4 Families of Hobby, LLC, 4 Families of Houston, LLC, and Pappas Restaurants, Inc v. City of Houston, Texas

Supreme Court of Texas

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No. 24-0796

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4 Families of Hobby, LLC, 4 Families of Houston, LLC, and

Pappas Restaurants, Inc.,

Petitioners,

v.

City of Houston, Texas,

Respondent

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On Petition for Review from the

Court of Appeals for the First District of Texas

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PER CURIAM

This petition arises from a suit alleging, among other claims, that

the City of Houston violated Section 252.021(a) of the Texas Local

Government Code by entering into a contract that requires an

expenditure of more than $50,000 without following one of the

prescribed procedures. The City filed a plea to the jurisdiction, arguing

the contract is outside the scope of the statute. Without jurisdictional

discovery, the trial court denied the plea. The court of appeals reversed

in part and dismissed the Chapter 252 claims. Because we conclude that

jurisdictional discovery is warranted, we reverse and remand to the trial

court for that purpose.

BACKGROUND

For over twenty years, petitioner Pappas oversaw concessions at

Houston’s Hobby Airport under a contract with respondent City of

Houston. 1 In September 2019, the City began soliciting bids for a new

concessions contract. After three rounds of requests for proposals

spanning three years, the City awarded the contract to Areas HOU JV,

LLC by a slim margin over Pappas. On March 9, 2023, the City and

Areas executed a Food and Beverage Concession Agreement (the Areas

Agreement), making Areas the concessionaire at Hobby for the next ten

years.

Pappas sued the City and alleged that the Areas Agreement was

void because the City violated Chapter 252 of the Texas Local

Government Code. The applicable version of Section 252.021(a)

provides:

Before a municipality may enter into a contract that

requires an expenditure of more than $50,000 from one or

more municipal funds, the municipality must:

(1) comply with the procedure prescribed by this

subchapter and Subchapter C for competitive sealed

bidding or competitive sealed proposals;

(2) use the reverse auction procedure, as defined by

Section 2155.062(d), Government Code, for

purchasing; or

1 “Pappas” refers collectively to 4 Families of Hobby, LLC; 4 Families of

Houston, LLC; and Pappas Restaurants, Inc.

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(3) comply with a method described by Chapter 2269,

Government Code.

Act of May 9, 2013, 83d Leg., R.S., ch. 161, § 22.002(20), 2013 Tex. Gen.

Laws 622, 707 (amended 2025) (current version at TEX. LOC. GOV’T CODE

§ 252.021(a)) (emphasis added). 2 The Legislature has waived

governmental immunity for Chapter 252 claims: “If the contract is made

without compliance with this chapter, it is void and the performance of

the contract . . . may be enjoined by . . . any property tax paying resident

of the municipality.” TEX. LOC. GOV’T CODE § 252.061(1).

Pappas sought a declaration that the Areas Agreement is void

given the City’s failure to comply with Chapter 252’s procedures, as well

as a temporary and permanent injunction suspending the Areas

Agreement. The parties agreed to limited expedited discovery to

prepare for a temporary injunction hearing. Two days before the

hearing—and after both parties had produced the requested

documents—the City filed a plea to the jurisdiction, arguing in relevant

part that Chapter 252 applies only to expenditure contracts, not to

revenue contracts such as the Areas Agreement. The City asked for its

plea to be heard at the temporary injunction hearing. Pappas moved to

continue the hearing in light of the City’s new jurisdictional challenge.

This motion was denied, but the trial court only heard arguments on the

temporary injunction at the hearing.

The court scheduled a later hearing on the plea to the jurisdiction.

Pappas then filed an emergency motion for expedited discovery on

several issues, including the jurisdictional issue raised in the City’s plea.

2 The Legislature increased the threshold to $100,000 in 2025.

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The trial court did not rule on this motion. At the hearing, the trial court

denied the City’s plea to the jurisdiction after hearing arguments from

both parties. The next day, the City filed an interlocutory appeal of this

ruling.

The court of appeals reversed in part and rendered judgment

dismissing Pappas’s Chapter 252 claims. 702 S.W.3d 698, 723 (Tex.

App.—Houston [1st Dist.] 2024). The court held that “the Areas

[Agreement] is a revenue generating contract” because it did not “find

any provision in the Areas [Agreement] that requires the City to

‘purchase’ any goods or services, and Pappas has not pointed us to any

such provision.” Id. at 708. The court also looked to the Areas

Agreement’s “No City Expenditure” clause, which provides that

“[n]othing in this Agreement shall be construed to require that the City

make any expenditure of its funds by, through or under this Agreement.”

