Southern Methodist University and Paul J. Ward v. South Central Jurisdictional Conference of the United Methodist Church and Bishop Scott Jones

Supreme Court of Texas

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No. 23-0703

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Southern Methodist University and Paul J. Ward,

Petitioners,

v.

South Central Jurisdictional Conference of the United Methodist

Church and Bishop Scott Jones,

Respondents

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On Petition for Review from the

Court of Appeals for the Fifth District of Texas

═══════════════════════════════════════

Argued January 15, 2025

JUSTICE LEHRMANN delivered the opinion of the Court, in which

Chief Justice Blacklock, Justice Boyd, Justice Devine, Justice Busby,

Justice Huddle, Justice Young, and Justice Sullivan joined in full, and

in which Justice Bland joined except as to Part IV(B).

JUSTICE YOUNG filed a concurring opinion, in which Justice

Devine and Justice Sullivan joined in full, and in which Chief Justice

Blacklock joined as to Parts I, III, and IV.

JUSTICE BLAND filed an opinion dissenting in part.

Southern Methodist University, founded over a century ago by

predecessors to the South Central Jurisdictional Conference of the

United Methodist Church, is a renowned institution of higher learning.

It is also a nonmember, nonprofit corporation. Until recently, SMU’s

articles of incorporation consistently reflected that the university is

“owned” and “controlled” by the Conference and that the Conference’s

approval is required to amend those articles. However, in 2019, SMU’s

board of directors, without the Conference’s approval, amended SMU’s

articles of incorporation to delete all references to the Conference as well

as provisions detailing the board’s composition and election. After SMU

filed the amended articles with the Texas Secretary of State, the

Conference sued, seeking a declaration that the 2019 amendments are

void and asserting claims for breach of contract and filing a materially

false instrument.

According to SMU, Texas corporations law forecloses the

Conference’s suit because, as a nonmember of SMU, the Conference

cannot complain that the board exceeded its authority under the articles

of incorporation and has no contractual rights arising from those

articles. The trial court dismissed the Conference’s claims for

declaratory judgment and breach of contract under Texas Rule of Civil

Procedure 91a and granted summary judgment on the false-filing claim.

The court of appeals reversed in relevant part.

We hold that the Conference has statutory authority to sue SMU

to enforce its rights under the articles and the Texas Business

Organizations Code and that the Conference may pursue, at least at this

stage, its breach-of-contract claim as a third-party beneficiary of SMU’s

articles of incorporation. However, we agree with SMU that it is entitled

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to summary judgment on the false-filing claim. Accordingly, we affirm

the court of appeals’ judgment in part and reverse it in part.

I. Background

In 1911, SMU was organized as a corporation for the purpose of

the establishment, maintenance, and support of an institution of higher

learning. In SMU’s original charter, the incorporators expressed their

intent for the established university “to be owned, controlled and

managed by the Texas Conferences of the Methodist Episcopal Church

South,” a predecessor-in-interest to the respondent in this case. The

charter named the initial trustees and provided that their successors

would be selected in the manner determined by the Texas Conferences.

The charter was amended in 1916 to state that the corporation

was “not organized for the purpose of pecuniary gain or profit” and to

prescribe various requirements for the composition, election, and terms

of the board of trustees. The 1916 amendment also gave approval rights

over charter amendments to the controlling conference, stating:

No amendment to this charter shall ever be made unless

the same shall have been first affirmatively authorized and

approved by the General Conference of the Methodist

Episcopal Church, South, or by some authorized agency of

said General Conference.

The charter—or, in modern parlance, articles of incorporation or

certificate of formation 1—has been amended numerous times, and in

1 The Business Organizations Code, which took effect in 2006, replaced

the term “articles of incorporation” with “certificate of formation.” See Act of

May 13, 2003, 78th Leg., R.S., ch. 182, § 1, sec. 3.001(a), 2003 Tex. Gen.

Laws 267, 319 (requiring the filing of a “certificate of formation” to form a

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1968 it was amended to vest ownership and control in the respondent,

the South Central Jurisdictional Conference of the United Methodist

Church. As amended in 1996 with the Conference’s approval, SMU’s

articles continued to reflect:

• the corporation was formed for the establishment, maintenance,

and support of an institution of higher learning “to be forever

owned, maintained and controlled by the” Conference;

• the corporation is nonprofit and has no members;

• the Conference has the right to elect and remove for cause

members of the board of trustees;

• the qualifications of the trustees would be those “fixed by the

Discipline of The United Methodist Church for the Trustees of its

educational institutions” or, if none existed, would be “fixed by”

the Conference;

• the Conference’s consent is required to sell or lease “campus

property and such other property as may be used for the conduct

of the business of the corporation”; and

• no amendment to the articles “shall ever be made” unless first

authorized and approved by the Conference or an authorized

agency thereof.

The 1996 articles remained the operative governing document when

SMU filed the 2019 amendments that gave rise to this suit.

In 2019, doctrinal disagreements led some Methodist entities to

disaffiliate from the national Church. SMU’s board of trustees voted

34-to-1 to amend the 1996 articles to, among other things, delete all

references to the Conference and all provisions addressing the

composition of the board. The Conference did not “authorize” or

corporation or other filing entity). SMU’s formation document is currently

titled articles of incorporation. We use the terms interchangeably.

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“approve” the amended articles, which SMU nevertheless filed with the

secretary of state on November 15, 2019, along with a certificate of

amendment. As amended, SMU’s articles of incorporation no longer

reflect that it is “owned, maintained and controlled by” the Conference;

that the Conference has any rights with respect to the qualifications,

election, and removal of trustees; that the Conference’s consent is

required with respect to the sale or lease of real property; or that the

Conference’s approval is required to amend the articles.

