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Sentinel Insurance Co. Ltd. v. Tzion

United States District Court, D. Arizona

March 31, 2017

Sentinel Insurance Company, Limited, Plaintiff,
v.
Shaarei Tzion; Ahavat Israel Israel-Bucharian Jewish Community; Baruch Cohen; Elinor Cohen; and Alexander Priyev, Defendants. Shaarei Tzion-Ohel Bracha Affiliated With Bet Gavriel of Phoenix, an Arizona nonprofit corporation, Cross-Claimant,
v.
Ahavat Israel Israel-Bucharian Jewish Community, an Arizona non-profit corporation; Baruch Cohen and Elinor Cohen, husband and wife; Alexander Priyev and Sarah Priyev, husband and wife, Cross-Defendants. Ahavat Israel Israel-Bucharian Jewish Community, an Arizona non-profit corporation, Counterclaimant,
v.
Shaarei Tzion-Ohel Bracha Affiliated With Bet Gavriel of Phoenix, an Arizona nonprofit corporation, Counterdefendant.

          ORDER

          Neil V. Wake United States District Judge.

         Before the Court are two separate motions and their accompanying briefing. First is the Motion for Summary Judgment by defendant/cross-claimant Shaarei Tzion-Ohel Bracha (“Shaarei Tzion”) against defendants/cross-defendants Ahavat Israel-Bucharian Jewish Community, Baruch and Elinor Cohen, and Alexander and Sarah Priyev (collectively “Ahavat Israel”) (Doc. 51). Second is Shaarei Tzion's motion to dismiss Count IV of Ahavat Israel's “counterclaim” (actually a cross-claim) against Shaarei Tzion. (Doc. 55). Supplemental briefing at the Court's request was completed on February 24, 2017. (Docs. 90, 91, 92.)

         I. NATURE OF THE PROCEEDING AND SUMMARY OF RULINGS

         This dispute arises out of the departure of members of a Bucharian Jewish congregation to form their own worship group. The original group, Shaarei Tzion, incorporated as an Arizona non-profit corporation in 2004, and the departing group, Ahavat Israel, incorporated in 2014 when the departure happened. Without knowledge or approval of Shaarei Tzion, Ahavat Israel and its principals entered Shaarei Tzion's place of worship and “loaded into a truck all physical contents (all personal property) and moved it to another location . . . .” (Doc. 1 at 3.) “This property included several Torahs, prayer books, books, other religious artifacts, tables, chairs, and bookcases, which Shaarei Tzion has valued at $176, 040.” Id.

         The next day Shaarei Tzion made a property theft claim under its Spectrum Business Owner's Insurance Policy with Sentinel. Sentinel's investigation showed that though the Ahavat Israel defendants, including Cohen and Priyev, do not claim ownership of the property taken, they do deny Shaarei Tzion's ownership. They did take the personal property without Shaarei Tzion's consent, but they claim some kind of right to do that through the greater “Bucharian Jewish Community.” The parties have not provided the Court with a copy of the policy at issue, but it appears that to make out an insurance claim, Shaarei Tzion must prove ownership and theft.

         Faced with these conflicting claims, Sentinel brought this declaratory judgment action against both non-profit corporations and individuals to determine ownership of the property, its obligations under the policy, and its subrogation rights against the Ahavat Israel defendants if it pays the claim. (Doc. 1 at 5-6.) The Court and the parties agreed to proceed first with discovery and motions on the ownership issue. (Doc. 58.) The motions before the Court address that and a few other claims.

         In summary, the Court rules as follows at this time:

         1. Ahavat Israel has no ownership interest in any of the property. Ahavat Israel admits this.

         2. Ahavat Israel's attempt to defeat Shaarei Tzion's ownership and conversion claims based on some kind of rights in the “Bucharian Jewish Community” is beyond civil courts' authority to recognize. Those contentions, too, do not undermine Shaarei Tzion's assertion of ownership.

         3. There is a disputed question of fact whether certain books and other items are the personal property of Cohen or the property of Shaarei Tzion that Cohen was allowed to use.

         4. There are disputed questions of fact as to exactly how much and which properties were taken and their value.

         5. To the extent Sentinel pays the claim, it will be subrogated to Shaarei Tzion's claims against Ahavat Israel, Cohen, and Priyev.

         6. As between Sentinel and its insured Shaarei Tzion, the controversy pled for declaratory judgment, very generously read, has largely been resolved except for Cohen's claim to own some books and other items, which may not be significant. The parties will be directed to address whether that is a sufficient declaration of rights to enable Sentinel to continue processing the claim and the rest of this declaratory action should be dismissed.

