in Re Hoa Hao Buddhist Congregational Church Texas Chapter and Dung Anh Nguyen

Opinion

Opinion issued December 23, 2014.

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-14-00059-CV ——————————— IN RE HOA HAO BUDDHIST CONGREGATIONAL CHURCH TEXAS CHAPTER AND DUNG ANH NGUYEN, Relators

Original Proceeding on Petition for Writ of Mandamus

MEMORANDUM OPINION

Relators, Hoa Hao Buddhist Congregational Church Texas Chapter (Hoa

Hao) and Dung Anh Nguyen, have filed a petition for writ of mandamus,

challenging the trial court’s order denying their motion for protective order,

requiring them to comply with real party in interest Sarah Huynh’s discovery

demands, and abating their motion for summary judgment until thirty days after the completion of discovery.1 We conditionally grant the petition for writ of

mandamus in part.

Background

After a dispute arose between the parties, Huynh, through her attorney, made

a written request to Hoa Hao to inspect books, records, and documents pertaining

to Hoa Hao’s operation and governance since its formation in 2007. See TEX. BUS.

ORGS. CODE ANN. § 22.351 (West 2012). Huynh also filed a petition for writ of

mandamus in the trial court, naming Hoa Hao and Nguyen, as President and/or

custodian of records for Hoa Hao, as defendants and seeking to compel them to

permit examination of the corporation’s books and records. Huynh alleged that

Hoa Hao was a non-profit corporation organized under Texas law and she had been

a member and director of the non-profit corporation at all times since its

incorporation. By letter addressed to Huynh’s counsel, relators, through their

counsel, responded to Huynh’s request to inspect Hoa Hao’s records, asking for

documents to support her authority to inspect the records. Huynh then amended her

original petition to add claims for breach of fiduciary duty against Nguyen,

asserting that he was “personally responsible for denying [her] lawful rights by

directing counsel ‘representing Hoa Hao’ to refuse the requested examination” and

1 The underlying case is Sarah Huynh v. Dung Anh Nguyen and Hoa Hao Buddhist Congregational Church-Texas Chapter, cause no. 1035611, in the County Civil Court at Law No. 4 of Harris County, Texas, the Honorable Roberta Lloyd presiding. 2 his actions constituted a breach of the fiduciary duty he owed to Hoa Hao’s

members.

Soon after she amended her petition, relators served Huynh with

interrogatories, requests for production, and requests for admission. The

mandamus record reflects that Huynh responded to at least some of relators’

requests. Huynh also propounded discovery to relators, including requests for

production, interrogatories, and requests for admission. Relators responded to all

the discovery requests with general objections, including “[o]verly broad,” “not

limited in time and scope,” and “seeks information that is not relevant and that is

not reasonably calculated to the discovery of admissible evidence.” Relators did

not answer any interrogatories or requests for admission, or provide documents to

Huynh.

Instead, realtors filed a motion for a protective order, seeking a stay of

discovery “pending the resolution of the central issue of whether [the trial court]

has jurisdiction to determine ‘who ought to be members of the church.’”2 Relators

challenged Huynh’s membership in Hoa Hao and contended that she was not

entitled to review its records without a determination that she is a member and the

trial court was “constitutionally prohibited and deprived of subject matter

2 In her response in this Court, Huynh asserts that Hoa Hao served Huynh with the motion for protective order but did not file it with the trial court. Hoa Hao’s supplemental record in this proceeding includes a file-stamped copy of the motion for protective order.

3 jurisdiction to make that determination.” Relators further contended that the

discovery Huynh sought “was the ultimate relief” sought by her mandamus

petition. Shortly thereafter, relators filed their plea to the jurisdiction and,

alternatively, motion for summary judgment, supported by affidavits and other

exhibits. Realtors sought dismissal of the case, asserting that the trial court did not

have jurisdiction to determine Huynh’s membership in Hoa Hao. As to Nguyen,

relators further asserted that Section 22.152 of the Business Organizations Act

precluded a claim for damages against him and, alternatively, moved for summary

judgment as a matter of law on Huynh’s breach of fiduciary duty claim against

him. See TEX. BUS. ORGS. CODE ANN. § 22.152 (West 2012).