The Conference sued SMU in response to what it deemed SMU’s

“unauthorized acts.” In its live pleading, the Conference brings

declaratory-judgment claims regarding the validity and effectiveness of

the 2019 amendments to the articles, seeking declarations that (1) the

1996 articles are SMU’s “effective Articles of Incorporation . . . and all

actions taken by SMU or its representatives in violation of such articles

are void”; (2) the 2019 amendments, and any actions taken by SMU in

reliance thereon, are void; (3) the Conference “retains all its rights, and

its long-standing and permanent relationship with SMU, guaranteed by

SMU’s governing documents”; and (4) any amendment to the 1996

articles must comply with the terms thereof, including that such an

amendment “must first be authorized and approved by” the Conference.

The Conference also asserts that SMU’s actions constituted a breach of

contract and claims that, in filing a certificate of amendment with the

secretary of state averring that the 2019 amendments had been

approved “in the manner required by [the Business Organizations C]ode

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and the governing documents of the entity,” SMU filed a “materially

false” instrument in violation of Section 4.008 of the Code. 2

SMU moved to dismiss the claims under Texas Rule of Civil

Procedure 91a. 3 With respect to the claims seeking to enjoin or declare

void the 2019 articles, SMU argued that the Conference is not among

the limited group of persons to whom the Code 4 grants authority to sue

to enjoin SMU’s allegedly ultra vires acts—that is, SMU’s corporate

actions that violated its governing documents. SMU further argued that

the claims seeking damages fail because the Conference alleges no

monetary harm, that the contract claim fails because no enforceable

contract exists as a matter of law between the Conference and SMU, and

that the false-filing claim under Section 4.008 fails because the

complained-of statement in the certificate of amendment is a conclusion

2 The Conference asserted several other claims that are not before us

and on which we therefore express no opinion. Specifically, the Conference

sought additional declarations regarding whether SMU’s governing documents

and the 1922 deed conveying to SMU 133 acres of the Conference’s real

property (where the school’s campus is located) created a trust and fiduciary

relationship between the parties, and it asserted claims for breach of fiduciary

duty and promissory estoppel. The trial court granted SMU’s motion to

dismiss the fiduciary-duty and promissory-estoppel claims under Rule 91a,

and it granted summary judgment for SMU on the claims for additional

declaratory relief. The court of appeals affirmed as to all these claims, 674

S.W.3d 334, 372, 383 (Tex. App.—Dallas 2023), and the Conference did not

petition this Court for review. Accordingly, those portions of the court of

appeals’ judgment are final. See TEX. R. APP. P. 53.1 (“A party who seeks to

alter the court of appeals’ judgment must file a petition for review.”).

3SMU ultimately filed three motions to dismiss, filing a successive

motion each time the Conference amended its petition.

4Unless otherwise stated, “Code” refers to the Texas Business

Organizations Code.

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of law that cannot be “false.” The trial court granted the motion as to

the declaratory-judgment and breach-of-contract claims but denied it as

to the false-filing claim. However, the trial court subsequently granted

SMU’s motion for summary judgment as to that claim and rendered a

final judgment in SMU’s favor. The Conference appealed. 5

The court of appeals reversed in pertinent part and remanded the

case to the trial court. 674 S.W.3d 334, 383–84 (Tex. App.—Dallas

2023). First, although neither party raised the issue, the court sua

sponte addressed whether it had subject matter jurisdiction over the

case because the issues “potentially involve matters of church doctrine.”

Id. at 350; see Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 605–06

(Tex. 2013) (“Courts do not have jurisdiction to decide questions of an

ecclesiastical or inherently religious nature, so as to those questions

they must defer to decisions of appropriate ecclesiastical decision

makers.”); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.

1993) (explaining that issues of subject matter jurisdiction may be

raised by the court sua sponte). Concluding that church doctrine need

not be considered to resolve issues related to the validity of SMU’s

amended articles of incorporation, the court of appeals determined it

had jurisdiction. 674 S.W.3d at 351.

5 While SMU’s motion to dismiss was pending, Bishop Scott Jones, the

member of SMU’s board of trustees who cast the sole negative vote to amend

the 1996 articles, intervened in the suit seeking injunctive relief. When the

board then terminated his membership, he added claims for declaratory relief

and brought third-party claims against SMU’s general counsel. The trial court

granted SMU’s motion to dismiss Bishop Jones’s claims under Rule 91a, and

the court of appeals affirmed. 674 S.W.3d at 383. Bishop Jones did not petition

this Court for review, and his claims are not before us. TEX. R. APP. P. 53.1.

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Next, the court of appeals considered SMU’s argument that the

Conference, as a nonmember of SMU, lacks statutory authority to

complain of SMU’s allegedly ultra vires acts. 6 The court held that, while

the Code forecloses the Conference from challenging an action of SMU

as invalid “merely because it is ultra vires[,] . . . if the act breaches some

other legal duty imposed on the corporation in addition to being ultra

vires, it may be challenged on that additional ground.” Id. at 361. The

Conference pleaded violations of such additional duties, including via its

breach-of-contract and false-filing claims. Id. at 362. The court of

appeals went on to conclude that the pleadings sufficiently supported

the Conference’s breach-of-contract claim, rendering the trial court’s

dismissal of that claim improper, and that the Conference presented

more than a scintilla of evidence on its false-filing claim, defeating

summary judgment for SMU on that claim. Id. at 362–68, 374–81.

Ultimately, the court of appeals remanded for further proceedings

on the declaratory-judgment claims regarding the validity of the 2019

amendments to SMU’s articles of incorporation, the breach-of-contract

claim premised on SMU’s alleged violations of the 1996 articles, and the

false-filing claim. We granted SMU’s petition for review.

