Southern Methodist University and Paul J. Ward v. South Central Jurisdictional Conference of the United Methodist Church and Bishop Scott Jones
23-0703
Tex.Jun 27, 2025Background
- Southern Methodist University (SMU) is a nonmember, nonprofit corporation whose charter grants the South Central Jurisdictional Conference of the United Methodist Church (the Conference) certain governance rights, including approval of amendments to SMU’s articles of incorporation.
- In 2019, SMU’s board amended its articles of incorporation without seeking the Conference’s required approval.
- The Conference sued SMU, seeking declaratory relief about the validity of the amendments and alleging breach of contract.
- The trial court dismissed the breach of contract claim, but the court of appeals reversed, finding sufficient allegations of a contractual relationship.
- On review, this is a dissent from the Texas Supreme Court’s judgment, particularly objecting to allowing the Conference to pursue private contract damages as a third-party beneficiary to a nonprofit's charter.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are SMU’s articles a contract between SMU and the Conference? | Articles constitute a contract with the Conference | Articles are not a contract with outside parties | Not a contract between SMU and Conference |
| Is the Conference a third-party beneficiary of the articles? | Alternatively, Conference is an intended beneficiary | No third-party beneficiary rights under state law | Court recognized Conference as third-party beneficiary |
| Can the Conference seek breach of contract damages? | Entitled to damages as beneficiary | Only State can enforce charter rights for damages | Majority held the Conference could seek damages (dissent disagrees) |
| Is declaratory/injunctive relief appropriate for Conference? | Should have remedy to enforce governance rights | Limited to declaratory/injunctive relief under statute | All agreed Conference is entitled to declaratory/injunctive relief |
Key Cases Cited
- First Bank v. Brumitt, 519 S.W.3d 95 (Tex. 2017) (limits on third-party beneficiary status and contract enforcement)
- City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2011) (intent required for third-party-beneficiary government contracts)
- S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304 (Tex. 2007) (declined to grant third-party beneficiary status based on general public benefit)
- MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647 (Tex. 1999) (intent of contracting parties controls third-party enforcement)