# 4 Families of Hobby, LLC v. City of Houston

Supreme Court of Texas, No. 24-0796

**4 Families of Hobby, LLC v. City of Houston, No. 24-0796 (Tex. Jan. 9, 2026). Holding: If there is a reasonable reading of the contract that could result in required City expenditures of more than $50,000, Pappas is entitled to jurisdictional discovery, and two articles of the Areas Agreement can reasonably be read that way, so the Court reversed the dismissal of the Chapter 252 claims and remanded for jurisdictional discovery.**

Practice areas: governmental immunity

## Key issues

- Pappas is entitled to jurisdictional discovery in its challenge to Houston's Hobby Airport concessions contract with Areas, because the contract could reasonably be read to require City expenditures over $50,000 that would trigger Chapter 252's competitive-bidding rules and waive immunity.
- The Court reversed the court of appeals' dismissal in part and remanded to the trial court for jurisdictional discovery.

## Factual History
For over twenty years Pappas Restaurants and its affiliates (together, Pappas) oversaw concessions at Houston's Hobby Airport under a contract with the City of Houston, and in September 2019 the City began soliciting bids for a new concessions contract (Per Curiam Opinion, PDF p. 2). After three rounds of requests for proposals over three years, the City awarded the contract to Areas HOU JV, LLC by a slim margin over Pappas, and on March 9, 2023, the City and Areas executed a Food and Beverage Concession Agreement making Areas the concessionaire at Hobby for ten years (Per Curiam Opinion, PDF p. 2). Pappas's brief describes the case as about fairness and lawfulness in the airport concessions procurement process (Petition for Review (Petitioner), PDF p. 12).

## Procedural History
Pappas sued the City, alleging the Areas Agreement was void because the City violated Chapter 252 of the Local Government Code, and sought a declaration, a temporary and permanent injunction, and limited expedited discovery for a temporary injunction hearing (Per Curiam Opinion, PDF pp. 2-3). Two days before that hearing, and after both sides had produced documents, the City filed a plea to the jurisdiction arguing that Chapter 252 applies only to expenditure contracts, not revenue contracts like the Areas Agreement; the trial court denied Pappas's motion to continue and later denied the plea without jurisdictional discovery, and the City took an interlocutory appeal (Per Curiam Opinion, PDF pp. 3-4). The First Court of Appeals (Houston) reversed in part and dismissed the Chapter 252 claims, reasoning that the agreement generates revenue, that its "No City Expenditure" clause shows it was not meant to require expenditures of $50,000 or more, and that Pappas's evidence of required expenditures was speculative (Per Curiam Opinion, PDF pp. 4-5). The vehicle in this Court is a petition for review filed by Pappas, which the Court granted and decided by per curiam opinion without oral argument on January 9, 2026 (Per Curiam Opinion, PDF pp. 1, 9).

## Issues Presented
Pappas presents whether the court of appeals misapplied the law, including its own precedent, by dismissing three claims without permitting jurisdictional discovery where the case raises questions of jurisdictional facts, and whether it erred by ignoring the procedural posture and lack of discovery and holding Pappas to a heightened evidentiary burden on the City's plea (Brief on the Merits (Petitioner), PDF p. 12).

## Standard(s) of Review
When a plea to the jurisdiction challenges the existence of jurisdictional facts, courts consider the relevant evidence, and when the Legislature conditions an immunity waiver on a statutory violation, the elements of the violation are jurisdictional facts (Per Curiam Opinion, PDF pp. 5-6).

## Legal Arguments
**Whether Pappas is entitled to jurisdictional discovery on the Chapter 252 claim.**

**Pappas (Petitioners):** The City waived immunity under Chapter 252, and the court of appeals erred by applying a summary-judgment-like evidentiary standard to the City's plea before Pappas had a fair opportunity for jurisdictional discovery, an opportunity Texas courts consistently permit (Brief on the Merits (Petitioner), PDF p. 21; Petition for Review (Petitioner), PDF p. 10).

