Friday, July 17, 2026
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California Supreme Court:
State Bar May Order Lawyer to Pay Restitution to Non-Client
Opinion Says Review Department Misread Precedent in Declining to Order Attorney to Satisfy Judgment
By a MetNews Staff Writer
The California Supreme Court held yesterday that restitution is an appropriate condition of probation in attorney disciplinary proceedings even if the payments are to be made to a non-client based on that party’s having obtained a fraud judgment against the lawyer.
Justice Kelli Evans authored the unanimous decision, saying:
“In this case, we consider whether the Review Department of the State Bar Court…properly concluded that attorney…Thomas John Spielbauer…should not be required to pay restitution for his acts of misconduct….The Review Department concluded…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.’ ”
She continued:
“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.”
Disciplinary Charges
The Office of Chief Trial Counsel of the State Bar (“OCTC”) filed a notice of disciplinary charges against Spielbauer, a Contra Costa County solo practitioner, in December 2019, alleging five counts of misconduct based on a civil fraud judgment entered against him in February 2014.
According to lawyers with the OCTC, Spielbauer formed an entity, Devine Blessings Inc., for which he was the president and sole shareholder, to serve as a vehicle for purchasing lien-position notes on certain properties owned by his brother that were facing foreclosure.
In March 2010, less than two weeks before the foreclosure sales of some of the real estate, the new entity agreed to purchase loans from a second-position lender, including one secured by San Jose property with a balance of approximately $7,000.
When the new owner of the San Jose property, 167 E. William LLC, requested a payoff statement from Divine Blessings to clear title for resale, Spielbauer demanded $269,500. He ignored requests for accounting, and the company was allegedly forced to cancel an impending sale and make refunds to the proposed buyer.
Civil Judgment
William LLC secured a judgment against him for 869,276.55—comprising $332,547.06 in compensatory damages, $163,597.12 in attorney fees, $40,582.37 in costs, and $332,550 in punitive damages—in 2014 after filing a complaint in Santa Clara Superior Court alleging that he made an inaccurate payoff demand, committed fraud, and took actions that slandered title in violation of California law. The Court of Appeal affirmed the judgment.
Spielbauer has made no payments on the judgment.
According to the lawyers with the OCTC, Spielbauer’s conduct leading up to the lawsuit and his failure to report the judgment to the State Bar amounted to violations of subsections of Business and Professions Code §6068.
On Dec. 2, 2022, State Bar Court Judge Manjari Chawla recommended that he be suspended from the practice of law for two years, that execution of that suspension be stayed except for the first 90 days, and that he be required to serve probation. She declined to tie the termination of his suspension to restitution payments to William LLC.
In 2023, the Review Department recommended that his actual suspension be increased to six months but declined “to recommend Spielbauer be ordered to make restitution to William LLC, a non-client entity, in connection with his disciplinary suspension.”
1991 Decision
Evans pointed to the court’s 1991 decision in Sorensen v. State Bar as providing guidance. In that case, the high court said that it does not view restitution as a “damage award” or a way of compensating a victim of wrongdoing but held that a condition of probation requiring payment was appropriate in that matter where the attorney had misused court processes to file a fraud claim against a reporting firm over a disputed bill.
She wrote:
“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,’…it ‘cannot [be] use[d] as a justification to impose restitution.” The restitution order in Sorensen, the Review Department declared, constituted only ‘a limited exception’—based on ‘the unique facts of [that] case….’ ”
Rejecting this view, Evans opined:
“Contrary to the Review Department’s analysis, our order of restitution in Sorensen did not 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.”
Saying that “[o]ur comments” must be “understood in context,” she continued: “[W]e did not…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.”
She pointed out that imposing restitution as a condition of probation serves the dual purposes of rehabilitation and protecting the public by forcing an attorney to confront the harm his actions have caused and further remarked that “William LLC’s nonclient status is not a basis for declining to order Spielbauer to make restitution.”
As to an assertion that Spielbauer was not acting in his professional capacity at the time of the alleged misconduct, the jurist noted that he had repeatedly responded to William LLC on his firm’s letterhead and indicated that he was communicating “on behalf of Devine Blessings.” She commented:
“[T]o the extent Spielbauer…[is] 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.”
Allegations Against Attorney
Turning to the allegations against Spielbauer, she said:
“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.”
Evans declared:
“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:
“….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…and presents satisfactory proof thereof to the State Bar.”
Noting that the amount reflects the judgment against him, minus the punitive damages award, she continued:
“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…. If Spielbauer adequately demonstrates his inability to pay, obtains approval of a repayment plan, and makes payments consistent with that repayment plan, then he may be reinstated before making full restitution.”
The case is In re Spielbauer, 2026 S.O.S. 2073.
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