6 The parties and the court of appeals label this issue as one of statutory

standing, though they correctly recognize that it does not invoke “standing” in

the constitutional, jurisdictional sense. 674 S.W.3d at 356–57. Rather, the

question is whether the Conference “falls within the class of

[persons] . . . authorized to sue,” which may deprive the Conference of the right

to relief but does not affect the courts’ jurisdiction to grant it. Pike v. Tex. EMC

Mgmt., LLC, 610 S.W.3d 763, 774 (Tex. 2020) (alteration in original) (quoting

Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128

(2014)). To avoid confusion, we will refrain from describing the issue presented

as one involving standing.

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II. Subject Matter Jurisdiction

Like the court of appeals, we begin by considering whether we

have jurisdiction over the Conference’s claims, as the First Amendment

“prohibit[s] civil courts from inquiring into matters concerning

‘theological controversy, church discipline, ecclesiastical government, or

the conformity of the members of a church to the standard of morals

required of them.’” Masterson, 422 S.W.3d at 601 (quoting Serbian E.

Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713–14 (1976)). In

Masterson, which involved a church-property dispute between a local

Episcopal parish and the regional diocese from which the parish sought

to withdraw due to doctrinal differences, we confirmed that courts in

Texas should apply the “neutral principles methodology” to resolve such

disputes. Id. at 607. Under that approach, courts “do not have

jurisdiction to decide questions of an ecclesiastical or inherently

religious nature, so as to those questions they must defer to decisions of

appropriate ecclesiastical decision makers.” Id. at 605–06. But courts

“apply neutral principles of law to non-ecclesiastical issues involving

religious entities”—“such as land titles, trusts, and corporate formation,

governance, and dissolution”—“in the same manner as they apply those

principles to other entities and issues.” Id. at 606. We explained in

Masterson that this methodology “respects and enforces the manner in

which religious entities and their adherents choose to structure their

organizations and their property rights.” Id.

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. To

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be sure, “courts must be careful not to intrude upon internal matters of

church governance.” Westbrook v. Penley, 231 S.W.3d 389, 397 (Tex.

2007). In Milivojevich, for example, the United States Supreme Court

held that the First Amendment foreclosed court inquiry into “whether

the decisions of the highest ecclesiastical tribunal of [the hierarchical

Serbian Orthodox Church] complied with church laws and regulations,”

specifically, the Serbian Orthodox Church’s constitution and penal code.

426 U.S. at 713; see also In re Diocese of Lubbock, 624 S.W.3d 506, 509

(Tex. 2021) (holding that courts lacked jurisdiction over a Catholic

deacon’s defamation claims arising out of the Diocese’s public

statements regarding an internal investigation of its clergy because

resolving the claims would both require an evaluation of whether the

Diocese properly applied canon law and encroach on the Diocese’s

decision to investigate its clergy in accordance with its own internal

policies). This case requires no such inquiry. Though a religious entity,

the Conference chose to establish SMU as a nonprofit corporation

subject to Texas corporations law. At least in this case, its claims may

be resolved by looking solely to Texas statutes and SMU’s articles of

incorporation.

Relatedly, the doctrinal differences that purportedly led SMU to

amend its articles have no bearing on our resolution of this dispute. Far

from interfering with ecclesiastical matters, exercising our jurisdiction

here “respects and enforces the manner in which [the] religious entities

[at issue] and their adherents ch[o]se to structure their organizations

and their property rights.” Masterson, 422 S.W.3d at 606.

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The Conference does not argue otherwise; indeed, the Conference

is the entity seeking relief from the courts, which of course may grant

such relief only if they have jurisdiction over the dispute and the parties.

See CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996) (“A court must

possess both subject matter jurisdiction over a case and personal

jurisdiction over a party to issue a binding judgment.”). In an amicus

brief submitted in support of the Conference, the Becket Fund for

Religious Liberty asserts that this case cannot be resolved without

unconstitutionally impeding the Conference’s ability to manage its own

affairs and that the courts must therefore “enforce” the Conference’s

“‘forever’ control over SMU” by “declar[ing] invalid” “SMU’s unilateral

effort to circumvent that control.” For two reasons, we disagree that

these arguments, whatever their force in other contexts, summarily

require a ruling in the Conference’s favor here.

First, as discussed, we can resolve this case by applying Texas

statutes and SMU’s articles of incorporation to only nonecclesiastical

matters. Second, if courts could not decide the case without “resolv[ing]

a religious question or imped[ing] the church’s authority to manage its

own affairs,” Diocese of Lubbock, 624 S.W.3d at 509 (internal quotation

marks omitted), the result would be dismissal for lack of jurisdiction,

not rendition of judgment granting the Conference (or any other party)

affirmative relief, see id. at 519 (holding that the

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ecclesiastical-abstention doctrine required dismissal of the case for want

of jurisdiction). 7

The Becket Fund argues in effect that, based on substantive

principles of First Amendment law, the statutes on which SMU relied to

amend its articles of incorporation—and which authorized the secretary

of state to accept the amended articles for filing—violate the First

Amendment as applied to the Conference. Cf. Kedroff v. Saint Nicholas

Cathedral of Russian Orthodox Church of N. Am., 344 U.S. 94, 117–21

(1952) (holding that a New York statute, which divested Russian

Orthodox churches in New York from governance by the Moscow synod

and required that those churches be governed in the future by the

ecclesiastical body and hierarchy of the American metropolitan district,

violated the constitutional prohibition against interference with the

exercise of religion). Whatever the merits of this contention, which the

Conference has not itself raised, even on the argument’s own terms we

would have authority to “enforce” the Conference’s control over SMU,

which we could not do without subject matter jurisdiction.

Satisfied of our jurisdiction, we turn to the merits of the case.

III. Standard of Review

We review summary judgments and Rule 91a dismissal orders

de novo. City of Dallas v. Sanchez, 494 S.W.3d 722, 724 (Tex. 2016)

(Rule 91a); Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.

7 Amicus First Liberty Institute advocates for that result, agreeing with

the Becket Fund that this dispute poses a religious question that intrudes on

matters of church governance but arguing that the only possible disposition is

dismissal for lack of jurisdiction.

