Mile High Enterprises, Inc. v. Dee

• Decision Date: 04 January 1977
• Docket Number: No. C--961,C--961
• Citation: 558 P.2d 568,192 Colo. 326
• Parties: MILE HIGH ENTERPRISES, INC., a Colorado Corporation, Plaintiff-Appellant, v. John F. DEE, Jr., Auditor of the City and County of Denver, Defendant-Appellee, and The City and County of Denver, a municipal corporation, Defendant-Appellant.
• Court: Colorado Supreme Court

Page 568

558 P.2d 568

192 Colo. 326

MILE HIGH ENTERPRISES, INC., a Colorado Corporation Plaintiff-Appellant, v. John F. DEE, Jr., Auditor of the City and County of Denver Defendant-Appellee and The City and County of Denver, a municipal corporation Defendant-Appellant.

No. C--961.

Supreme Court of Colorado, En Banc.

Jan. 4, 1977.

Rehearing Denied Jan. 31, 1977.

Holme, Roberts & Owen, Donald K. Bain, Paul A. Jacobs, Jack L. Richtsmeier, Denver, for plaintiff-appellant.

Montgomery Little Young Campbell & McGrew, P.C., Richard O. Campbell, Denver, for defendant-appellee.

Max P. Zall, H. Goral, Asst. City Atty., Stanley Ereckson, Jr., Denver, for defendant-appellant.

GROVES, Justice.

This action was brought by Mile High Enterprises, Inc. (referred to as 'Mile High') against the City and County of Denver (called 'City') and the Auditor of the City (referred to as the 'Auditor'). Mile High sought a declaration as to the validity of a contract and to compel the Auditor to execute it. Mile High and the City have asserted the same positions, and the Auditor joined Mile High and the City in the request for a declaration of rights and responsibilities. The district court held in favor of the Auditor, ruling that the contract was void. The matter was appealed to the Colorado Court of Appeals to which we granted certiorari under C.A.R. 50 prior to argument and judgment in that court. We reverse the district court.

During 1967 arrangements were made for the City to purchase Bears Stadium, the formal conveyance being in early 1968. ¹ Upon acquisition, the property was called Denver Municipal Stadium, and shortly thereafter it became known as Denver Mile High Stadium. We refer to it as the stadium.

On March 5, 1968 the mayor issued Executive Order No. 61, which assigned 'responsibility for directing all operations, maintenance and concessions' at the stadium to the Manager of the Department of Parks and Recreation. On June 7, 1968, Mile High and the City entered into a contract granting Mile High the right to operate food and beverage concession facilities at the stadium for a period of ten years beginning as of May 1, 1968, in return for payment of agreed compensation to the City determined by gross receipts. This base contract was amended twice in 1969 to clarify the intention of the parties concerning compensation to be paid to the City.

In 1974 the voters of the City approved an expansion which would add several thousand additional seats to the stadium. Construction on the expanded stadium began in late 1974 and still continues. That construction included the destruction of some of the existing concession facilities.

It was foreseen that the expansion would adversely effect Mile High's concession sales and disrupt its concession operation. Also, there was needed a remodeling of the stadium's existing concession facilities, and construction and installation of additional concession facilities and equipment. As a result, Mile High and the City, acting through its Manager of Department of Parks and Recreation, negotiated an amendment to the 1968 contract (called the Third Amendatory Agreement). This amendment was to become effective July 25, 1975. This is the contract here under consideration. The contract extends the term of the original contract for an additional 18 years, commencing May 1, 1978, and obligates Mile High to spend not less than $750,000 and not more than $850,000 to purchase equipment and construct concession facilities adequate to service the expanded stadium. The contract vests in the City title to the new equipment purchased and installed by Mile High, and modifies the gross receipt formula under which the City is to be compensated.

It was stipulated that there had been no bad faith, fraud or collusion involved in the negotiation of the Third Amendatory Agreement. No competitive bids were solicited prior to its execution. The Third Amendatory Agreement was approved by the Mayor's Cabinet as required by executive order. The Manager of the City's Department of General Services is a member of the Cabinet, and he approved the Third Amendatory Agreement. The Auditor, however, refused to become a signatory to it.