Huynh then filed her motion to compel realtors’ responses to her discovery

requests. Huynh contended, in sum, that the trial court had jurisdiction because it

could decide the disputed matters under neutral principles of law; all of the

disputed issues, including the jurisdictional issue, involved questions of fact; and

discovery was appropriate to answer a plea to the jurisdiction or summary

judgment motion and support her “already pleaded” and “potentially available”

claims against relators. Specifically, according to Huynh, the trial court had

jurisdiction because relators operated by and through a corporation and “identity

and interests of the Church membership are co-extensive with those of the

defendant corporation . . . .” Realtors responded, contending that the trial court

4 should continue the hearing on Huynh’s motion until the court determined the

jurisdiction issue; the requested discovery was overly broad, unduly burdensome,

and exceeded the bounds of permissible discovery; and Huynh was not entitled “by

way of discovery [to] what she would not be entitled by way of a final judgment

from [the trial court.]”

The trial court held a hearing on Huynh’s motion to compel at which no

evidence was offered or admitted. At the end of the hearing, the trial court

indicated that it would grant Huynh’s motion, and would “put everything off” and

“roll it forward” to allow Huynh time to review relators’ discovery responses

before responding to their plea to the jurisdiction. Several days later, the trial court

signed an order (1) requiring relators to comply fully with Huynh’s discovery

demands, (2) denying relators’ motion for protective order, and (3) carrying their

summary judgment motion until thirty days after completion of the discovery

required by the order. Relators then filed their petition for writ of mandamus and a

motion for temporary relief. We issued an order staying the trial court order

requiring relators to comply with Huynh’s discovery demands pending resolution

of this mandamus proceeding. See TEX. R. APP. P. 52.10(a).

5 Discussion

Relators contend that the trial court abused its discretion in denying their

motion for protective order and abating their plea to the jurisdiction because the

trial court was obligated to determine the threshold issue of its own subject-matter

jurisdiction before requiring them to respond to Huynh’s discovery requests.3

Relators further contend that the irrelevant and overbroad discovery that the trial

court ordered “bore no utility to the legal issues raised by Relators’ plea to the

jurisdiction and motion for summary judgment . . . .”

A. Standard of review

Mandamus will issue only to correct a clear abuse of discretion when there is

no adequate remedy at law. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–

36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839–40

(Tex. 1992) (orig. proceeding). A trial court abuses its discretion if it reaches a

decision so arbitrary and unreasonable as to constitute a clear and prejudicial error

of law, or if it clearly fails to correctly analyze or apply the law. In re Cerberus

Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding). A trial

court has no discretion in determining what the law is or in applying the law to the

3 We do not reach the issue whether the trial court abused its discretion in abating relators’ plea to the jurisdiction. The order that relators challenge states that relators’ “motion for summary judgment, presently noticed for January 28, 2014, shall be carried” until thirty days after the ordered discovery is completed and does not mention relators’ plea to the jurisdiction. 6 facts. In re Prudential Ins., 148 S.W.3d at 135. Mandamus relief is available when

a trial court compels discovery beyond the permissible bounds of discovery. In re

Weekley Homes, L.P., 295 S.W.3d 309, 322 (Tex. 2009) (orig. proceeding). An

appeal from a trial court’s discovery order is not adequate if the appellate court

would not be able to cure the trial court’s error on appeal. In re Lumsden, 291

S.W.3d 456, 459 (Tex. App.—Houston [14th Dist.] 2009, orig. proceeding)

(citations omitted).

B. The trial court abused its discretion by requiring relators to comply fully with Huynh’s discovery demands

Realtors assert that resolution of Huynh’s claims asserted against them

requires a determination that Huynh is Hoa Hao member, a determination that the

trial court lacks jurisdiction to make. Thus, according to relators, the trial court’s

order “violates the separation between church and state guaranteed by the First

Amendment” and “places the cart before the horse . . . .” By their plea to the

jurisdiction, relators challenged Huynh’s membership in Hoa Hao and the trial

court’s jurisdiction to determine whether she is member of the church. See

Westbrook v. Penley, 231 S.W.3d 389, 394 (Tex. 2007) (stating that lack of

jurisdiction may be raised by plea to jurisdiction when religious-liberty grounds are

basis for jurisdictional challenge). By their motion for protective order, relators

sought a stay of discovery pending resolution of subject-matter jurisdiction, also

7 contending that the trial court did not have jurisdiction to make an independent

determination of Huynh’s membership and the discovery sought was the “ultimate

relief” Huynh sought by her mandamus proceeding in the trial court.