Id. at 709. In the court’s view, “[t]his provision alone demonstrates that

the Areas [Agreement] was not intended to require the City to make an

expenditure of $50,000 or more.” Id.

The court of appeals went on to examine the terms of the contract.

It held that Article 8.1.1’s requirement that the “City shall provide and

maintain all utilities” and Article 8.2.1’s requirement that the “City

shall ‘maintain all public areas and facilities’” do not on their face

require expenditures of more than $50,000. Id. at 709-10. The court

reasoned that Article 8.1.1 cannot require expenditure by the City

because the provision states that Areas “shall be responsible for the cost

of the use of all such [utility] services.” Id. at 709 (alteration in original).

Further, the only evidence Pappas provided was that all three Houston

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airports combined to incur $318,568,000 in maintenance and operating

expenses in 2021. Id. The evidence did not break these expenses down

by specific airport, let alone specific locations within the airport. Id. at

709-10. The court held that “[b]ecause the evidence upon which Pappas

relies is so weak as to do no more than create mere surmise and

speculation, it fails to create a fact issue on this point.” Id. at 710.

Rather than remanding for the trial court to allow Pappas an

opportunity to establish a fact issue through jurisdictional discovery, the

court of appeals dismissed the Chapter 252 claim based on the record

before it. Id. at 723.

ANALYSIS

Texas courts routinely consider evidence when a plea to the

jurisdiction challenges the existence of jurisdictional facts. 3 “If the

waiver of immunity is tethered to specific factual prerequisites, the only

way to know if immunity has been waived is to determine if the

necessary facts exist.” Tex. So. Univ. v. Young, 682 S.W.3d 886, 887

(Tex. 2023) (Young, J., concurring in denial of petitions). “The path to

that destination often passes through jurisdictional discovery.” Id.

3 See, e.g., City of Austin v. Powell, 704 S.W.3d 437, 447 (Tex. 2024)

(“[T]he government’s plea to the jurisdiction may . . . ‘challenge[] the existence

of jurisdictional facts,’ requiring the trial court to ‘consider relevant evidence

submitted by the parties when necessary to resolve the jurisdictional issues

raised.’” (alteration in original) (quoting Tex. Dep’t of Parks & Wildlife v.

Miranda, 133 S.W.3d 217, 227 (Tex. 2004))); Bland Indep. Sch. Dist. v. Blue,

34 S.W.3d 547, 555 (Tex. 2000) (“[A] court deciding a plea to the jurisdiction is

not required to look solely to the pleadings but may consider evidence and must

do so when necessary to resolve the jurisdictional issues raised.”).

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Here, the City’s plea to the jurisdiction challenged the existence

of a jurisdictional fact: whether the Areas Agreement “requires an

expenditure of more than $50,000” by the City. Act of May 9, 2013, 83d

Leg., R.S., ch. 161, § 22.002(20), 2013 Tex. Gen. Laws 622, 707 (amended

2025); see Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 784

(Tex. 2018) (“[W]hen the Legislature conditions an immunity waiver on

the existence of a statutory violation, the elements of the violation are

jurisdictional facts.”). If there is a reasonable reading of the contract

that could result in required expenditures by the City of more than

$50,000 depending on the facts, Pappas is entitled to jurisdictional

discovery.

We conclude two articles of the Areas Agreement can reasonably

be read to require city expenditures of more than $50,000. First,

Article 8.1.1 requires that the “City shall provide and maintain all

utilities.” Second, Article 8.2.1 provides that the “City shall throughout

the Term hereof, maintain all public areas and facilities.” These

provisions could reasonably require an expenditure by the City to

provide and maintain all utilities, public areas, and facilities. Pappas is

entitled to jurisdictional discovery to gather evidence regarding whether

these provisions will in fact require expenditures of more than $50,000

over the life of the contract.

The court of appeals made three errors in reaching the opposite

conclusion. First, Chapter 252 makes no distinction between revenue

contracts and expenditure contracts. Any city expenditure of $50,000 or

more will qualify; net expenditures are not required. It is therefore

irrelevant that the Areas Agreement will generate revenue for the City.

