Statile

Respondent William J. Statile, a former attorney, settled lawsuits brought by parties alleging that he had misappropriated trust funds. The settling plaintiffs reserved their right to seek additional reimbursement from the Client Security Fund (CSF), administered by appellant State Bar of California (State Bar or the bar). Those same settling plaintiffs (as well as a trustee of a separate trust alleging wrongdoing by Statile) applied for reimbursement from the CSF, which reimbursed them for losses allegedly caused by Statile. The State Bar brought this action for reimbursement pursuant to its rights of subrogation under Business and Professions Code section 6140.5 (section 6140.5). On appeal, the bar challenges the trial court’s conclusion, following a court trial, that the bar’s right of recovery was limited to money due under the agreement settling lawsuits against Statile. We reverse the judgment.

I.

Factual and Procedural Background

A. Statile Settles Lawsuits Alleging Misappropriation of Trust Funds.

Statile was an attorney licensed to practice law in the state. In that capacity, he represented the trustees of various trusts. A trust known as the Barbettini…