Since the time that the City acquired the stadium, annually it has been used approximately 72 days by professional baseball teams, 10 days by professional football teams and 5 or 6 days for activities such as band contests, Boy Scout gatherings and rock concerts. All tenants pay for the use of the stadium and all spectators are always charged an admission fee.

Article IV of the City's charter relates to the Department of Parks and Recreation. Some of the provisions of this article are as follows:

'(There is vested 'exclusively' in the Department the) management, operation and control of all facilities, either within or without the territorial limits of the City and County, owned by the City and County for park and recreational purposes, including the right to make reasonable charges, subject to ordinance approval, for the use of any special facility or activity and management and control of the operation, care, repair and maintenance of all structures in which and all land on which those facilities are located and operated . . ..' Denver Charter § A4.4--1.

'In the manner and pursuant to terms and conditions fixed by the Mayor's Cabinet, to grant or refuse the license or privilege of operating concessions in or of selling goods and services in all parks and recreational facilities and on the streets and sidewalks within three hundred feet of the boundary of any park or recreational facility.' Id. A4.4--3.

'No franchise, license or permit for the construction or maintenance of any railway shall ever be granted within the limits of any park or lengthwise upon any parkway nor shall any franchise for the maintenance of any other special privilege within any park be granted; provided, however, that the foregoing shall not be a limitation upon the right of the Department to grant licenses for the operation of concessions or for the sale of goods or services in or near park and recreational facilities and to designate specific areas, structures or parts of structures or to authorize the construction and maintenance of facilities or structures in which licensees or concessionaires shall operate and function.' Id. A4.6.

Article XII of the charter relates to the Department of General Services. It is there provided 'The Department shall have the management and control of the occupancy and of the operation, care, repair and maintenance, either by the Department or under contract let by the Department, of all facilities, structures or parts of structures owned or leased by the City and County and used for theatre, concert, auditorium or Arena purposes whenever such facilities, structures, or parts of structures are regularly rented to others for such purposes and a charge is made for their use or a charge is customarily made for admission thereto. The Department shall also have the management and control of all land on which such facilities or structures are located, and shall have the right to establish and make reasonable charges for the use of such facilities and structures and to do such remodeling thereof as does not require reconstruction, change of design or structural change.' (Emphasis added.)

The district court concluded that the stadium came under the category of the provisions of the last quoted portion of the charter (A12.3--5) in that it is a facility of the City used for 'arena purposes' and is 'regularly rented to others for such purposes and a charge is made for their use or a charge is customarily made for admission thereto.' It quoted Steinberg v. Forest Hills Golf Range, 303 N.Y. 577, 105 N.E.2d 93 (1952), as to the definition of the word 'arena.' There the word was generally defined as a central part of an amphitheater, in which combats or spectacular displays take place or as any place of public contest or exertion. The court, therefore, concluded that the Third Amendatory Agreement was and is void because the exclusive power and authority in this contractual area was vested in the Department of General Services. It further concluded that Executive Order No. 61 is void and of no effect insofar as it is inconsistent with the authority granted to the Department of General Services to have the management and control of the stadium.

This conclusion by the district court was predicated upon its finding of the intent of the electors who adopted the charter provisions involved. In this connection, the court stated:

'Like McNichols Arena, Mile High Stadium is a facility with thousands of seats which is used primarily by paying spectators who wish to observe sporting events staged for their entertainment. In this respect the Stadium differs from the facilities managed and controlled by the Department of Parks and Recreation, which are designed to beautify the City and to provide areas in which residents can personally engage in sporting activities and other acts of physical exertion or restful relaxation and diversion. The difference in use between the Parks and Recreation Department facilities and Mile High Stadium is fundamental, while the similarities between the General Services Department Arena facilities and Mile High Stadium are compelling. This analysis leads the Court to conclude that the intent of the framers of the Charter was to place facilities such as the Stadium under the management and control of the Department of General Services. In interpreting the Charter provisions which control the City's government, this clear intent must be given effect.'

Were we to decide this case solely on the basis of our interpretation of what is written within the four corners of the above quoted charter provisions, and without any other guidelines, it is conceivable that we would affirm the district court. Removed from such circumscription, we give consideration to the...