         II. FACTUAL BACKGROUND

         Located in Phoenix, Shaarei Tzion is a Bucharian Jewish congregation and an Arizona non-profit corporation formed in 2004. (Doc. 51 at 6.) The group's membership overlaps to some extent with that of non-party Phoenix Buchori Jewish Community (“Phoenix Buchori”), also an Arizona nonprofit corporation, which was legally organized in 1998. (Doc. 67 at 8-9.) In other words, Shaarei Tzion is composed of Bucharian Jews but is a separate corporate entity from Phoenix Buchori.[1]

         Rabbi Baruch Cohen served as Shaarei Tzion's paid rabbi, manager, and spiritual leader until the spring of 2014 when a dispute soured their relationship. (Doc 51 at 6.) In April of that year, Cohen and several followers broke off from Shaarei Tzion and formed Ahavat Israel as a separate worship group. (Doc. 67 at 10; Doc. 51 at 6.) Included among them was Alexander Priyev, who had served on Ahavat Israel's board of directors since its inception. (Doc. 52-1 at 11.) Ahavat Israel incorporated in 2014 under Cohen's leadership. (Doc. 52-6 at 2.) Shaarei Tzion officially terminated Cohen on May 1, 2014. (Doc. 67 at 10; Doc. 51 at 6.) Cohen has presided as Ahavat Israel's rabbi ever since.

         For some time and throughout all of this, Shaarei Tzion has operated a house of worship at 6516 North 7th Street in Phoenix (“7th Street Synagogue”). (Doc. 51 at 6; Doc. 67 at 7.) The parties at oral argument struggled to articulate who exactly owns the 7th Street Synagogue, though both parties agree it is not Shaarei Tzion.[2] Throughout the record, Ahavat Israel generally characterizes Shaarei Tzion as a mere “property manager” (or, in at least one instance, a “quasi-property manager”) of the 7th Street Synagogue. (Doc. 91 at 5; Doc. 66 at 8.) However, it is undisputed that Shaarei Tzion operated and occupied the 7th Street Synagogue with permission from the owner at all times relevant to this case.

         At issue here are various items of personal property that were kept within that building over time. The parties dispute who owns these items. According to Ahavat Israel, “Shaarei Tzion has asserted and exercised dominion over approximately half of said property, which property continues to be located in the [7th Street Synagogue].” (Doc. 67, ¶ 9.) Ahavat Israel appears to be saying that Shaarei Tzion did exercise dominion and control over the personal property on the premises that was not taken and is still there, which they say is about half of what was there. This verbal sleight of hand does not deny that the property taken-the other half-was also under Shaarei Tzion's dominion and control. (The record contains no admissible evidence disputing that all the taken property was under Shaarei Tzion's dominion and control at the premises.)

         Ahavat Israel is vague about who owns the property taken but, in its most focused contention, asserts that it is owned by “the community of worshipers called the Bucharian Jewish Community (or the individual members thereof personally).” (Doc. 67, ¶ 9.) However, contrary to Ahavat Israel's own cross-claim (Doc. 36 at 7), Priyev himself conceded in a deposition that regardless of who does own it, Ahavat Israel does not. (Doc. 52-1 at 21.)

         On August 27, 2014, agents of Ahavat Israel, without permission from or notice to Shaarei Tzion, brought a truck to the 7th Street Synagogue and removed numerous items from the building. (Doc. 51 at 7; Doc. 67 at 10.) Ahavat Israel asserts that everything removed from the building belongs to “the community of worshipers called the Bucharian Jewish Community (or the individual members thereof personally), which has existed in one corporate form or another since 1998 . . ., and not to any corporation and certainly not to Shaarei Tzion.” (Doc. 67 at 6.) Shaarei Tzion disputes this, claiming to be the sole lawful owner of all the property removed. (Doc. 51 at 9.) Accordingly, Shaarei Tzion filed a claim for theft with Sentinel, its insurer and the plaintiff in this case, alleging that Ahavat Israel stole $176, 040 worth of items from the 7th Street Synagogue. (Doc. 52-4.) These items consisted of “several Torahs, prayer books, books, other religious artifacts, tables, chairs, and bookcases.” (Doc. 1, ¶¶ 13-14.) Ahavat Israel disputes both Shaarei Tzion's purported ownership of the items and the $176, 040 value estimation. (Doc. 15 at 2.) There is no dispute, however, that agents of Ahavat Israel removed the items from the 7th Street Synagogue on August 27, 2014, and that Shaarei Tzion was the sole legal entity occupying and operating out of that building at the time. (Doc. 52, ¶¶ 15, 20; Doc. 67 at 10; Doc. 52-5 at 2.)

         Sentinel filed this diversity action on February 6, 2015, against both Shaarei Tzion and Ahavat Israel, the Cohens, and the Priyevs seeking a declaratory judgment as to the true owner of the disputed property. Shaarei Tzion filed a cross-claim against Ahavat Israel, the Cohens, and the Priyevs alleging common law conversion and unjust enrichment. (Doc. 13.) Ahavat Israel then filed a “counterclaim” (actually a cross-claim) against Shaarei Tzion, alleging breach of settlement agreement, demand for accounting, and conversion, as well as unjust enrichment on a real estate matter beyond the insurance dispute at issue here. (Doc. 36.) Shaarei Tzion now seeks summary judgment against Ahavat Israel on its own claims of conversion and unjust enrichment concerning the personal property, ...


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