Texas Business Court Decision – July 14, 2026

No. 25-BC03A-0020  Sri Shirdi Sai Baba Temple of Austin, et al. v. Shiva Lam, et al. (Third Division, Judge Andrews) 2-26 Tex. Bus. 45    25-bc03a-0020-sri-shirdi-sai-baba-temple-of-austin-v-lam-2026-tex-bus-45.pdf

Corporate Governance.

Background.  Sri Shirdi Sai Baba Temple of Austin (respectfully referred to as Temple in this summary), a Texas nonprofit religious corporation, filed a 2007 Certificate of Formation, designating it as board-managed with no members. After a 2024 board (the defendants) took over following exposure of a fraudulent donation-matching scheme, it adopted 2025 Bylaws purporting to convert the Temple to a member-managed structure, with a “General Body of Trustees” – devotees who paid a $20,000 membership fee – holding governance authority, including the power to elect and remove the board. The Certificate of Formation was never amended to match the new Bylaws. When outside counsel advised the board that the 2025 Bylaws conflicted with the Certificate of Formation and recommended delaying a scheduled trustee election until the Certificate could be amended, the board voted to revoke the 2025 Bylaws and postpone the trustee election. However, a faction of candidates (denominated “Team Trust”) nonetheless proceeded with an unauthorized election, declaring a new “Plaintiff Board,” which then sued seeking a declaration that the 2025 Bylaws governed and asserting promissory estoppel. The matter comes before the court on the parties’ motion for summary judgment.

Issues.

1. Whether the Certificate of Formation or the 2025 Bylaws controls the Temple’s governance structure when the two conflict. Held: The Certificate of Formation controls.
2. Whether the church-autonomy doctrine or equitable principles override the statutory rule. Held: They do not.
3. Whether Plaintiff’s declaratory judgment and promissory-estoppel claims survive summary judgment. Held: They do not.

Discussion.

1. Applying Sec. 22.103 of the Business Organization Code, the court concludes that a certificate of formation controls over conflicting bylaws (except for director-count changes, an exception not applicable here) and no party amended the Certificate of Formation before this suit was filed. The 2025 Bylaws’ member-management scheme is therefore ineffective.
2. The court rejects plaintiffs’ argument that the statute creates a “Catch 22” situation because filing the amended certificate of formation before enacting new bylaws strips the board of directors of power, such that it could not enact new bylaws to enable member management, while amending the bylaws first renders the bylaws inconsistent and thus void; the court notes the Code permits simultaneous or sequenced amendments, thereby avoiding any “Catch 22” problem.
3. Applying the neutral-principles methodology Texas courts use to determine whether they have jurisdiction over over actions such as this, the court concludes the dispute is purely a matter of corporate governance and does not involve ecclesiastical issues; as a result, the church-autonomy doctrine does not shield the 2025 Bylaws.
4. Plaintiff’s vague equity arguments fail for lack of any identified doctrine or evidentiary support.
5. On defendants’ Motion for Summary Judgment, the court concludes: (a) plaintiffs’ declaratory judgment action fails as a matter of law because the Certificate of Formation controls (see 1 above); (b) plaintiffs’ equitable estoppel, waiver, and ratification defenses failed for lack of evidence on the required elements; and (c) plaintiffs’ promissory estoppel claim fails as a matter of law because plaintiffs do not seek damages and the injunctive relief they seek would not be an appropriate remedy for the promissory-estoppel claim; i.e., it does not seek to place plaintiffs in the position they were in before they relied on defendants’ alleged promises; they seek, instead, to be placed in the position they expected to be in had defendants fulfilled their promises to file an amended Certificate of Formation; this is expectation-type relief rather than reliance-based restoration.
6. This is not a final judgment as defendants’ claim for attorneys’ fees under the Declaratory Judgment Act remains pending, and the court establishes a schedule for future filings on the matter.