Stephen J. Tully

Stephen Tully is a seasoned litigator with a broad base of litigation expertise and significant trial experience. His practice focuses on business litigation, with a particular emphasis in accountants, legal and professional liability cases, where he has been at the forefront of major cases and developments. He has litigated hundreds of business cases involving a variety of issues, including purchases and sales, corporate, business, taxation, bankruptcy, shareholder disputes, and lending.

Mr. Tully has tried many cases to verdict and has successfully obtained judgments in favor of his clients by way of other procedures, including a number of summary judgments on such issues as the statute of limitations, duty, the statute of frauds, and privilege.

Mr. Tully has also handled dozens of appeals before the Courts of Appeal, Supreme Court of California, and other jurisdictions.

Trials

• PNY Technologies v. Miller, Kaplan, Arase & Co.(tried with Trang Tran): The plaintiff, a licensee under a license agreement with a large technology company, alleged that the auditor Mr. Tully represented had overstated the plaintiff’s royalty obligations during an examination of the license agreement, and caused $30 million in damages. Mr. Tully tried the case in federal court in San Francisco, and the jury returned a unanimous verdict in favor of Mr. Tully’s client. The Ninth Circuit Court of Appeal affirmed the jury’s defense verdict.
• Conquest International v. HKG (tried with Trang Tran): Plaintiffs alleged a market valuation prepared by Mr. Tully’s client caused them to sell a company for $20 million less than its value. Plaintiffs claimed damages of $26 million. Mr. Tully’s client prevailed on all counts at trial, after which plaintiffs paid defense fees and costs.
• Mehcad Brooks v. Innovative Artists and Literary Agency Inc.: Mr. Tully defended his clients, a talent agency and one of its agents, against claims by a former client of copyright infringement. After a three-week arbitration, Mr. Tully’s client prevailed on all counts.
• Reliable Properties v. Jennings Steine & Co. (and related cross-action): After a two week trial, Mr. Tully’s clients in this lost tax opportunity case prevailed. Based on a cross-complaint brought by Mr. Tully’s clients, the president of the plaintiff paid the attorneys fees of Mr. Tully’s client.
• Smylie v. Mann Gelon (and related cross-action): The plaintiff alleged the accounting firm Mr. Tully represented failed to detect an embezzlement by the plaintiff’s employee, resulting in $5 million of damages. Mr. Tully filed a cross-complaint on behalf of his client seeking to recover attorneys’ fees from the plaintiff. After years of litigation, on the third day of trial and during Mr. Tully’s cross-examination of the plaintiff, the plaintiff dismissed the case with prejudice in exchange for the agreement of Mr. Tully’s client not to pursue the cross-complaint.

Appeals

• Robert P. Mosier v. Stonefield Josephson, Inc: A court-appointed receiver for a company, which former directors and managers allegedly used to defraud investors in a Ponzi scheme, brought an action against Mr. Tully’s client, which had audited the company, alleging damages of over $300 million. The Ninth Circuit Court of Appeals affirmed summary judgment in favor of Mr. Tully’s client, based upon admissions by the receiver under Mr. Tully’s cross examination that no one relied on the audits, and holding the plaintiff’s damage claims were speculative and any recovery would result in unjust enrichment. 

• Czajkowski v. Haskell & White: Mr. Tully’s client was alleged to have negligently performed an audit that caused the plaintiff millions of dollars of tax damages. In one of the leading decisions on the topic of the running of the statute of limitations in a professional liability case, the California Court of Appeal affirmed judgment in favor of Mr. Tully’s client. The Court held the plaintiff bore the burden to prove he was without the ability to discover his claims within the limitations period, and had failed to meet his burden by sitting on his claims years after he had “he opportunity to obtain knowledge from sources open to investigation.”
• International Engine Parts, Inc. v. Feddersen & Co.: A formerly bankrupt company brought suit against its former accountants, alleging the accountants had failed to advise the company concerning IRS requirements for the maintenance of a tax strategy called a domestic international stock corporation, resulting in millions of dollars of taxes which would otherwise have been avoided. Relying on and quoting Mr. Tully’s cross-examination of the plaintiff’s president, the Court of Appeal affirmed judgment in favor of Mr. Tully’s client. The Court held the company was judicially estopped from pursuing its malpractice claims against Mr. Tully’s client by the inconsistent positions it had taken in its bankruptcy reorganization proceedings, in which company attributed its failure to qualify for advantageous tax treatment to its former officer’s negligence, and because the company did not disclose to its creditors the claim against accountants for those lost tax benefits.
• Richard B. LeVine, Inc. v. Higashi: A partner in medical partnership sued Mr. Tully’s client, the partnership’s accountant, alleging fraud, negligence, and conspiracy in connection with the allocation of partnership’s profits. The Court of Appeal affirmed judgment in favor of Mr. Tully’s client, finding the plaintiff’s claims were precluded by res judicata principles based on an earlier arbitration against his partners in which the plaintiff asserted and lost the same claims he alleged against Mr. Tully’s client. The Court also found the accountant’s duty ran solely to the partnership, and it owed no duty to the plaintiff.
• Neu-Visions Sports, Inc. v. Soren/McAdam/Bartels: A developer brought an action against Mr. Tully’s client, a property owner’s accounting firm, for misrepresentations in connection with a lease for a proposed ice and roller hockey arena. The Court of Appeal affirmed judgment in favor of Mr. Tully’s client, finding the accountant’s predictions about value of property were mere expressions of opinion as to a future events, and therefore not actionable.
• Carlson v. Lorenz: Mr. Tully obtained judgment in Missouri Bankruptcy Court on behalf of his accountant-client, on the grounds the plaintiff-trustee in bankruptcy lacked standing to sue for the damages he sought, as they had been suffered by creditors of the bankruptcy estate, not the estate itself. On appeal, the District Court in Missouri affirmed judgment in favor of Mr. Tully’s client.

Practice Areas

Community & Professional

• American Bar Association, Member
• Association of Southern California Defense Counsel, Member
• Los Angeles County Bar Association, Member
• New York State Bar Association, Member
• Washington D.C. Bar Association, Member