The last investors in a partnership that bought the six-story former McGinnis Independent Paper Co. building in downtown Spokane in the mid-1990s, then later dissolved, are seeking to fend off a foreclosure action brought by Washington Trust Bank.


The Spokane-based bank alleged in a in Spokane County Superior Court suit in December that the dissolved partnership, called S. 124 Wall Street Partners, has defaulted on loan agreements secured by the property.


In an effort to delay a foreclosure sale, the partnershipthrough building owners Rick and Karen Rubiofiled last month for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, its second such filing in the last three years.


The bank, in turn, asked the U.S. Bankruptcy Court here for relief from the automatic stay, or postponement, of litigation triggered by the partnerships filing and also asked it to dismiss the filing, claiming that the partnership has no equity in the property nor any ability to reorganize. A hearing on the motion for relief was scheduled for today, although Judge Patricia C. Williams has ruled tentatively that the automatic stay should be lifted effective March 4, which presumably would allow the bank to reschedule a foreclosure sale.


The flurry of filings in recent weeks are just the latest volleys in a year-and-a-half-long court battle over the building, which is estimated in court documents to have a value of between $600,000 and $1 million. The building is located on the west side of Wall Street, just north of the Burlington Northern Santa Fe Railway Co. viaduct, on land leased from the railroad.


Rick Rubio, who says he and his wife own all interests in the former partnership, vows to take all possible steps to retain control of the building.


We expect to find a suitable partner, and are seeking refinancing, but as a last solution, we may have to sell. That would be sad, but the court has ordered us to liquidate, he says. We have a great building. We have made significant progress.


McGinnis Independent Paper, a wholesale distributor, occupied the 70,000-square-foot building for nearly 37 years, until moving in the fall of 1996 to a building in East Spokane. S. 124 Wall Street Partners bought the building in 1994, before the Rubios became part-owners, and then leased it to McGinnis Independent Paper until that company moved. Rick Rubio says he bought into the partnership in 1996, then bought out the interest of the only other partner the following year.


Rubio says the building is only about one-third occupied, and two of the tenants, City Center Storage and Northwest Juice & Beverage, are companies that he and his wife own. He contends, though, that the buildings revenue stream has been growing and its financial prospects have been improving. He says he had hoped to continue modernizing the building for commercial-storage-and-distribution tenants that need fiber-optic communications systems and to develop the top two floors for loft-style apartments. He claims that he and his wife were dealt a severe financial blow in 2000 when a storage-center chain pulled out of an agreement to open a large operation in the downtown building.


Washington Trust Bank originally had set a foreclosure sale for the building back in June 2000, but that sale was put on hold after the Rubios filed as individuals for Chapter 11 protection, court documents indicate. S. 124 Wall Street Partners then filed for Chapter 11 protection about a month later, after a judge ruled that the downtown building wasnt part of the couples bankruptcy estate and lifted the stay preventing the bank from going after the building, the documents say. That bankruptcy case was dismissed last Dec. 14, and the bank filed its latest foreclosure action five days later.


The bank alleges that the partnership owes more than $730,000 on the building in unpaid loans, tax liens, costs, and attorneys fees, which exceeds the structures last appraised value.