AUSTIN - The Texas Supreme Court has given new life to a lawsuit that was brought by Pappas Restaurants after losing a bid to continue to have its restaurants at Hobby Airport.
For more than twenty years, Pappas oversaw concessions at Hobby under a contract with the city of Houston. In September 2019, the city began soliciting bids for a new concessions contract, ultimately awarding the contract to Areas, a Spanish company.
Court records show Pappas sued the city, alleging that the agreement with Areas was void because the city violated Chapter 252 of the Texas Local Government Code.
Pappas asserts the city violated Chapter 252 by entering into a contract that requires an expenditure of more than $50,000 without following one of the prescribed procedures.
In response to the suit, the city filed a plea to the jurisdiction, which was denied by the trial court, but reversed in part on appeal.
On Jan. 9, the Supreme Court concluded that jurisdictional discovery is warranted, reversing the appellate court and remanding the case.
Justices found that Pappas has not had an opportunity to obtain jurisdictional discovery. The expedited discovery in the case was limited in scope to the temporary injunction and was completed before the city raised the jurisdictional issue.
“Despite numerous requests for jurisdictional discovery, Pappas has yet to receive any responsive information from the City,” the opinion states. “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.”
Areas submitted a brief in the case, arguing that Pappa’s lawsuit “is an attempt by a dominant market player to achieve in the courthouse what it could not in the marketplace: the defeat of a superior competitive bid.”
“Petitioners frame this case as a story of a local business wronged by an opaque and arbitrary government process,” the brief states. “The narrative is compelling but incomplete. It omits the central fact that Petitioners are not aggrieved outsiders, but the powerful incumbents that held the exclusive food and beverage concession contract at Hobby Airport for two decades.
“After participating in and losing a robust, multi-year competitive procurement process, Petitioners now attack the very system that enriched them for a generation.”
Pappas is represented by the BakerHostetler law firm.
Supreme Court case No. 24-0796