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2005) (summary judgment). Dismissal under Rule 91a is proper “if the

allegations, taken as true, together with inferences reasonably drawn

from them, do not entitle the claimant to the relief sought.” TEX. R. CIV.

P. 91a.1. To obtain summary judgment, the movant must demonstrate

“that no genuine issue of material fact exists and [it] is entitled to

judgment as a matter of law.” Austin Tr. Co. v. Houren, 664 S.W.3d 35,

42 (Tex. 2023); TEX. R. CIV. P. 166a(c).

IV. Analysis

SMU presents three main issues in this Court. First, SMU

reiterates that the Conference lacks authority to complain of SMU’s

allegedly ultra vires acts, arguing that the court of appeals

impermissibly expanded the statutory list of persons authorized to bring

such suits. Second, SMU contends that the Conference’s

breach-of-contract claim independently fails because a nonprofit

corporation’s articles of incorporation do not constitute a binding

contract enforceable by a nonmember. Third, SMU asserts that the

Conference’s false-filing claim fails as a matter of law. We address each

issue in turn.

A. The Conference’s Authority to Sue SMU

SMU’s primary argument is that the Conference lacks authority

to bring its remaining declaratory-judgment and breach-of-contract

claims, all of which stem from SMU’s alleged ultra vires act of amending

its articles of incorporation without Conference approval. Under

Section 20.002 of the Code, which applies to both for-profit and nonprofit

corporations, a corporate act “is not invalid because the act or transfer

was” ultra vires—that is, “beyond the scope of the [corporation’s]

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purpose” or “inconsistent with a limitation on the authority of an officer

or director” as that purpose or limitation “is expressed in the

corporation’s certificate of formation.” TEX. BUS. ORGS. CODE

§ 20.002(b). However, “[t]he fact that an act or transfer is beyond the

scope of the expressed [corporate] purpose . . . or is inconsistent with an

expressed limitation on” an officer’s or director’s authority “may be

asserted” in certain proceedings, specifically, “in a proceeding: (1) by a

shareholder or member against the corporation to enjoin the

performance of an act or the transfer of property by or to the corporation;

(2) by the corporation [directly or derivatively] against an officer or

director” for exceeding the scope of his authority; or (3) by the attorney

general to, among other things, enjoin performance of an unauthorized

corporate act. Id. § 20.002(c).

SMU argues that subsection (b) generally forecloses a challenge

to the validity of a corporate act—here, the 2019 amendments to SMU’s

articles of incorporation—on the ground that the corporation’s officers

exceeded the scope of their authority as expressed in those

articles—here, by amending the articles without the Conference’s

approval. And while subsection (c) contains certain exceptions to that

prohibition for a limited class of persons, SMU asserts, the Conference

does not fall within the scope of any of those exceptions—it is not a

shareholder or member, the corporation itself, or the attorney general.

See Scudday v. King, No. 04-20-00562-CV, 2022 WL 2230730, at *12

(Tex. App.—San Antonio June 22, 2022, pet. denied) (holding that the

plaintiff lacked authority under Section 20.002(c)(2) to complain about

a nonprofit corporation’s officers’ allegedly ultra vires acts when there

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was no evidence the plaintiff was a representative or member of the

corporation).

The court of appeals agreed that, to the extent the SMU board’s

adoption and filing of the 2019 amendments constituted an ultra vires

act, “a suit under § 20.002(c) cannot be used to set aside that act.” 674

S.W.3d at 361. But, focusing on subsection (b), the court held that the

amendments “can be challenged by other means.” Id. “Under

subsection (b),” the court concluded, “a corporate act is not invalid

merely because it is ultra vires. But if the act breaches some other legal

duty imposed on the corporation in addition to being ultra vires, it may

be challenged on that additional ground.” Id. (first emphasis added)

(citation omitted). We agree with the court of appeals that the

Conference may challenge the 2019 amendments, though not entirely

for the same reasons.

Because SMU is a nonprofit corporation, we focus largely on

Chapter 22 of the Code, which applies specifically to such corporations.

A nonprofit corporation generally may not distribute dividends or

income to their members, directors, or officers. TEX. BUS. ORGS. CODE

§§ 22.001(5), .053, .054. A nonprofit “may have one or more classes of

members” or, like SMU, “may have no members.” Id. § 22.151(a). As

SMU contends, for a corporation with no members, an amendment to

the corporation’s certificate of formation requires a majority vote of the

board of directors. Id. §§ 22.107(a), .164(b)(3). However, that default

rule may be modified by “specific, lawful provision[s] in the corporate

documents.” Masterson, 422 S.W.3d at 610.

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Such provisions have been present in SMU’s articles of

incorporation since 1916. The articles have generally provided that

SMU would be “controlled by” the Conference and have specifically

stated that they may not be amended absent the Conference’s

authorization and approval. And as the court of appeals held, those

provisions are lawful under Chapter 22. 674 S.W.3d at 358. In

particular, Section 22.207 provides:

The board of directors of a religious, charitable,

educational, or eleemosynary corporation may be affiliated

with, elected, and controlled by an incorporated or

unincorporated convention, conference, or association

organized under the laws of this or another state, the

membership of which is composed of representatives,

delegates, or messengers from a church or other religious

association.

TEX. BUS. ORGS. CODE § 22.207(a).

Section 22.207 is significant because it expressly authorizes the

Conference, as “a church or other religious association,” to assert and

maintain the very right of control that SMU disputes and that its board

has unilaterally purported to sever. The Conference’s effort to do so is

consistent with the Uniform Declaratory Judgments Act’s express

“remedial” purpose of “afford[ing] relief from uncertainty and insecurity

with respect to rights, status, and other legal relations.” TEX. CIV. PRAC.

