Michigan Appeals Court: Ecclesiastical Proceedings Toll Statute of Limitations; Hierarchical Structure Poses Factual Question

In Chabad-Lubavitch of Michigan v. Schuchman, (MI App., May 22, 2014), a Michigan appellate court reversed a trial court's dismissal of a suit brought by Chabad-Lubavitch of Michigan in its property dispute with a local Chabad organization. Plaintiff claimed that property of Bais Chabad Torah Center of West Bloomfield should have been titled in the name of the Michigan parent entity rather than in the name of the local organization. The property claim was apparently first raised in a rabbinic panel proceeding as a counter-claim after the head of the West Bloomfield Chabad center filed complaints against the rabbi who heads the Michigan parent organization. The dispute has already been the subject of  five decisions by Jewish rabbinic panels, all of which ruled that title should be in the name of the parent group. However the West Bloomfield Chabad center refused to comply and the rabbinic court gave the parent body permission to file this civil suit.

The court held that the ecclesiastical abstention doctrine would require it to defer to the decision of the Chabad rabbinic determinations if Chabad-Lubavitch is a hierarchical organization. The court concluded, however, that "there is a genuine issue of material fact regarding whether Chabad-Lubavitch is hierarchical in regard to property matters, and thus, whether the ecclesiastical abstention doctrine applies in this case."

In the course or reaching this conclusion, the court made interesting rulings on defendants' statute of limitations defense. It held that "the applicable statutes of limitation were equitably tolled during the time that the parties were engaged in the mandatory ecclesiastical dispute resolution process."  It ruled that prior precedent refusing to toll statutes of limitation while parties are engaged in voluntary arbitration does not apply because the parties were involved in Chabad-Lubavitch's mandatory ecclesiastical procedure. But that left the question of when tolling ended:

[D]efendants dispute the date that the ecclesiastical dispute resolution process was concluded. Plaintiff maintains that the process was not complete until it received permission to bring a lawsuit in civil court.... Defendants maintain that plaintiff should have sought permission earlier so as to comply with the applicable statutes of limitations..... However, the parties’ dispute regarding when the internal procedure was final constitutes a factual question that is not appropriate for resolution by this Court on appeal. Moreover, resolution of the parties’ disagreement about when the internal dispute resolution process was final would require this Court to interpret religious doctrine or polity. Engaging in such an interpretation would be improper because the First Amendment “requires that civil courts defer to the resolution of issues of religious doctrine or polity by the highest court of a hierarchical church organization.” ... Accordingly, we are required to defer to plaintiff’s claim that the procedure was not final until it received permission to file a civil lawsuit.... Therefore, plaintiff’s complaint was timely filed.