Bd. of County Comm’rs v. Denver: Contract Dispute Over DIA Noise Standards

During the 1980s, the City and County of Denver sought to expand Stapleton International Airport but faced opposition from Adams County due to aircraft noise concerns. After negotiations, Denver and Adams County entered into a 1988 Intergovernmental Agreement (IGA) permitting Denver to annex land in Adams County to build Denver International Airport (DIA). In return, Denver agreed to comply with strict noise exposure performance standards (NEPS) and to operate a noise monitoring system to measure compliance. The IGA also established financial penalties for uncured violations.

Early Development and Implementation

When DIA opened in 1995, Denver initially reported noise levels using both a noise modeling system called ARTSMAP and a monitoring system known as the Airport Noise and Operations Monitoring System (ANOMS). Early reports showed minimal differences between the two systems. By 1999, however, Denver began reporting noise data solely from ARTSMAP, asserting that it adequately measured noise exposure. The parties settled early violations using ARTSMAP data, and Adams County did not initially object to its use.

In 2014, Adams County discovered significant discrepancies between the noise levels reported by ARTSMAP and those recorded by ANOMS. The newer ANOMS data showed that actual noise levels were substantially higher than reported. After failed settlement discussions, Adams County and several municipalities filed suit against Denver in 2018, alleging breach of the IGA and seeking damages for uncured NEPS violations from 2014 through 2016.

Trial Court Proceedings

Following a bench trial in 2019, the trial court found that ARTSMAP did not satisfy the IGA’s requirement for a noise monitoring system because it modeled noise rather than measuring it. The court rejected Denver’s affirmative defenses of statute of limitations, waiver, accord and satisfaction, laches, and claim preclusion. It held that Denver’s use of ARTSMAP violated the IGA and awarded liquidated damages for sixty-seven Class II NEPS violations between 2014 and 2016. The court also awarded prejudgment interest at eight percent per year.

Appellate Review

Denver appealed, contending that Adams County’s claims were barred by various defenses and that the court’s calculation of prejudgment interest was incorrect. The Colorado Court of Appeals reviewed each issue in turn.

The appellate court first addressed the statute of limitations and determined that Adams County’s claims accrued in 2014, when it discovered the discrepancy between ARTSMAP and ANOMS data. The court held that although Adams knew of ARTSMAP’s use since 1995, it did not know of any resulting harm until 2014, making the claims timely.

The court also rejected Denver’s waiver defense, finding that Adams lacked the full knowledge necessary to intentionally abandon its contractual rights. The record showed that Denver withheld critical information about ARTSMAP’s limitations and its inability to produce accurate noise data. The court further noted that Denver had an implied duty of good faith and fair dealing, which required transparency in its performance of the IGA.

Denver’s accord and satisfaction defense was also denied. The court found that no written agreement existed to alter the IGA’s requirement for noise monitoring, as the contract explicitly prohibited modification except through a written instrument. The acceptance of ARTSMAP data in earlier settlements did not constitute a valid alteration of the IGA.

The appellate court rejected Denver’s laches argument, concluding that Adams did not unreasonably delay filing suit. Adams acted promptly after discovering the discrepancies in 2014, and Denver had benefitted from the delay by avoiding payments for noise violations during that time. Likewise, the claim preclusion defense failed because the 1999 litigation between the parties addressed earlier violations and did not resolve whether ARTSMAP complied with the IGA.

Finally, the appellate court upheld the trial court’s calculation of prejudgment interest. It ruled that interest began accruing on December 31 of each year a violation occurred, consistent with prior rulings interpreting the IGA’s liquidated damages provisions.

Court’s Ruling

The Colorado Court of Appeals affirmed the trial court’s judgment in full. It held that Denver breached the IGA by failing to use a proper noise monitoring system and that Adams County’s claims were not barred by any asserted defenses. The court upheld the damages and prejudgment interest awards.

Assistance with Contract Disputes

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