& REM. CODE § 37.002(b); id. § 37.004(a) (“A person . . . whose rights,

status, or other legal relations are affected by a statute, municipal

ordinance, contract, or franchise may have determined any question of

construction or validity arising [there]under . . . and obtain a

declaration of rights, status, or other legal relations thereunder.”).

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SMU dismisses Section 22.207 as irrelevant because “[i]t doesn’t

say who can sue to challenge a nonprofit’s authority to amend its

governing documents.” Instead, SMU asserts, Section 20.002(c)

authorizes “[m]embers, shareholders, and the attorney general [to] sue

to enforce a church’s alleged control rights in a nonprofit—just not the

Conference, which is none of those things.” But SMU has no members

or shareholders, and the attorney general can sue under

Section 20.002(c) only to “enjoin the corporation from performing an

unauthorized act.” TEX. BUS. ORGS. CODE § 20.002(c)(3)(B) (emphasis

added). 8 As the court of appeals recognized, subsection (c) does not

contemplate an action by the attorney general to set aside an

unauthorized act that has already been performed. See 674 S.W.3d at

361 (noting that “[a]n injunction cannot undo [the SMU board’s] act” of

adopting the 2019 amendments, “which had already gone into effect

when the Conference filed this lawsuit”). SMU would thus view the

Code as simultaneously granting a right and ensuring the holder has no

mechanism to enforce it. We decline to do so. See Glen Oaks Utils., Inc.

v. City of Houston, 340 S.W.2d 783, 784 (Tex. 1960) (rejecting the city’s

argument that the courts lacked jurisdiction to consider a procedural

due process challenge to an ordinance that was “regular and valid” on

its face because “otherwise the [challenger] would have a right without

a remedy”).

8 The attorney general can also sue to “terminate the corporation” or to

“enforce divestment of real property acquired or held contrary to the laws of

this state.” TEX. BUS. ORGS. CODE § 20.002(c)(3)(A), (C). Neither of those

provisions is relevant here.

17

Section 22.207 is a specific provision focused on a narrow

circumstance. But it is a circumstance that unquestionably is present

here given SMU’s status as a nonprofit educational corporation, the

Conference’s status as a religious entity, and the 1996 articles of

incorporation’s express recognition of the Conference’s right of control.

Accordingly, the far more general provisions of Section 20.002(c) cannot

control over the specific requirements of Section 22.207. See, e.g.,

Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 901 (Tex. 2000).

Even if we were less confident of that reading, however, the result would

be the same because the doctrine of constitutional avoidance would lead

us to resolve any ambiguity in favor of the Conference. See, e.g., Borgelt

v. Austin Firefighters Ass’n, 692 S.W.3d 288, 303 (Tex. 2024). If one

statutory reading allows a religious entity to access the courts to protect

its right to control a nonprofit corporation it established to further its

religious mission, while another reading would deprive the religious

entity of that right, we would select the reading that avoids any tension

with the substantive legal protections for religious exercise that the

Texas Constitution affords. See, e.g., TEX. CONST. art. I, § 6 (forbidding

“control or interfere[nce] with the rights of conscience in matters of

religion” and imposing an affirmative “duty of the Legislature to pass

such laws as may be necessary to protect equally every religious

denomination in the peaceable enjoyment of its own mode of public

worship”). Section 22.207 appears to be the kind of law contemplated

by this provision of the Constitution.

We need not and do not decide whether SMU’s reading of

Section 20.002(c) in the absence of Section 22.207 would violate any

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constitutional provision; harmonizing the two provisions allows us to

avoid that issue. Nor do we address how SMU’s reading would fare

against an entity that is not covered by Section 22.207; that is, we do not

foreclose SMU’s general understanding of Section 20.002(c)’s scope or

any of its other contentions about nonprofit corporations law outside the

circumstances of today’s case. We reserve any holding regarding those

questions for cases that implicate them.

Accordingly, we hold that Section 22.207 of the Code protects the

Conference’s authority to sue SMU to enforce its rights under the 1996

articles and that Section 20.002 therefore does not deprive the

Conference of that authority. We turn to SMU’s other grounds for

challenging the breach-of-contract and false-filing claims.

B. Breach of Contract

In holding that the trial court erred in dismissing the

Conference’s breach-of-contract claim, the court of appeals concluded

that the Conference’s pleadings sufficiently allege that the 1996 articles

are a legally binding contract between SMU and the Conference. 674

S.W.3d at 365. SMU disputes this conclusion, arguing that the articles

of incorporation of a nonmember, nonprofit corporation do not give rise

to contractual rights. 9 We agree with the result reached by the court of

appeals but not its reasoning.

We have recognized that in the for-profit context, a corporation’s

charter creates a contractual relationship between the corporation and

9 SMU does not argue that the evidence does not support the elements

of a breach-of-contract claim; it contends only that a contract cannot exist as a

matter of law under the circumstances.

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its shareholders. Ritchie v. Rupe, 443 S.W.3d 856, 880 (Tex. 2014); see

also Calvert v. Cap. Sw. Corp., 441 S.W.2d 247, 255 (Tex. App.—Austin

1969, writ ref’d n.r.e.). The court of appeals in Overland Automobile Co.

v. Cleveland summarized the relationship as follows:

A charter of a private corporation is a contract, it is true.

It is a contract between the government which grants it

and the corporation. It is also a contract between the

corporation and the shareholders. The contract between

the corporation and the shareholders, however, is a

contract concerning the pursuit of the objects for which it

is created. The stockholders and the corporation between

themselves must abide by the articles of association and

the by-laws. The stockholders are contractually bound to

submit to the management of the business by the

managing officers and board of directors under the by-laws.

There also exists a contract among the stockholders with

each other by virtue of the charter to the effect that the

business will be directed and the funds applied in

conformity with the charter.

