In In re Spielbauer, the Supreme Court last week held a disciplined attorney can be “required to pay restitution to nonclients based on damages for the tort of fraud.” The attorney in the matter must serve a six-month suspension and make good on $536,726.55 plus interest of a 2014 civil judgment entered against him before he can practice law, although the court left open the possibility of a payment plan.
The court’s unanimous opinion by Justice Evans concluded the State Bar Court’s Review Department “misread” the Supreme Court’s Sorensen v. State Bar (1991) 52 Cal.3d 1036 decision and “our other precedents.” The Review Department had ruled, “the matter involves a civil judgment in tort, which cannot serve as the basis for restitution.”
The Supreme Court found “appropriate to protect the public” the restitution, which “reflects [the defrauded company’s] damages and the out-of-pocket costs it incurred in the civil action as a result of [the attorney’s] misconduct.” It also said that the company’s “nonclient status is not a basis for declining to order [the attorney] to make restitution.”
The court overturned the Review Department’s opinion only insofar as it found restitution inappropriate. It also disapproved the restitution parts of State Bar Court Review Department decisions in In the Matter of Torres (Review Dept. 2000) 4 Cal. State Bar Ct. Rptr. 138 and In the Matter of Bach (Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 631. The Supreme Court denied the attorneys’ petitions for a writ of review in Torres and Bach; the State Bar didn’t seek review of the restitution rulings in those cases.
Horvitz & Levy filed an amicus curiae brief in support of the attorney and participated in the oral argument.
