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
══════════
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

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

2
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.

4
“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

5
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.

7
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.

10
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]

13
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

14
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

18
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).

20
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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