Concordia University Texas Seeks to Avoid Federal Jurisdiction

The Lutheran Church—Missouri Synod filed a civil lawsuit against Donald Christian, Christopher Bannwolf, and Concordia University Texas, Inc. on September 1, 2023. As with most court cases, the filing of the complaint that begins the lawsuit is not the beginning of the story. It is a step in the middle of the story. The endnote[1] lists my essays and interviews about the context leading up to the filing of the complaint.

A majority of the board of regents of the university, under the leadership and influence of the board chairman and the university president, threw off the control, doctrine, and ownership of the university by LCMS on November 8, 2022. Without authority, they amended the university’s governing documents, denied any control of the synod’s school by the synod, denied the right of the synod to elect and appoint members to the board of regents, and declared that they alone would determine the extent to which they would retain the doctrine of the synod. The case challenges these actions after the synod in convention voted overwhelmingly that the actions were rebellion against the Fourth Commandment and moral theft against the Seventh, Ninth, and Tenth Commandments.

The case is filed in federal court, not a court of the state of Texas. Why is the case in federal court and why does the motion say it should not be in federal court?

The state district courts usually are courts of general jurisdiction. This means they are assumed to have jurisdiction over the subject matter of practically any case. Consequently, complaints filed in state district courts usually are not required to plead facts or law showing that the court has jurisdiction. Jurisdiction of the subject matter is assumed unless a party or the court raises a question about jurisdiction.

The federal district courts are courts of limited jurisdiction. This means there is no assumption that the court has jurisdiction of the subject matter of cases filed in it. Instead, one of the first tasks of a party filing a complaint in federal district court is to plead facts and law showing that the court has subject matter jurisdiction.

The claims in this case all arise under state law, particularly, the law of Texas. Consequently, a federal court by default does not have jurisdiction of this case. Congress, however, has granted jurisdiction to the federal courts in cases of absolute diversity of citizenship. In this case, diversity of citizenship means that the defendants are citizens of the state of Texas while the plaintiff is not a citizen of Texas. Though LCMS is a corporation with authority to transact business in Texas, it is a Missouri corporation. Absolute diversity means that all of the defendants are citizens of Texas whereas none of the plaintiffs are.

Congress had the idea that out of state parties might suffer a bias in favor of the citizens of the state court’s own state when all of the opposing parties are from out of state. To safeguard the impartiality of the court that will hear a case, Congress gave jurisdiction to the federal courts to hear state law cases when there is an absolute diversity of citizenship of the parties.

LCMS chose to avail itself of the impartiality of a federal court in this case where all the defendants are citizens of Texas and LCMS is from outside of Texas. This, however, does not change the law that applies. Federal courts can and frequently do apply state law. In this case, the federal court will apply the law of the state of Texas.

CTX has filed a motion to dismiss the complaint. The motion denies that diversity of citizenship jurisdiction in the federal court exists. If the federal court were to agree and dismiss the complaint, that would not end all litigation. It would mean only that the case would have to be refiled in state court.

The motion depends on two senses of the word “synod.” In one sense, the synod is an unincorporated association of two kinds of members: congregations and rostered clergy members. Its ultimate legislative authority is the synod in convention. In another sense, the synod is a Missouri corporation. The corporation is governed by its Board of Directors. Among other things, the Board of Directors is the custodian of all property of the synod.

The first of those senses of synod is an ecclesiastical sense. The second is a civil or temporal meaning. A lawsuit before the courts of the civil state is a temporal or civil proceeding. Therefore it was to be expected that the Board of Directors would base jurisdiction on the civil or temporal sense of “synod.”

The motion contends, however, that the synod in its ecclesiastical sense is the real party in interest. As such, the motion pleads, it must be joined as an indispensable party. Once joined, the diversity of citizenship dissolves. “Synod is an unincorporated association with members throughout the United States, including Texas, and is therefore a citizen of Texas for diversity jurisdiction purposes.” (Motion, ¶ 2.)

The complaint itself asserts:

[w]hile LCMS asserts each claim for relief in the complaint as the Plaintiff, it does so both on its behalf, as applicable, and on the Synod’s behalf. Accordingly, if a claim for relief is asserted by LCMS, it is also asserted by and on behalf of the Synod, as appropriate, and vice versa. On occasion, out of an abundance of caution, a claim is asserted on behalf of both the Synod and LCMS.

The determination of the motion depends, therefore, in a claim-by-claim analysis. Take one claim as an example. CTX rejects the election by synod of four members to the Board of Regents of the university. It claims that only CTX can elect or appoint its regents. The election by synod was by the synod in convention this past summer. That was a convention of synod in its ecclesiastical sense, not in the sense of the Missouri corporation. Thus, CTX says it is a matter of the synod in its sense as an unincorporated association which has citizenship in Texas, and thus there is not an absolute diversity of citizenship between the plaintiff and the defendants.

In a similar manner, the motion contends that various matters in the complaint are about synod in the ecclesiastical sense, not in the sense of the Missouri corporation, including:

The right of the synod to review and either approve or disapprove proposed changes to governing documents of the university such as its articles of incorporation and bylaws.
The right of the synod to control the theology taught at the university.
The right of the synod to control the selection of the president of the university.
Any fiduciary duty of CTX, Christian, Bannwolf, and other regents to synod.
The right to be granted, or a promise to grant, a reversionary interest in property.

While on the surface, the argument of the motion might appear simple and compelling, for at least some of the claims it bears scratching beneath the surface. Take for example the claim that any right of equitable title or reversionary interest is vested in the synod as an unincorporated association rather than in the Missouri corporation. In Montana, that should not fly.

Under Montana law where I practice, an unincorporated association lacks capacity to be vested with title to real property. We face this every now and again such as when a pioneer school goes defunct and the issue of reversion of the school land to the successor of the donating farmer or rancher arises. It happens sometimes that a deed was erroneously written to an unincorporated school association that cannot hold title rather than to a proper corporation or other form of entity that has capacity to own real property. When the association goes defunct, from whom does one get a quitclaim, release, or disclaimer of interest recognizing the reversionary interest of the farmer or rancher. It can be a mess. The cause of the mess is the error of thinking that, under Montana law, an unincorporated association can hold title to real property.

Query: What is the law of Texas about unincorporated associations and their capacity or lack of capacity to hold title to real property, including the equitable title or reversionary interests in schools that arbitrarily declare autonomy from the association. If the law of Texas is like the law of Montana, then the Missouri corporation is the real party in interest as to the property claims of the complaint. The unincorporated ecclesiastical association is no party at all since it cannot be vested with equitable title or reversionary interest in the real property of the university.

Would this mean that the federal court might grant the motion as to some claims but deny it as to others? The motion was just filed today. It has 37 pages and hundreds of pages of exhibits. My thoughts on this question of a mixed outcome are too preliminary to express at this time.

In the argument section of the motion, the defendants frequently pull back the curtain on what might be their defenses on the merits once the matter of jurisdiction is decided. Some of the arguments are better than others. A striking thread running through them is circular reasoning. Because the governing documents of CTX give the synod no rights, therefore the synod cannot be awarded declaratory judgment to enforce its rights. In other words, because CTX wrongly amended the governing documents to strip the synod of any rights, therefore the synod cannot have the court decide whether it was wrong or right to amend the documents. That is circularity. It is pure fiat: you have no rights because we amend documents to say that you have no rights. Our say, no highway option.

This is the name of Lutheran ethics and higher education.

[1] I have written about the context leading up to this stage in the following essays and articles: