TX Supreme Court Allows Case by UMC to Continue Against SMU

Case revolves around changes to school’s articles of incorporation in 2019 to remove UMC’s control.

Southern Methodist University / Video screenshot @SMU

Last week, the Texas Supreme Court ruled that the long-running case between Southern Methodist University (SMU) and the United Methodist Church’s South Central Jurisdictional Conference (SCJC) may continue.

The court decided that the Texas Business Organizations Code allows the SCJC to sue SMU for “engaging in conduct that its articles of incorporation do not permit.” It also held that Conference could pursue its breach-of-contract claim as a third-party beneficiary of SMU’s articles of incorporation.

The court remanded the case to the trial court for further proceedings in the breach-of-contract and declaratory judgment claims.

The case started in 2019 when SMU amended its articles of incorporation to purportedly take away the SCJC’s authority to approve trustee nominations and school land sales and leases.

The SCJC claims it founded SMU in 1911 and placed the assets of SMU in trust for the benefit of the SCJC in 1924. SMU’s restated articles of incorporation adopted in 1996 again acknowledged its relationship with the SCJC.

After the UMC voted to approve the “traditional plan” which continued the denomination’s ban on the ordination and marriage of people who identify as LGBTQ in 2019, SMU initiated the amendments to remove the SCJC’s authority.

But in 2024, the General Conference of the UMC voted overwhelmingly to overturn that measure, effectively affirming and including persons who identify as LGBTQ into all areas of church life and function.

The SCJC sued SMU regarding the validity and effectiveness of its 2019 amended articles of incorporation.

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One question in the case was whether the court had jurisdiction over ecclesiastical matters.

The Becket Fund for Religious Liberty filed an amicus, or friend of the court, brief in the case because it is interested in the outcome and application of the ecclesiastical abstention doctrine and the precedent it may set.

The Becket Fund’s brief sided with the church over SMU, stating, “Over one hundred years ago, the Church created and controlled SMU to carry out its religious mission, and memorialized that decision in documents binding SMU to the Church ‘forever.’ Texas courts are bound to recognize and accept that decision.”

Justice Debra Lehrmann authored the opinion of the court, in which she wrote about the ecclesiastical abstention doctrine. “We agree with the court of appeals that resolving this dispute does not require us to impermissibly opine on matters of church doctrine and that we therefore have jurisdiction over the Conference’s claims,” she said.

“[T]he doctrinal differences that purportedly led SMU to amend its articles have no bearing on our resolution of this dispute,” she added.

The court was able to resolve the dispute in the case by applying neutral principles of law found in the state’s Business Organizations Code.

While not in a contractual relationship with SMU via the articles of incorporation, SCJS is a third-party beneficiary of the contract between SMU and the State of Texas created by SMU’s nonprofit articles of incorporation, the court said. Therefore, the SCJC may sue SMU as a third-party beneficiary of the contract, Lehrmann reasoned.

Justice Jane Bland dissented to the court’s breach-of-contract reasoning, claiming the majority allowed the breach-of-contract claim “under a newly minted theory that a party may claim third-party beneficiary status through the State’s prerogative to issue a nonprofit charter.”

“A stretch found nowhere in existing law, the Court permits a private party to exercise enforcement powers granted to the State while obtaining compensatory damages in the process. None of the statutes governing nonprofits suggest private contract rights are a follow-on benefit to nonprofit charter provisions,” Bland wrote.

In response to the Texas Supreme Court’s decision, the SCJC wrote, “Today’s favorable opinion from the Court supports our original position that SMU must seek the approval of the SCJ when making changes to its amendments.”

“Our desire is to see this matter brought to a peaceful resolution so that our historic connection to the university can be fruitfully maintained for future generations,” it added.

“SMU remains proud of its Methodist heritage as we move forward with advancing SMU’s mission and providing enriching education for all students,” Megan Jacob, SMU’s director of media and community relations, told The Texas Tribune.

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