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Aug 18, 2023
San Antonio appeals court sides with city in fight with delivery company
A state appeals court sided with the city on Wednesday in DHL Express’ lawsuit
A state appeals court sided with the city on Wednesday in DHL Express’ lawsuit over its land distribution center at San Antonio International Airport.
A San Antonio appeals court has sided with the city in its dispute with international shipping company DHL Express.
The 4th Court of Appeals on Wednesday overturned a state District Court ruling by finding the city has immunity from clams for breach of contract and declaratory judgment, thus dismissing a lawsuit the shipper filed against the city.
The company sued in February seeking a court injunction that would allow it to continue operating at San Antonio International Airport.
DHL was facing a possible lockout over an alleged lease violation. Airport officials had told DHL it was in default under terms of the lease because it was no longer conducting air car express operations as required under its lease at 10307 Wetmore Road.
DHL has been a tenant for more than 30 years at the airport, where it say it employs hundreds of the city's residents. Under its most recent five-year lease, which was signed in 2020, the company pays about $185,100 in annual rent for 42,000 square feet of space.
The city notified DHL in October 2020 that it must "quit and surrender" the space within five days.
Airport Director Jesus Saenz Jr. told the Express-News after DHL sued the city that the airport is not an appropriate place to run a ground distribution center with no aviation component.
"We have an obligation to maximize aeronautical revenues to support operations and growth of the airport," Saenz said. "DHL can run a ground distribution warehouse anywhere in the city. Other tenants are more than ready to use the airfield for air cargo operations."
In an August court filing, the city said DHL stopped receiving aircraft carrying cargo at the airport immediately after the company renewed its lease. DHL is receiving air cargo at Austin-Bergstrom International Airport and trucking some of it to the San Antonio airport.
If it was forced to leave, DHL has said it would sustain "lost profits that are difficult, if not impossible, to calculate."
"The threat of a lockout would cause a "substantial interruption" to DHL's international network and its customers — "resulting in the delayed delivery of medicines, machinery, documents, laboratory samples and time and temperature sensitive shipments," DHL said in its an amended complaint filed in August.DHL said that after it sued the city, the city withdrew its notice of default but continued to say the company was in breach of the lease. The city insisted that DHL vacate the premises, the lawsuit said.
The city argued DHL's claims were barred by governmental immunity and should be dismissed. DHL disagreed.
The "lease agreement is a contract for the performance of a governmental function," and therefore, the city is immune from the lawsuit, Justice Patricia Alvarez said in the three-judge panel's ruling.
State District Judge Norma Gonzales had denied the city's bid to get the case dismissed in August, a ruling the appeals court overturned.
In the wake of the appeals court's decision, it's unclear whether the city will press DHL to vacate the space.
"The City is reviewing the implication of the decision and the current state of operations," the city attorney's office said in an emailed statement.
A lawyer for DHL didn't immediately respond to a request for comment, so it's not known whether the company will appeal Wednesday's ruling.