250 S.W. 453, 455 (Tex. App.—Dallas 1923, writ dism’d w.o.j.); see also

Ainsworth v. Sw. Drug Corp., 95 F.2d 172, 173 (5th Cir. 1938) (applying

Texas law) (“[T]he charter and by-laws of a corporation constitute a

contract between the company and its stockholders, into which the

statutes of the state of its incorporation enter and are controlling.”). The

Code expressly envisions this contractual relationship, providing that

shareholders of a for-profit corporation may enter into a “shareholders’

agreement” setting out how the corporation will be governed if the

agreement is (1) in “the certificate of formation or bylaws if approved by

all of the shareholders at the time of the agreement” or (2) in a written

agreement signed by all shareholders at the time of the agreement and

made known to the corporation. TEX. BUS. ORGS. CODE § 21.101(b)(1).

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The contractual relationship between a for-profit corporation and

its shareholders makes sense because such corporations operate

primarily to benefit their shareholders. A nonprofit corporation, by

contrast, has no shareholders, and, generally speaking, “no part of the

income of [a nonprofit corporation] is distributable to a member,

director, or officer of the corporation.” Id. § 22.001(5); see also id.

§ 22.053 (“Except as provided by Section 22.054, a dividend may not be

paid to, and no part of the income of a corporation may be distributed to,

the corporation’s members, directors, or officers.”). However, limited

exceptions to this prohibition allow a nonprofit corporation to, among

other things, “confer benefits on the corporation’s members in

conformity with the corporation’s purposes” and “make distributions to

the corporation’s members on winding up and termination to the extent

authorized by . . . chapter [22].” Id. § 22.054. Arguably then—although

we need not definitively opine on the issue—articles of incorporation can

similarly give rise to contractual obligations between a nonprofit

corporation and its members. 10

However, a nonmember, nonprofit corporation operates “not for

private profit or its own benefit” but “for the benefit of the public.” See

Abbott v. Blue Cross & Blue Shield of Tex., Inc., 113 S.W.3d 753, 765

(Tex. App.—Austin 2003, pet. denied) (emphasis omitted) (evaluating

whether Blue Cross, a nonprofit corporation, qualified as a “charitable

corporation” for purposes of applying the cy pres doctrine). Though

10 SMU makes this very argument, contending that members of a

nonprofit have contractual rights deriving from its articles of incorporation but

nonmembers have no such rights.

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neither party cites any directly on-point Texas precedent, 11 courts in

other jurisdictions have held that a nonprofit’s articles of incorporation

do not confer contractual rights on nonmembers. See, e.g., Exec. Bd. of

Mo. Baptist Convention v. Windermere Baptist Conf. Ctr., 280 S.W.3d

678, 692–93 (Mo. Ct. App. 2009) (holding that nonmembers “do not have

[contractual] rights deriving solely from a corporation’s articles of

incorporation”; “only members” do).

We agree with SMU that its articles of incorporation are not a

contract between SMU and the Conference. Again, a nonmember,

nonprofit corporation is formed to benefit the public. The very articles

of incorporation on which the Conference relies describe the purpose for

which SMU was formed as “the establishment, maintenance and

support of an institution for higher learning.” While the articles reflect

that SMU would be “controlled by” the Conference, SMU is not required

to act for the Conference’s benefit in the way that corporations must act

for the benefit of their shareholders or members. Nor does the Code

provide for the equivalent of a shareholders’ agreement in the nonprofit

context.

11 The Conference cites High Road on Dawson v. Benevolent & Protective

Order of Elks of the U.S., Inc., 608 S.W.3d 869, 887 (Tex. App.—Houston [14th

Dist.] 2020, pet. denied), for the proposition that a nonprofit’s governing

documents can constitute an enforceable contract between a nonprofit and its

controlling entity. But High Road does not support such a broad proposition.

First, that case dealt with the relationship between a national hierarchical

organization and a subordinate lodge—a relationship that is governed by a

separate subchapter of the Code. Id. at 874; see TEX. BUS. ORGS. CODE

§§ 23.101–.110. Further, the national organization in High Road had its own

governing documents that the lodge had agreed to follow; it had not merely

been granted rights in the lodge’s articles. 608 S.W.3d at 880.

22

However, as with for-profit corporations, a nonprofit corporation’s

articles do constitute a contract between SMU and the State of Texas.

See Overland Auto. Co., 250 S.W. at 455; Santa Rosa Infirmary v. City

of San Antonio, 259 S.W. 926, 935 (Tex. Comm’n App. 1924, judgm’t

adopted) (“By their very incorporation for purely charitable and

benevolent purposes [charitable corporations] have made a contract

with the state . . . .”). The Conference alternatively alleges in its petition

that it is a third-party beneficiary of that contract and may pursue its

breach-of-contract claim in that capacity. 12 We agree.

Although, as a general rule, only parties to a contract can sue to

enforce it, an exception applies to a nonparty who qualifies as a

third-party beneficiary of the contract. First Bank v. Brumitt, 519

S.W.3d 95, 102 (Tex. 2017). In First Bank, we summarized the

“[w]ell-established principles” that govern the third-party-beneficiary

analysis:

Absent a statutory or other legal rule to the contrary, a

person’s status as a third-party beneficiary depends solely

on the contracting parties’ intent. Specifically, a person

seeking to establish third-party-beneficiary status must

demonstrate that the contracting parties intended to

secure a benefit to that third party and entered into the

contract directly for the third party’s benefit. It is not

enough that the third party would benefit—whether

directly or indirectly—from the parties’ performance, or

that the parties knew that the third party would benefit.

Nor does it matter that the third party intended or

expected to benefit from the contract, for only the intention

12 Because the court of appeals concluded that the 1996 articles

constitute a valid contract between the Conference and SMU, it did not reach

the third-party-beneficiary issue. 674 S.W.3d at 364 n.19.

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of the contracting parties in this respect is of controlling

importance. To create a third-party beneficiary, the

contracting parties must have intended to grant the third

party the right to be a claimant in the event of a breach.

