The actress and her mother Dina were on their way back from an evening out at a nightclub in New York City when the dispute began - and it reportedly turned nasty back home.
Police attended the scene after receiving a 911 call from the property. Officers took a domestic incident report, but no arrests were made.
Now, Michael Lohan was revealed he called the cops at the request of his daughter.
In a statement issued to HollyScoop.com, he writes, "She (Lindsay) even asked that I record the conversation because she was being held against her will by the limo driver at Dina's instruction."
He adds, "Dina is endangering Lindsay, (sister) Ali and (brother) Cody and it has to stop. She is using the kids as pawns... Dina and her lies must stop. I will not have this done to my kids or be lied to any more."
Michael Lohan claims Dina broke his daughter's diamond bracelet in the argument over a reported unpaid loan.
Michael lashed out at his ex last month (Sep12) after she appeared on TV in America and accused him of attacking her during their marriage.
He said, "It's one lie after another; it just doesn't stop... I don't know why she comes up with these things."
Michael has also taken aim at his ex-wife over claims she made during a recent Dr. Phil TV chat, when she claimed he threw a Bible at her head on their honeymoon.
He says, "I don't remember that, and if I did throw a Bible at her she should have picked it up and read it."
Meanwhile, the actress and her mother appear to have made up after the alleged fight - they were photographed hugging each other later on Wednesday.