Relators do not dispute that Hoa Hao is a nonprofit corporation organized

under Texas law, the Texas Nonprofit Corporation Act (the Act). See TEX. BUS.

ORGS. CODE ANN. §§ 22.001–.365 (West 2012). A “member” of a nonprofit

corporation is “a person who has membership rights in the nonprofit corporation

under its governing documents[.]” Id. § 1.002(53)(B) (West Supp. 2014). The

“governing documents” are “the certificate of formation for a domestic filing entity

or the document or agreement under which a domestic filing entity is formed” and

“the other documents or agreements adopted by the entity under this code to

govern the formation or the internal affairs of the entity[.]” Id. § 1.002(36)(A)(i),

(ii) (West Supp. 2014). A member of a nonprofit corporation has a right, “on

written demand stating the purpose of the demand . . . at any reasonable time and

for any proper purpose” to examine and copy books and records relevant to that

purpose, at the member’s expense. Id. § 22.351 (West 2012); see Lacy v. Bassett,

132 S.W.3d 119, 124 (Tex. App.—Houston [14th Dist.] 2004, no pet.).

In the trial court, realtors disputed Huynh’s assertion that she was a

“member” of Hoa Hao at the time she requested inspection of Hoa Hao’s books

and records. See Citizens Ass’n for Sound Energy v. Boltz, 886 S.W.2d 283, 289–

8 90 (Tex. App.—Amarillo 1994, writ denied) (recognizing that plaintiff requesting

inspection of records of nonprofit corporation had to establish membership at time

of request). Relators sought protection from discovery, contending that the trial

court did not have subject-matter jurisdiction to determine whether Huynh was or

was not a member of Hoa Hao.

The Free Exercise Clause of the First Amendment prohibits civil courts from

interfering in a church’s purely ecclesiastical or administrative affairs. See

Westbrook, 231 S.W.3d at 398–99; Windwood Presbyterian Church, Inc. v.

Presbyterian Church (U.S.A.), 438 S.W.3d 597, 600 (Tex. App.—Houston [1st

Dist.] 2014, no pet.). In Texas, this doctrine has been referred to as “ecclesiastical

abstention” or “ecclesiastical exemption.” See Windwood Presbyterian, 438

S.W.3d at 600 (citing Lacy, 132 S.W.3d at 123). The ecclesiastical-abstention

doctrine stands for the proposition that the First Amendment prohibits civil courts

from exercising jurisdiction over matters concerning “‘theological controversy,

church discipline, ecclesiastical government, or the conformity of the members of a

church to the standard of morals required of them.’” Thiagarajan v. Tadepalli, 430

S.W.3d 589, 594 (Tex. App.—Houston [14th Dist.] 2014, pet. filed) (quoting

Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713–14, 96 S. Ct.

2372, 2382 (1976)). “But Texas courts are bound to exercise jurisdiction vested in

them by the Texas Constitution and cannot delegate their judicial prerogative

9 where jurisdiction exists.” Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 606

(Tex. 2013). However, “the line between required judicial action and forbidden

judicial intrusion ‘will not always be distinct’ because many disputes ‘require

courts to analyze church documents and organizational structures to some

degree.’” Thiagarajan, 430 S.W.3d at 595 (quoting Masterson, 422 S.W.3d at

606)).

To properly exercise jurisdiction, courts are “to apply neutral principles of

law to non-ecclesiastical issues involving religious entities in the same manner as

they apply those principles to other entities and issues.” Thiagarajan, 430 S.W.3d

at 595 (citing Masterson, 422 S.W.3d at 606). Thus, courts “apply neutral

principles of law to issues such as land titles, trusts, and corporate formation,

governance, and dissolution, even when religious entities are involved.”

Masterson, 422 S.W.2d at 606. Under such an approach, a court may interpret

church documents in purely secular terms without relying on religious precepts in

resolving the conflict. See Hawkins v. Friendship Missionary Baptist Church, 69

S.W.3d 756, 758–59 (Tex. App.—Houston [14th Dist.] 2002, no pet.) (citing Jones

v. Wolf, 443 U.S. 595, 604, 99 S. Ct. 3020, 3026 (1979)); see also Anderson v.