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Similarly, evidence that the City would make the expenditure

regardless of the contract does not resolve the question at hand. The

only relevant question under the statute is whether the Areas

Agreement “requires an expenditure of more than $50,000.” Act of May

9, 2013, 83d Leg., R.S., ch. 161, § 22.002(20), 2013 Tex. Gen. Laws 622,

707 (amended 2025).

Second, Article 8.1.1’s provision that Areas “shall be responsible

for the cost of the use of all such [utility] services” does not mean that

the City has no expenditures at all. Rather, it is reasonable to read the

two parts of this article as operating in tandem. The City must “provide

and maintain all utilities,” which may include costs associated with

making these utilities available and maintaining their availability for

use. Once the utilities are available, Areas is “responsible for the cost of

the use of” those utilities. If the City intended Article 8.1.1 to require

only expenditures by Areas, it could have clarified “without cost to City”

or “at no cost to City,” as it did throughout Article 5.8. The lack of any

such language indicates that Article 8.1.1 could reasonably require an

expenditure by the City in providing and maintaining all utilities.

Third, the No City Expenditure clause does not resolve this issue.

A municipality cannot circumvent Chapter 252’s requirements by

adding a disclaimer clause to a contract that in fact does require

expenditures of over $50,000. This is not to say that a disclaimer clause

can never end the analysis. For example, the existence of a strongly

worded disclaimer clause—one with language indicating it overrides

any other provisions potentially requiring city expenditures—would be

sufficient to resolve the analysis without jurisdictional discovery. Such

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a contract could not reasonably be read to fall within Chapter 252’s

scope.

But this contract’s No City Expenditure clause lacks such

language. Instead, this provision appears to be an aid in resolving

ambiguities: “Nothing in this Agreement shall be construed to require

that the City make any expenditure of its funds” under the Areas

Agreement. (Emphasis added.) Any ambiguities in the Areas

Agreement should be resolved with this provision in mind. But if

Pappas provides evidence that unambiguous provisions of the Areas

Agreement require expenditures totaling more than $50,000, then the

mere existence of the No City Expenditure clause does not excuse the

City from its obligation to comply with Chapter 252.

Pappas has preserved its request to discover such evidence at

every step. It sought jurisdictional discovery two days after the City

filed its plea to the jurisdiction. It moved for expedited jurisdictional

discovery in anticipation of the hearing on the plea. At the hearing,

Pappas emphasized its need for jurisdictional discovery. On appeal,

Pappas asked the court of appeals to lift the stay of trial court

proceedings, which would allow further discovery. And it asked this

Court “for an opportunity to conduct jurisdictional discovery before its

claims are dismissed.” 4

4 The City contends Pappas was denied discovery and failed to seek

appellate review. We disagree. Although the trial court denied Pappas’s

request for a continuance of the temporary injunction hearing, which included

a request for discovery regarding the City’s plea to the jurisdiction, the court

ultimately considered the plea at a later hearing. And in denying the plea at

that hearing, the court either (1) determined that Pappas had already pleaded

sufficient jurisdictional facts to support the City’s waiver of immunity, or

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Pappas has not had an opportunity to obtain jurisdictional

discovery. The expedited discovery in this case was limited in scope to

the temporary injunction and was completed before the City raised this

jurisdictional issue. Despite numerous requests for jurisdictional

discovery, Pappas has yet to receive any responsive information from

the City. The court of appeals nonetheless dismissed Pappas’s

Chapter 252 claims based solely on evidence Pappas was able to obtain

from public records. We reverse and remand to give Pappas a fair

opportunity to meet its burden of establishing a genuine issue of

material fact regarding whether the Areas Agreement requires an

expenditure of more than $50,000.

CONCLUSION

Pursuant to Texas Rule of Appellate Procedure 59.1, without

hearing oral argument, we grant the petition for review, reverse the

portion of the court of appeals’ judgment dismissing Pappas’s

Chapter 252 claims, and remand those claims to the trial court for

jurisdictional discovery.

OPINION DELIVERED: January 9, 2026

(2) exercised its discretion in deciding to await further development of the

case—including discovery—before making the jurisdictional determination.

See Miranda, 133 S.W.3d at 227. Pappas had no reason to appeal this ruling

in its favor. Instead, the error arose from the court of appeals’ decision to

reverse and dismiss the Chapter 252 claims without allowing jurisdictional

discovery, and Pappas properly raised that issue in this Court. See G.T. Leach

Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 517-18 (Tex. 2015).

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