damages component
of that judgment, shall be credited toward his restitution
obligation under this order. Likewise, any restitution payments
he makes pursuant to this order shall be credited toward the
civil judgment.
2. Spielbauer must comply with all other conditions of
probation recommended by the Review Department, as set out
in its decision filed October 25, 2023 (as modified on October 27,
2023).
50
In re SPIELBAUER
Opinion of the Court by Evans, J.
It is also ordered that:
1. Spielbauer take and pass the Multistate Professional
Responsibility Examination (MPRE) administered by the
National Conference of Bar Examiners within one year after the
effective date of this order and provide satisfactory proof of such
passage to the State Bar’s Office of Probation within the same
period. Failure to do so may result in additional suspension.
(Cal. Rules of Court, rule 9.10(b).) If he provides satisfactory
evidence of completion of taking and passage of the MPRE after
the date of the State Bar Review Department opinion but before
the effective date of this order, he will receive credit toward his
duty to comply with this condition.
2. Spielbauer must comply with California Rules of Court,
rule 9.20, and perform the acts specified in (a) and (c) of that
rule within 30 and 40 calendar days, respectively, after the
effective date of this order. (Athearn v. State Bar (1982) 32
Cal.3d 38, 45 [the operative date for identification of clients
being represented in pending matters and others to be notified
is the filing date of the Supreme Court order imposing
discipline].) Failure to do so may result in disbarment or
additional suspension. He must file a rule 9.20(c) affidavit even
if he has no clients to notify on the date this order is filed.
3. Costs are awarded to the State Bar in accordance with
Business and Professions Code section 6086.10, and are
enforceable both as provided in Business and Professions Code
section 6140.7 and as a money judgment. Unless time for
payment of discipline costs is extended pursuant to Business
and Professions Code section 6086.10, subdivision (c), costs
assessed against an attorney who is actually suspended or
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In re SPIELBAUER
Opinion of the Court by Evans, J.
disbarred must be paid as a condition of reinstatement or return
to active status.
EVANS, J.
We Concur:
GUERRERO, C. J.
CORRIGAN, J.
LIU, J.
KRUGER, J.
GROBAN, J.
CASTILLO, J.*
*
Associate Justice of the Court of Appeal, Fourth Appellate
District, Division One, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
52
See next page for addresses and telephone numbers for counsel who
argued in Supreme Court.
Name of Opinion In re Spielbauer
__________________________________________________________
Procedural Posture (see XX below)
Original Appeal
Original Proceeding XX
Review Granted (published)
Review Granted (unpublished)
Rehearing Granted
__________________________________________________________
Opinion No. S283172
Date Filed: July 16, 2026
__________________________________________________________
Court:
County:
Judge:
__________________________________________________________
Counsel:
Moss & Murphy and Glen L. Moss for Petitioner.
Horvitz & Levy, Steven S. Fleischman, John B. Sprangers and Beth J.
Jay for Lawyers’ Mutual Insurance Company as Amicus Curiae on
behalf of Petitioner.
Ellin Davtyan, Brady R. Dewar, George S. Cardona, Christopher G.
Jagard and Rachel S. Grunberg for Respondent.
Counsel who argued in Supreme Court (not intended for
publication with opinion):
Glen L. Moss
Moss & Murphy
1297 B Street
Hayward, CA 94541
(510) 583-1155
John B. Sprangers
3601 West Olive Avenue, 8th Floor
Burbank, CA 91505
(818) 995-0800
Rachel S. Grunberg
State Bar of California Office of Chief Counsel
180 Howard Street
San Francisco, CA 94105
(415) 538-2196