Id. (citations and internal quotation marks omitted).

SMU’s articles include numerous unequivocal statements that

expressly and directly benefit the Conference. See City of Houston v.

Williams, 353 S.W.3d 128, 145 (Tex. 2011) (“look[ing] to the entire

agreement, giving effect to all its provisions,” to “determin[e] whether

there is intent to benefit a third party”). For example, all trustees must

first be elected by the Conference (Article VI(3)); the Conference may

remove any trustee for cause (Article VI(5)); and campus property

cannot be sold or leased without the Conference’s consent (Article XIII).

Indeed, the Conference’s general authority is enshrined in the articles’

stated purpose: to create an educational institution “forever owned,

maintained and controlled by” the Conference. And Article XII

specifically prohibits amending the articles without the Conference’s

affirmative authorization and approval. SMU’s unilateral amendment

of the 1996 articles of incorporation obliterated all these rights and

benefits, and more. 13

In Williams, we held that a city’s firefighters could sue the city as

third-party beneficiaries to a contract between the city and the

firefighters’ union where the agreement plainly stated a purpose to

13 The Conference additionally had the right under the 1996 articles to:

nominate no fewer than twelve members of the board of trustees

(Article VI(1)); fix the qualifications for all trustees (Article VIII); and fill any

unelected vacancies on the board (Article X).

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benefit the firefighters in its preamble and then “directly guarantee[d]”

specific benefits to the firefighters. Id. at 146. The statements in SMU’s

articles of incorporation, conferring a variety of meaningful rights

directly on the Conference, are at least as clear and unequivocal as the

statements in the contract at issue in Williams. See id. at 146 n.18

(noting that the agreement made promises regarding the firefighters’

longevity pay, classification pay, educational incentive pay, assignment

pay, and termination pay), n.19 (“All overtime pay and hours

calculations . . . shall be governed by [federal, state, and city law].”),

n.20 (noting that the agreement promised minimums for the firefighters’

vacation leave).

We recognize, of course, the unique nature of the “contract”

established by a corporation’s articles of incorporation. Although the

State is a “party” to that contract, it is not the product of a bargain or

negotiation. The State has no involvement in the substance of the

articles’ terms so long as they do not violate the law; it has no interest,

for example, in the corporation’s stated purpose, or whether it has

members, or the qualifications of the board of trustees, or how those

board members are elected or removed. 14

However, we need not decide today whether articles of

incorporation, standing alone, could confer enforceable

third-party-beneficiary status. Even if such status never arises from

14 In that respect, we do not disagree with the dissent that Williams is

distinguishable. See post at 5 (Bland, J., dissenting in part). We cite Williams

as an example of contractual language that expressly and clearly confers rights

on a specific third party.

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articles on their own, we emphasized in First Bank that “a statutory or

other legal rule” could trump the general rules governing

third-party-beneficiary status. 519 S.W.3d at 102. A statute providing

the requisite State intent to confer such status, combined with sufficient

indicia in the articles, would thus justify a third-party-beneficiary

finding. In this case, the key provision is Business Organizations Code

Section 22.207, which, as discussed above, expressly authorizes a

religious association to “be affiliated with” a nonprofit educational

corporation and to “elect[]” and “control[]” the corporation’s board. TEX.

BUS. ORGS. CODE § 22.207. That statute ensures the lawfulness of the

1996 articles’ provisions giving the Conference—a “third party” to the

contract—such control. Cf. Exec. Bd. of Mo. Baptist Convention, 280

S.W.3d at 692 (holding that the Baptist Convention, a nonmember of a

nonprofit corporation whose original articles gave the Convention

certain rights with respect to election of trustees and distribution of

assets on dissolution, could have protected those rights by including a

statutorily authorized provision in the articles requiring the

Convention’s approval before they could be amended). Considering

Section 22.207 in conjunction with SMU’s 1996 articles’ terms, we agree

with the Conference that it qualifies as a third-party beneficiary of those

articles and may thus pursue its breach-of-contract claim against

SMU. 15

15 Again, we express no opinion on whether some other legal authority,

or the articles themselves, would allow the Conference to qualify as a

third-party beneficiary in the absence of Section 22.207. We also express no

opinion on any other aspect of the contract claim.

26

We again emphasize that the right to sue is available only to the

third party to whom the contract expressly grants contractual

rights—here, the Conference. 16 The fact that others (individual

members of the Conference and Methodist Church) might be within the

class of people the corporation is intended to benefit would not entitle

them to sue to enforce the articles as third-party beneficiaries because

the articles confer no rights upon them. See First Bank, 519 S.W.3d at

102 (“It is not enough that the third party would benefit—whether

directly or indirectly—from the parties’ performance, or that the parties

knew that the third party would benefit.”). But, unlike that large and

amorphous class of people who are nowhere mentioned in the articles,

the articles, under the auspices of Section 22.207, repeatedly single out

the Conference and expressly articulate precise powers the Conference

may wield. While concerns about expanding the rights of interlopers to

sue on a contract to which they are not a party are perfectly valid,

recognizing the Conference’s right here to survive a Rule 91a motion

16 The dissent describes the Conference as “tak[ing] on the role of the

State” in pursuing its contract claim. Post at 7 (Bland, J., dissenting in part).

We fail to see how the Conference’s enforcement of its own rights as a

third-party beneficiary places it in the position of acting on the State’s behalf.

The dissent also takes issue with allowing private parties to seek

damages for a violation of articles of incorporation. See id. at 6–8. This concern

is significantly minimized, if not negated, by the narrowness of our holding:

the Conference may pursue its contract claim based on its status as a religious

association that controls a nonprofit educational corporation under

Section 22.207’s express authority. For its part, the Conference unsurprisingly

seeks damages only in the alternative; indeed, although we need not address

the issue, SMU maintains that the Conference has presented no evidence of

monetary damages.

