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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. So on top of trying to get the default judgments vacated — with mixed results so far — Elibrium executives Sharon Chiu and Christina Seelye sued Collectronics, its president, process server, and two of its lawyers, alleging that they conspired to collect easy judgments or coerce settlements. “If it wasn’t illegal, it would be an ingenious money-making scheme,” Chiu and Seelye’s lawyer, William Weisberg, of San Francisco’s Weisberg & Miller, said in court Wednesday. San Francisco attorney Anthony Head represented Collectronics when it first sued Elibrium, with Provencher joining in after Chiu and Seelye sought to vacate the default judgments, according to Provencher. The executives’ suit, filed in mid-December, also accuses the defendants of conspiring “to perpetrate a fraud on every court in California.” Provencher and his lawyer, Santa Rosa attorney Hans Herb, tried to persuade Judge Warren that the unlawful business practice and abuse-of-process claims against Collectronics, the process server, and Provencher and his firm should be thrown out. (Head has not yet filed a response to the suit.) Chiu and Seelye claim the defendants filed false declarations of service, which “occurred at times and places where it was impossible for service to have occurred.” Provencher and Herb argue that the declarations qualify as privileged statements made in a judicial proceeding. They have filed a motion to strike the suit under California’s law prohibiting strategic lawsuits against public participation. The anti-SLAPP law says a suit arising from certain protected activities must be dismissed unless the plaintiff demonstrates a probability that he’ll win on the merits. Provencher and Herb contend that Chiu and Seelye can’t prevail because the state Civil Code includes a privilege for any publication or broadcast made in any judicial proceeding. “The privilege applies as an absolute limit on liability regardless of whether the defendant possesses wrongful intent, motivation or malice,” Herb argued in a brief, citing the 1990 California Supreme Court case Silberg v. Anderson, 50 Cal.3d 205. Chiu and Seelye argue the defendants’ actions fall outside the litigation privilege. Provencher and his firm miss a critical distinction between conduct and communication, “and the fact that protected communications can still be used as evidence of unprotected conduct,” argued Weisberg in a brief. In court, Weisberg claimed that false service and asset levies are both conduct outside the litigation privilege, citing two court of appeal cases, Kappel v. Bartlett, 200 Cal.App.3d 1457, and Drum v. Bleau, Fox & Associates, 107 Cal.App.4th 1009. Weisberg also told Warren he has declarations from two other alleged debtors that called him to share similar experiences with the defendants. He wanted permission to ferret out more alleged victims with discovery. “This is not the sour grapes of a disgruntled litigant,” Weisberg said. “Our clients allege that they are a victim of a scheme.” Provencher, meanwhile, accused Weisberg’s clients of suing in order to interfere with his representation and extort a global settlement on the underlying cases. “This is a frivolous lawsuit filed by disgruntled litigants,” Provencher said. If a false declaration were filed, he said in a later interview, the court or a district attorney could act, “but a third party can’t sue you for that.” Otherwise, any time a party lied or got something wrong in a case — and there are always two stories presented in lawsuits — “you can imagine you’d have lawsuit after lawsuit,” Provencher added. Warren didn’t tip his hand Wednesday, but took the motions under submission in Chiu v. Head, 437106.

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