Truelove, No. 01-13-00872-CV, 2014 WL 3747604, at *5 (Tex. App.—Houston

[1st Dist.] July 31, 2014, no pet. h.) (noting possible application of neutral

10 principles of law in cases in which question turns on substance of document to

which neutral principles may be applied, such as incorporated church’s bylaws).

In Lacy v. Bassett, the Fourteenth Court of Appeals considered the

application of the Act to a church member’s request for access to a church’s

financial records. 132 S.W.3d at 121. Lacy, a church member, sued the church and

church personnel after the church did not comply with her request to inspect

church records. Id. The church moved to dismiss the suit, asserting that the court

did not have subject-matter jurisdiction because the court would be required to

involve itself in matters of church governance. Id. The trial court dismissed Lacy’s

claims. Id. at 121–22. The court of appeals disagreed. It concluded that, by

incorporating under the Act, the church had become amenable to the Act’s

provisions; and the member’s “request to review the Church’s records merely

require[d] the trial court to enforce a neutral principle of law.” Id. at 126; see Chen

v. Tseng, No. 01-02-01005-CV, 2004 WL 35989, at *6 (Tex. App.—Houston [1st

Dist.] Jan. 8, 2004, no pet.) (mem. op.) (affirming trial court judgment based on

application of neutral principles to interpret and apply corporation’s bylaws that

“governed the Corporation, not the religious group”). The court of appeals reversed

the trial court judgment “[b]ecause under these circumstances the court is not

required to involve itself with any religious doctrine or principles . . . .” Lacy, 132

11 S.W.3d at 126. Notably, the parties did not dispute that Lacy was a member of the

church. See id. at 124 n.6.

Here, unlike in Lacy, relators dispute Huynh’s membership in Hoa Hao.

Huynh asserts that membership in the church and the corporation are co-extensive

and “the corporation had no lawful means to exclude any Church member from

corporate membership.”4 Accordingly, relators’ challenge to Huynh’s membership

in Hoa Hao raised a question of the trial court’s jurisdiction over Huynh’s claims

against relators. See Fesseha v. Ethiopian Orthodox Tewahedo Debre Meheret St.

Michael’s Church in Dallas, No. 05-10-00202-CV, 2011 WL 2685969, at *3 (Tex.

App.—Dallas July 12, 2011, no pet.) (mem. op.) (citing Westbrook, 231 S.W.3d at

398–99; Retta v. Mekonen, 338 S.W.3d 72, 77 (Tex. App.—Dallas 2011, no pet.))

(stating courts do not have jurisdiction “to decide who may or may not be members

of the church”); see also Cherry Valley Church of Christ/Clemons v. Foster, No.

05-00-01798-CV, 2002 WL 10545, at *3 (Tex. App.—Dallas Jan. 4, 2002, no pet.)

(not designated for publication) (concluding that court could not apply neutral

principles when church’s articles of incorporation provided for selection of

directors “according to the custom and practices of the church”).

Before determining the jurisdiction question, the trial court required relators

to comply with Huynh’s discovery demands. In her response to relators’ petition in

4 In her motion to compel, Huynh asserted that she was, and continues to be, a member of the corporation “by virtue of her membership in the Church . . . .” 12 this Court, Huynh suggests that requiring compliance was proper so that she could

respond to relators’ plea to the jurisdiction. Some tailored or limited discovery may

be appropriate when an evidence-based jurisdiction challenge is asserted. See, e.g.,

Diocese of Galveston-Houston v. Stone, 892 S.W.2d 169, 178 (Tex. App.—

Houston [14th Dist.] 1994, orig. proceeding) (concluding that “discovery limited to

ascertaining facts related to the jurisdictional plea” was proper in suit asserting

claims arising from termination of teacher’s employment with diocese);5 see also

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004)

(recognizing that trial courts must exercise discretion with regard to timing of

evidence-based jurisdictional challenges to ensure claimant has opportunity to

develop and present contrary evidence). Here, however, review of Huynh’s

discovery requests reflects that the requests were not limited to the disputed issue

of Huynh’s membership in Hoa Hao.

