Motricity files suit against exec who was key in its InfoSpace acquisition

RESEARCH TRIANGLE PARK, N.C. — Having laid off hundreds of workers, Motricity has virtually abandoned Durham – once its home base – for the splendors of suburban Seattle. However, the company that has raised close to a half-billion dollars in venture capital has not been able to escape its troubling legacy.

Motricity’s latest battle is a legal one. The developer of mobile content services is suing the man who orchestrated the deal that ultimately led to Chairman Ryan Wuerch’s decision to go west.

Steve Elfman ran the mobile business unit of InfoSpace and helped engineer Motricity’s $135 million acquisition of that group just a year ago. Elfman was supposed to stay on for two years as part of the deal. Instead, he bolted in March for a top executive position at Sprint.

Motricity filed suit against Elfman in a Washington state court, saying that he deceived Motricity. He practiced “duplicitous conduct” and enriched himself at the expense of Motricity, according to the suit that was first reported by a Kansas City newspaper.

Elfman knew that Motricity would buy the InfoSpace group only if he agreed to stay on, according to the Kansas City Business Journal.

Elfman is in charge of network operations and wholesale at Sprint.

The newspaper learned of the lawsuit when it found in a Securities and Exchange Commission finding that Sprint agreed recently to pay Elfman’s legal expenses.

“We opted to reimburse the legal fees because we did not think the suit would have been brought if he hadn’t come to work for Sprint,” Sprint spokesperson Matt Sullivan told the paper. He noted that Elfman “continues to have our full support.”

Interestingly, shortly after Elfman bolted from Motricity, CEO Ryan Wuerch told a mobile news site that the move could actually help Motricity.

“He’s the president at Sprint, which is a customer. … No, it was never a good InfoSpace customer, but for Motricity it has been a customer for a while,” Wuerch said.