HOUSTON — The Texas Supreme Court on Friday ordered that a 2023 lawsuit filed by Pappas Restaurants against the City of Houston over a Hobby Airport concessions contract move forward at the trial court level.
Pappas, which operates Texas eateries including Pappasito’s Cantina, Pappas Bar-B-Q and Pappadeaux Seafood Kitchen, had alleged the city improperly awarded a 10-year, $470 million contract to a subsidiary of Spain-based Areas, a travel hospitality company, in violation of state procurement law.
The state’s highest civil court did not rule on the merits of the dispute but determined that Pappas had not been given a chance to gather evidence showing that the city’s expenditures under the contract exceed $50,000—a threshold relevant under the Texas Local Government Code.
“Two articles of the Areas Agreement can reasonably be read to require city expenditures of more than $50,000,” the court wrote. It noted that state law “makes no distinction between revenue contracts and expenditure contracts. Any city expenditure of $50,000 or more will qualify; net expenditures are not required.”
The decision means the case will return to trial court, where Pappas can pursue discovery and potentially challenge whether the city complied with procurement rules.
Pappas’ group, 4 Families of Hobby, has operated concessions at Hobby Airport since 2003 and finished a close second in the 2023 bidding, losing to Areas’ bid, which offered the city 22.2% of concession revenue compared to Pappas’ 15.5%. Pappas argued that it had historically outperformed sales projections, generating an additional $25 million for the city’s Airport Enterprise Fund between 2010 and 2019.
Representatives for Pappas, Areas, and the City of Houston did not immediately respond to requests for comment.