AUSTIN, Texas - The Texas Supreme Court seemed split on what laws, if any, could decide who controls Southern Methodist University.
Justices heard from the university and the South Central Jurisdictional Conference Wednesday morning.
What we know:
Is ownership of SMU a church issue or a business issue?
That's one of the questions that justices asked both parties Wednesday morning.
Attorneys for the university argued that the ecclesiastical abstention doctrine did not apply to their case of separating themselves from the United Methodist Church.
The ecclesiastical abstention doctrine prevents civil courts from resolving disputes that involve church doctrine.
Both sides seemed to agree that the doctrine didn't apply to the ongoing legal battle.
Still, some justices seemed to think that a decision on the case could cause a ripple effect on Texas business law.
The university has been locked in a legal battle with the church since SMU's Board of Trustees voted in 2019 to amend the school's articles of incorporation.
The move came after the church voted to keep its ban on recognizing same-sex marriages and ordaining clergy who are members of the LGBTQ community.
In those amendments, SMU clarified that the school was only managed by the board of trustees.
The amended articles sought to clarify that the school was a separate entity from the church.
What they're saying:
SMU Attorney Allyson Ho pushed the justices to use neutral principles to decide the university's fate.
She continually reiterated the school's position as a nonmember, nonprofit institution that operates outside the church's control and had the right to adopt new articles of incorporation and file them with the state.
The 2019 articles removed language from the 1996 articles that said the school was owned, maintained and controlled by the church.
Justice Brett Busby seemingly disagreed with Ho's assessment and pointed to the earlier articles.
"Except that the articles of incorporation say that it's owned," Busby said. "The 1996 articles say that it's owned.
Busby was the most vocal justice on the argument that the 2019 articles were not valid.
The justice suggested to South Central Jurisdictional Conference attorney Sawnie McEntire that the church add a board member and then add that board member to the lawsuit to give the church an unquestionable right to sue the school.
Ho said the 2019 articles only solidified the relationship the school had with the church and said the church never made monetary donations, was never involved in degree programs or the hiring of faculty.
McEntire said SMU's decision to leave interfered with 100 years of church control and its use of the university to advance its mission.
McEntire said the school did not give the church an opportunity to replace board members ahead of 2019.
Justice Debra Lehrmann said she felt the issue was resolved since the issues the university had with the church's doctrine were resolved.
"The fact that the dispute has been resolved about same-sex marriages and things of that nature, that's not going to let us back in the door," McEntire said. "They shut the door on us."
The backstory:
The university's founding articles of incorporation stated the school would be owned, maintained and controlled by the South Central Jurisdictional Conference and that the conference had the right to approve all amendments.
In 2019, the university's board of trustees amended the articles to remove those provisions without the approval of the conference and filed a sworn certificate with the secretary of state's office.
The move away from the United Methodist Church brought a lawsuit from the South Central Jurisdictional Conference, who claimed the amendments were invalid since they were not approved by the conference.
They argued that the property the school was built on belonged to the conference.
The conference amended its argument to claim the university had breached its contract with the conference and breached its fiduciary duties as they financially damaged the conference, citing a Texas law that would allow them to recover losses because the university filed the new amendments with the Secretary of State.
All the claims made by the conference were dismissed by a trial court.
The judgment was appealed to the Fifth Circuit Court of Appeals, who reversed the breach of contract decision.
The appeals court said the decision could be challenged in court under the Business Operation's Code and that both statements of opinion and fact could be actionable as materially false filings and damages can be recovered for losses caused by those filings.
The university filed an appeal to the Texas Supreme Court claiming the court went around the state’s rules on who can make an "ultra vires" claim.
An ultra vires claim is a claim that a corporation or government has acted outside its legal authority.
In Texas, only shareholders, the entity or the attorney general can make such claims against an entity.
SMU claimed the conference falls outside those rules because they do not have a stake in the university.
Attorneys for the university said the court was the first to say a non-member nonprofit’s articles of incorporation were a binding contract for the purpose of a breach of contract claim.
In a filing with the Supreme Court, SMU’s attorneys said the appeals court "disregarded a longstanding precedent that a legal opinion can’t be ‘materially false’ or give rise to damages where there’s no cognizable harm."
By the numbers:
The SCJC covers eight states, Arkansas, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma and Texas, according to their website.
Beyond SMU, the conference operates the Lydia Patterson Institute in El Paso and Saint Paul School of Theology with locations in Leawood, Kansas, and Oklahoma City.
SMU's website says more than 12,000 students attend the Dallas institution.
The Source: Information in this article comes from Texas Supreme Court filings, the SCJC's website and SMU's website.