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A real estate development company is pushing back against two insurers seeking to dismiss its $5.3 million coverage lawsuit over extensive damage to a former motel in Spokane, Washington, arguing that the companies’ claims of improper service rely on unsupported assumptions.

In an opposition filed Oct. 5 in Washington federal court, Fortify Holdings LLC challenged Landmark American Insurance Co. and Bridgeway Insurance Co.’s attempt to throw out the case, saying the insurers have failed to demonstrate that the legal documents were improperly served.

At the center of the dispute is a disagreement over summonses processed by the Washington Office of the Insurance Commissioner (OIC). The insurers claim the documents were mistakenly directed to the wrong companies. Fortify argues that the evidence instead points to administrative errors made during the OIC’s preparation and mailing of the notice packets.

“That inferential leap misapplies the standard governing challenges to service of process, flouts the presumption of correctness afforded by the declarations of service, and is belied by the envelopes themselves, which show that each was compiled and mailed by the OIC without plaintiffs' involvement,” Fortify said in its filing.

Fortify $5.3M Motel Damage Suit Stems From Break-In

The insurance battle traces back to a May 2024 break-in at a former motel that Fortify purchased with plans to transform the property into affordable housing.

According to the company’s lawsuit, thieves stripped the building of copper wiring and plumbing, leaving behind extensive damage. Fortify estimated that repairs would cost at least $8.6 million.

The developer sought compensation under insurance policies issued by Landmark and Bridgeway, which together carried coverage limits of $10 million.

Fortify filed its coverage lawsuit in Washington state court in July, alleging that the insurers spent nearly two years investigating the loss before deciding to shift as much of the damage as possible into a period outside the policies’ coverage.

The company said the insurers ultimately paid approximately $3.3 million, leaving a substantial gap between the alleged repair costs and the amount received.

Breach of Contract and Bad-Faith Allegations

Fortify’s complaint accuses the insurers of breach of contract and bad faith, along with alleged violations of Washington’s Unfair Claim Settlement Practices Act, Consumer Protection Act and Insurance Fair Conduct Act.

The insurers deny the case should proceed in its current form and removed it to federal court in September. They subsequently asked the court to dismiss the lawsuit, arguing that Fortify failed to comply with Washington’s strict requirements for serving legal documents.

Landmark and Bridgeway contend that the summons sent to Landmark was actually directed to Bridgeway, while the document sent to Bridgeway was addressed to Landmark. They argue that the alleged errors make service defective and justify dismissal under Washington law.

Developer Says Insurance Commissioner Made Mailing Errors

Fortify maintains that it followed the applicable service rules, which require insurance companies to be served through the OIC acting as their statutory attorney-in-fact.

Even if the court finds the evidence of proper service inconclusive, the developer argues, the insurers have not produced the “clear and convincing evidence” needed to establish that service was improper.

The company says the insurers’ motion relies on the notice packets they received, in which the summonses appeared to have been switched between the two mailings. But Fortify disputes the insurers’ characterization of those packets as documents that the plaintiff itself served incorrectly on the OIC.

Instead, Fortify points to features indicating that the office assembled and mailed the materials. The packets included the OIC’s masthead, a distinct certification letter and mailing information from Olympia, Washington, where the agency is based.

The developer also highlighted another apparent clerical mistake: Landmark’s packet lacked the second page of the OIC certification.

Fortify argued that the missing page further illustrates how administrative errors could occur outside its control without compromising the parties’ due process rights.

“The packets also reveal a second clerical error not attributable to plaintiffs: Landmark's packet omits the second page of the OIC certification,” the company said. It added that whether the omission occurred at the OIC or with the insurers, it demonstrated that mistakes could happen beyond the plaintiff’s involvement.

Fortify Says Dismissal Is Unnecessary

The developer offered an alternative argument in case the court determines that service was not unequivocally proper. Fortify said it had “substantially complied” with the relevant service statutes and that dismissal would therefore be unwarranted.

It also argued that any identified defect could be corrected by serving the documents again, without prejudice to its contractual and related claims against the insurers.

The dispute now places the focus on a procedural question that could determine whether Fortify’s broader insurance allegations move forward: whether the alleged mix-up warrants ending the case or can be remedied without derailing the coverage fight.

Representatives for the parties did not immediately respond to requests for comment Friday.

Fortify Holdings LLC and CV The James LLC are represented by John D. Cadagan of Gordon Tilden Thomas & Cordell LLP and Gabriel J. Le Chevallier of Paternoster Farnell & Grein LLP.

Landmark American Insurance Co. and Bridgeway Insurance Co. are represented by Robert A. Meyers of Kennedys CMK LLP.