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Firm Records Victory On Behalf Of UHY LLP

August 22, 2008

SAN ANTONIO (August 22, 2008) -- Bracewell & Giuliani LLP successfully defended Mann Frankfort Stein & Lipp, CPAs, LLP (now known as UHY LLP) against claims of negligence by Plaintiffs, Gary Ervin, Timothy Ervin, and Robert Ervin.

On August 5, Judge Pozza granted the Defendant's Motion for Judgment on the Verdict.  A take nothing judgment was entered in favor of Mann Frankfort Stein & Lipp and court costs were taxed against the Ervins.

In 2001, Mann Frankfort was hired by South Texas Wholesale Records & Tapes, Inc. (South Texas) to audit the balance sheet of South Texas, a music distribution company with offices in San Antonio and Houston.  During this time, South Texas completed a recapitalization in which the Plaintiffs became minority shareholders and the Plaintiffs’ cousin, Robert Guillerman, became the majority shareholder and president of South Texas.  One year after the recapitalization it was discovered that the independent artist account was not properly stated on the balance sheet of South Texas as of August 31, 2001.  Upon learning this information, Mann Frankfort withdrew its opinion that the balance sheet fairly presented the financial position of South Texas Wholesale as of August 31, 2001.

The Ervin brothers sued Mann Frankfort for negligence, gross negligence, negligent misrepresentation, and sought punitive damages based on the claim of gross negligence.  The case went to trial on July 14, 2008 before Judge Karen Pozza, 407th District Court Judge of Bexar County, Texas.  On July 25, 2008, after two weeks of trial and one day of deliberation, the jury found that Mann Frankfort had not made a negligent misrepresentation to the Plaintiffs.  The jury’s reasoning was based on the fact that the Ervins did not rely on the work of Mann Frankfort in making their investment decisions and because South Texas had failed to provide Mann Frankfort with all of the pertinent information regarding the independent artist account.  The jury also found that the Ervins were not clients of Mann Frankfort.

The Bracewell team consisted of Trial Partners J. Clifford Gunter III and Laura B. Herring and Trial Associate Eric B. Storm.  Appellate Partner Warren Harris provided counsel on the jury charge.