I need Answers!!!

If the CA has purchased the debt from the original creditor, the CA can collect the debt. Not only can they collect the debt, but also they can report the debt to the bureaus.
Did the CA send you collection letters?
If they have done so, you should send them a debt validation letter by certified mail and get it validated before you start paying them off.

No they have not sent me anything, they have filed suit to collect. I also filed suit prior to them and have a court date tomorrow. If they don't validate the debt what actions do I have. Its been two months.

If you can produce the certified mail receipt that you have asked for debt validation, on the court date, the creditor cannot bring judgment against you unless they validate the debt. The creditor may get another court date where they may be required to proof that they own your account. If they cannot prove it, the judgment may go in your favor.

Wow, I don't even think it should go *that* far, especially with the paid-in-full letter from the OC. How can one sell nothing?

#2, they are *required* to send you a dunning letter detailing the dispute process and who the original creditor is.

Even if it doesn't go in your favor, I would file an appeal.