**City of Houston (Respondent):** Pappas is a disappointed bidder, and the Legislature narrowly prescribes when immunity is waived; the jurisdictional-discovery argument is not properly before the Court because the trial court rejected Pappas's discovery and continuance motions and Pappas did not appeal those rulings (Response to Petition (Respondent), PDF p. 11; Brief on the Merits (City of Houston, Texas), PDF p. 22).

## Stated Reasons the Court Should Take the Case
Pappas argued that the court of appeals disregarded the case's procedural posture by dismissing its claims on a heightened evidentiary standard without discovery (Petition for Review (Petitioner), PDF p. 10).

## Practice Area Tags
governmental-immunity

## Procedural Posture/Vehicle
Petition for review from the First Court of Appeals (Houston) in an interlocutory appeal from the denial of a plea to the jurisdiction; granted and decided by per curiam opinion without oral argument on January 9, 2026 (Per Curiam Opinion, PDF pp. 1, 4, 9).

## Amicus Involvement
- [Areas HOU JV, LLC](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=4b8bdee4-853e-4e97-b09f-17debed801fb&coa=cossup&DT=BRIEFS&MediaID=d9962b51-25ec-4f47-8fa3-9471afcee2dc) supports the City: the case is a poor vehicle for review, and more discovery on the Chapter 252 claim would be futile.

## Holding
If there is a reasonable reading of the contract that could result in required City expenditures of more than $50,000, Pappas is entitled to jurisdictional discovery, and two articles of the Areas Agreement can reasonably be read that way, so the Court reversed the dismissal of the Chapter 252 claims and remanded for jurisdictional discovery (Per Curiam Opinion, PDF pp. 1-2, 6, 9).

## Court's Reasoning
**Jurisdictional facts and discovery.** Section 252.021(a) requires a municipality to follow competitive procedures before entering a contract that "requires an expenditure of more than $50,000," and the Legislature waived immunity for Chapter 252 claims by making a noncompliant contract void and subject to injunction at the suit of a property-tax-paying resident (Per Curiam Opinion, PDF pp. 2-3). The City's plea challenged the existence of that jurisdictional fact, and "the path to that destination often passes through jurisdictional discovery" (Per Curiam Opinion, PDF pp. 5-6).

**Two provisions could require expenditures.** Article 8.1.1, requiring the City to "provide and maintain all utilities," and Article 8.2.1, requiring it to "maintain all public areas and facilities," can reasonably be read to require City expenditures over the contract's life, so Pappas may discover whether they will exceed $50,000 (Per Curiam Opinion, PDF p. 6).

**The court of appeals' errors.** Chapter 252 does not distinguish revenue from expenditure contracts for purposes of the only relevant question, whether the contract requires an expenditure over $50,000, and evidence that the City would make the expenditure regardless does not answer it (Per Curiam Opinion, PDF pp. 6-7). That Areas is responsible for the cost of using utilities does not mean the City has no expenditures, and the City could have written "at no cost to City," as it did elsewhere, if that was the intent; and the "No City Expenditure" clause cannot let a municipality circumvent Chapter 252 by disclaimer, though it can help resolve ambiguities (Per Curiam Opinion, PDF pp. 7-8).

**Preservation and opportunity.** Pappas preserved its request for jurisdictional discovery at every step, and it has not had a chance to obtain it because the earlier expedited discovery was limited to the injunction and finished before the City raised the issue (Per Curiam Opinion, PDF pp. 8-9).

## Disposition
Petition for review granted without oral argument, the portion of the court of appeals' judgment dismissing the Chapter 252 claims reversed, and those claims remanded to the trial court for jurisdictional discovery (Per Curiam Opinion, PDF p. 9).

## Vote Breakdown
Per curiam opinion (Per Curiam Opinion, PDF p. 1).


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Source: The SCOTX Report, https://scotxreport.com/cases/24-0796. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.