Software Execs Allege Trickery by Collection Agency, Lawyers

Two software executives are suing a collection agency and its lawyers, charging that they intentionally serve people at wrong addresses so they can win easy default judgments when their opponents don’t show up.

Santa Rosa, Calif., attorney Douglas Provencher tried to persuade a San Francisco Superior Court judge last week to throw out the suit, arguing that he and his client, Collectronics Inc., are protected by California’s litigation privilege.

“First of all, none of it’s true,” Provencher said Wednesday, before about half the defendants appeared in Judge James Warren’s courtroom to ask him to strike the complaints against them. “But secondly, it’s absolutely privileged under litigation privilege.”

The underlying case dates to 2003, when a printing and packaging company assigned a collection agency to obtain money from a software company then known as Elibrium Inc. The collection agency, Collectronics, sued Elibrium twice in San Mateo County, Calif., Superior Court for collection and fraudulent conveyance, winning default judgments in both cases.

However, Elibrium claims it didn’t show up in court because it was never served, and didn’t find out about the judgments until its bank moved to seize the firm’s business account.

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