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falls squarely within our precedents and does not risk opening the

proverbial floodgates. 17

We therefore hold that the trial court erred in dismissing the

Conference’s breach-of-contract claim. The court of appeals correctly

remanded that claim to the trial court for further proceedings.

C. False Filing

Finally, we address the Conference’s false-filing claim under

Sections 4.007 and 4.008 of the Code. Section 4.008 makes it a criminal

offense for a person to “sign[] or direct[] the filing of a filing instrument

that the person knows is materially false with intent that the filing

instrument be delivered on behalf of an entity to the secretary of state

for filing.” TEX. BUS. ORGS. CODE § 4.008(a). Section 4.007 in turn

provides a private right of action for “damages, court costs, and

reasonable attorney’s fees” to a person who “incurs a loss . . . caused by

a . . . filed filing instrument that constitutes an offense under

Section 4.008.” Id. § 4.007(a)(1)(B).

The Conference claims that the filed certificate of amendment

accompanying the 2019 articles, signed by “Paul J. Ward, Vice President

and Secretary” of SMU, contained the “materially false” statement that

the amendments “have been approved in the manner required by . . . the

governing documents of the entity.” SMU argues summary judgment

17 The dissent’s suggestion that our holding grants

third-party-beneficiary status to countless individuals based on “the

benevolent intent of SMU alone,” see id. at 8, is thus unfounded and is in fact

directly contrary to the significant limitations on such status that we reaffirm

in this opinion.

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was proper on this claim because (1) the complained-of statement was a

good-faith legal opinion that inherently cannot be “materially false” and

(2) the Conference offered no evidence of damages. We hold that the

trial court properly granted summary judgment on this claim because

the certificate of amendment, considered as a whole, did not constitute

a materially false filing instrument as a matter of law and its filing thus

did not constitute an offense under Section 4.008. We therefore need not

reach the damages issue.

It is well settled that, with very limited exceptions, “[p]ure

expressions of opinion are not representations of material fact, and thus

cannot provide a basis for a fraud claim.” Italian Cowboy Partners, Ltd.

v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337–38 (Tex. 2011). The

court of appeals declined to apply this rule in the context of a claim

under Section 4.007, opining that “[t]he reason pure expressions of

opinion are not representations of material fact, and thus not actionable

in fraud, is because one is not justified in relying on a pure expression

of opinion.” 674 S.W.3d at 378. A false-filing claim under Section 4.007,

however, “does not require proof of the plaintiff’s justifiable reliance” on

the false statement, so, the court concluded, such a claim can be based

on a stated legal opinion. Id. Assuming without deciding that a legal

opinion can give rise to liability under Section 4.007, we nevertheless

agree with SMU that no genuine issue of material fact exists with

respect to whether the certificate of amendment SMU filed with the

secretary of state constituted a materially false instrument.

A certificate of amendment is a fillable form document created by

the secretary of state. The document contains a preprinted “Statement

29

of Approval” certifying: “The amendments to the certificate of formation

have been approved in the manner required by the Texas Business

Organizations Code and by the governing documents of the entity.” The

Conference argues that because SMU’s governing documents required

Conference approval to amend them and SMU did not obtain that

approval, there is evidence that the certificate’s “Statement of Approval”

is materially false.

However, we cannot read that statement in a vacuum.

Section 4.008 asks whether the filed instrument was materially false,

and the certificate contains additional, explanatory language.

Specifically, in the section of the form immediately following the

approval statement, 18 SMU inserted the following:

The amendments in the attached Addendum to the

Certificate of Amendment to the Restated Articles of

Incorporation were authorized and approved by the Board

of Trustees of Southern Methodist University . . . who were

elected by the South Central Jurisdictional Conference of

the United Methodist Church[.] No additional

authorization or approval by the UMC has been provided

as none is required or permitted pursuant to

Section 22.107(a) of the Texas Business Organizations

Code[.] Based on the foregoing and on the advice of

independent legal counsel, the undersigned certifies that

this Certificate of Amendment is in accordance with both

the [Code] and the University’s Restated Articles of

Incorporation.

18 The Conference discounts the explanation in part because it is

contained in the section relating to the date of effectiveness of the filing. But

the reason for the statement’s placement appears to be purely logistical: that

section, unlike the preprinted approval statement, includes a space for the filer

to provide additional information.

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The certificate thus confirmed that, as the Conference itself complains,

SMU had not obtained Conference approval for the amendments. The

reason, the certificate states, is that SMU concluded on advice of counsel

that such approval was not required under Texas law.

To controvert the veracity of that statement, the Conference

argues that SMU’s current president had signed the 1996 articles of

amendment, which stated that the amendment had been approved by

an authorized agency of the Conference in accordance with the articles.

Assuming this indicates that SMU’s president believed in 1996 that

Conference approval was required, we fail to see how this calls into

question Ward’s statement regarding his conclusion in 2019, based on

advice of counsel, that such approval was not required. Absent such

evidence, no genuine issue of material fact exists. Accordingly, the court

of appeals erred in reversing the trial court’s summary judgment on the

false-filing claim.

V. Conclusion

We hold that the Conference has statutory authority to pursue its

claims regarding the validity of the 2019 amendments to SMU’s articles

of incorporation. We further hold that the Conference may pursue its

breach-of-contract claim as a third-party beneficiary of SMU’s 1996

articles of incorporation. However, the Conference failed to demonstrate

a genuine issue of material fact on its false-filing claim under

Section 4.007. Accordingly, the court of appeals correctly reversed the

trial court’s dismissal of the claims for declaratory judgment and breach

of contract and erroneously reversed the trial court’s summary judgment

on the false-filing claim. We affirm the court of appeals’ judgment in

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part, reverse it in part, and remand the case to the trial court for further

proceedings.

Debra H. Lehrmann

Justice

OPINION DELIVERED: June 27, 2025

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