5 In Diocese of Galveston-Houston v. Stone, 892 S.W.2d 169 (Tex. App.—Houston [14th Dist.] 1994, writ denied), the diocese challenged the trial court’s jurisdiction to review a “religious-based” decision to terminate the plaintiff’s employment at a diocesan school. The plaintiff contended that the diocese’s actions were not religious-based and did not involve an ecclesiastical matter. Id. at 174. The trial court withheld a ruling on the diocese’s plea to the jurisdiction, allowed plaintiff limited discovery to discover the reasons for his termination and whether the decision was motivated by religious concerns, and provided for presentation of the jurisdictional question by summary judgment motion. Id. at 171. In reaching its decision, the court of appeals noted that “[t]here is nothing to show the decision to terminate [plaintiff] in fact involved religious concerns so that excessive entanglement will result from discovery . . . .” Id. The court concluded that it could not conclude that the trial court abused its discretion in allowing plaintiff “to prove his case while at the same time tailoring the inquiry to avoid entanglement.” Id. at 175–76. 13 Moreover, requiring relators to comply with Huynh’s discovery demands

will provide Huynh with the relief sought through her petition seeking to compel

relators to allow an inspection of Hoa Hao’s books and records. “Allowing

discovery that provides a party the relief sought in the main suit severely

compromises or vitiates the other party’s ability to present his claim or defense

during a trial because the issue would be moot.” In re Kimberly-Clark Corp., 228

S.W.3d 480, 490 (Tex. App.—Dallas 2007, orig. proceeding) (citing In re Dyer

Custom Installation, Inc., 133 S.W.3d 878, 883 (Tex. App.—Dallas 2004, orig.

proceeding)).

Huynh also responds that the First Amendment does not protect tortious

conduct and that she may obtain discovery that will lead to discovery of “relevant

and admissible information about Mr. Nguyen’s tortious conduct.”6 We understand

Huynh to contend that the requested discovery is appropriate to test her potential

claims against Nguyen, but merits discovery should wait until a ruling on the

jurisdictional plea. Although the scope of discovery is “‘quite broad,’ it remains

confined by the subject matter of the case and the reasonable expectations of

gathering information that will aid in the resolution of the dispute.” In re Mem’l

6 Texas courts have concluded that tort claims necessitated involvement with religious doctrine, requiring application of the ecclesiastical doctrine. See, e.g., In re Godwin, 293 S.W.3d 742, 749–50 (Tex. App.—San Antonio 2009, orig. proceeding [mand. denied]); Patton v. Jones, 212 S.W.3d 541, 552 (Tex. App.—Austin 2006, pet. denied); Turner v. Church of Jesus Christ of Latter-Day Saints, 18 S.W.3d 877, 897–98 (Tex. App.—Dallas 2000, pet. denied). 14 Hermann Healthcare Sys., 274 S.W.3d 195, 202 (Tex. App.—Houston [14th Dist.]

2008, orig. proceeding) (citing TEX. R. CIV. P. 192.1). Discovery requests,

therefore, must be reasonably tailored to include only matters relevant to the case.

Id. (citing In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003)).

We conclude that the trial court abused its discretion in requiring relators to

comply fully with Huynh’s discovery demands before determining the jurisdiction

question raised in relators’ motion for protective order and plea to the jurisdiction.

See City of Anson v. Harper, 216 S.W.3d 384, 390 (Tex. App.—Eastland 2006, no

pet.) (“If the trial court does not have jurisdiction to enter a judgment, it does not

have jurisdiction to allow plaintiffs to conduct discovery.”) Further, mandamus

relief is appropriate in this case. See In re Weekley Homes, 295 S.W.3d at 322

(stating mandamus relief is available when trial court compels discovery beyond

permissible bounds of discovery); see also In re Godwin, 293 S.W.3d 742, 747

(Tex. App.—San Antonio 2009, orig. proceeding [mand. denied]) (citing Tilton v.

Marshall, 925 S.W.2d 672, 682 (Tex. 1996)) (“[A]ppeal is often inadequate to

protect the rights of religious organizations when there are important issues

relating to the constitutional protections afforded by the First Amendment.”).

Conclusion

Accordingly, we grant relators’ petition for writ of mandamus in part, and

direct the trial court to vacate the portion of its order denying relators’ motion for

15 protective order and requiring relators to comply fully with Hyunh’s discovery

demands. The writ will issue only if the trial court does not do so. We deny

Huynh’s request for sanctions against relators’ counsel, and dismiss all other

pending motions as moot. Finally, we vacate our order, issued on January 22,

2014, staying the trial court’s order requiring relators “to comply fully with

Plaintiff’s discovery demands, as initially served on November 13, 2013.”

Jim Sharp Justice

Panel consists of Justices Higley, Bland, and Sharp.