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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