State Appellate Court Reinstates in Part Methodist Conference's Claims Against SMU

One of the consequences of theological divisions within denominations over hot button issues such as same sex marriage, female pastors, and other doctrinal disputes is an increasing body of case law relating to control of church property and institutions. Cases involving Episcopal churches have been particularly prominent, as noted by the Pew Research Center more than 10 years ago and illustrated by a 2021 set of certiorari denials by the U.S. Supreme Court as mentioned at the end of this SCOTUSblog post.

One of the ongoing such disputes is between the South Central Jurisdiction Conference of the United Methodist Church and Southern Methodist University (SMU). SMU's Board of Trustees voted 34-1 in 2019 to remove all references to the Conference from its Articles of Incorporation, including removing the Conference's right of approval over amendments to SMU's articles of incorporation and its authority to elect members of the Board. The Conference promptly filed a lawsuit in Texas state court challenging the amendments, but SMU prevailed at the trial court level against all of the Conference's claims through a combination of dismissals and summary judgment.

Now the Court of Appeals of Texas, Fifth District has weighed in, reinstating many of the the Conference's claims and directing that they be tried. Here is the court's conclusion:

We conclude that the Conference, as SMU's controlling parental entity, had standing to challenge the 2019 Amendments under the 1996 Articles, which are lawful provisions pursuant to [Texas Business Organizations Code (TBOC)] § 22.207. We further conclude the trial court erred in granting summary judgment on the Conference's TBOC § 4.007 claim [relating to allegedly filing a materially false certificate of amendment] and in dismissing the Conference's claims for breach of contract and declaratory-judgment claims (a), (b), (c), and (f).

We partially sustain the Conference's first and third issues and conclude the trial court erred in dismissing the Conference's claim for breach of contract and for declaratory judgment asserted in paragraph 64, subparagraphs (a), (b), (c), and (f) of the Conference's second amended petition. We also sustain the Conference's sixth issue and conclude the trial court erred in granting summary judgment against the Conference on its claim under § 4.007 of the TBOC. In all other respects, we affirm the trial court's judgment.

We remand this cause to the trial court for further proceedings consistent with this opinion.

It is worth noting that the appellate court found the dispute did not turn on a dispute over church doctrine, but instead over the proper application of relevant corporate documents, and so was proper for the court to resolve.

Lloyd Mayer