This is the third in a series of articles inspired by a recent Texas Business Court (TBC) decision, Jeremiah Counsel Corp. v. Young,1 which raised a number of interesting issues about how religious entities, constitutional religious liberty, and corporate law combine.
In Part I, I summarized the facts and then explored how states approach the question of incorporating religious entities such as churches. As we saw therein, there are three basic approaches:
The state provides a separate religious corporation statute.
The state permits incorporation of religious entities under its general not-for-profit corporation statute, but with meaningful provisions specific to religious entities.
The state permits incorporation of religious entities under its general not-for-profit corporations statute but with minimal (if any) special rules for religious entities.
Texas falls into the second category.
Jeremiah Counsel v. Young (Tex. Bus. Ct. July 15, 2026) and The Law of Religious Corporations: Part I
One of the odd things about life on the internet (at least for those of us who grew up without one) is the way one forms friendships online with people one has never met in the flesh. I like to think I can include Lauren Pringle of The Chancery Daily
In Part II, we turned to the constitutional issue—i.e., the church autonomy doctrine. We saw that the Texas trial judge (Judge Grant Dorfman) determined that the church autonomy doctrine precluded him from deciding certain issues—most notably derivative claims against individual defendants for breach of fiduciary duty, etc.—but did not preclude him from determining certain direct corporate law claims regarding the validity of certain church governing documents; namely, its amended articles of incorporation and bylaws.
Jeremiah Counsel v. Young (Tex. Bus. Ct. July 15, 2026) and The Law of Religious Corporations: Part II
As I discussed in Part I of this series, Texas does not have a separate corporations statute under which churches and similar religious entities may incorporate. Instead, Texas churches must incorporate under the state’s nonprofit corporation statute, which offers only a few targeted accommodations for religious organizations.
I’m assuming your familiarity with the first two posts, so I won’t rehearse the entire set of facts herein. Instead, let’s focus on the facts relevant to the organic document dispute: At the time the dispute arose, the Second Baptist Church of Houston operating pursuant to articles of incorporation dating to 1928 (as amended in 1978) and bylaws dating to 2005. Judge Dorfman observed that the amended articles “constituted the Church's certificate of formation” for as defined by Texas Business Organizations Code (TOBC) § 1.002(6). Filing of such a certificate with the Texas Secretary of State is the essential step in forming any entity subject to the TOBS. See § 3.001.
In 2023, the Church’s Board of Trustees unanimously approved amendments to the articles and bylaws. The amendments had three significant effects on the Church’s governance:
The church’s members were effectively stripped of voting rights “to elect the Senior Pastor, Board members, officers, committee members, to vote on amendments to governing documents, and to approve expenditures and certain business dealings.”
A Ministry Leadership Team (MLT) was created, which took over the oversight powers of the Board of Trustees. The MLT would consist of “the Senior Pastor and, thereafter, any additional individuals whom the Senior Pastor may nominate and the MLT may elect. The right to elect the Senior Pastor belongs solely to the Senior Pastor; and the MLT’s ability to remove the Senior Pastor is circumscribed.”
“The MLT was granted broad discretion over Church assets.”
In effect, the amendments converted the Church from a democracy with 94,000 voters into a nearly absolute monarchy.
JCC—”a Texas nonprofit corporation formed as an association of long-standing current or former Church members”—sued.