Opinion ID: 171865
Heading Depth: 1
Heading Rank: 8

Heading: The First and Second Hollinger Elements

Text: The first element, the applicant made a false statement, is encompassed in the second element, the applicant knowingly made a false statement. Id. Because there is significant overlap in the parties' arguments regarding the first and second elements, we consider the two elements together. Wade v. Olinger Life Insurance Co. holds that in determining whether an applicant knowingly made a false statement, a court must look beyond the applicant's mere knowledge she engaged in the activity which was allegedly required to be disclosed by the open-ended insurance question. 192 Colo. 401, 560 P.2d 446, 452 (1977). Namely, to protect innocent insurance applicants, an applicant must be reasonably chargeable with knowledge that the facts omitted or misrepresented were within the scope of questions asked on the application. Id. The court further explained that in the context of answering an insurance application question which calls for a value judgment, [a] particular misrepresentation . . . must be such that a [r]easonable person would, under the circumstances, have understood that the question calls for disclosure of specific information. Id. The court elaborated on this standard in Hollinger, a companion case to Wade. Hollinger, 560 P.2d at 827. In Hollinger, the court explained the standard applied in Wade was whether a reasonable person, with the applicant's physical or mental characteristics, under all the circumstances, would understand that the question calls for disclosure of specific information. Id. Question 5 asked Butts if he [e]ngaged in auto, motorcycle or boat racing, parachuting, skin or scuba diving, skydiving, or hang gliding or other hazardous avocation or hobby. WCLI contends Butts's negative response to Question 5 was unreasonable in light of his yearly heli-skiing vacations. Defendants argue reasonable minds could differ as to whether heli-skiing constitutes a hazardous activity, and thus the question should have been submitted to the jury. Defendants further contend because Butts believed heli-skiing was not a hazardous activity, his response to Question 5 could not have constituted a misrepresentation. This court must thus decide whether a reasonable person in Butts's position would know heli-skiing constituted a hazardous activity for purposes of the insurance policy. We agree with the district court that reasonable purchasers of life insurance understand they are agreeing to pay a premium in exchange for the insurer's promise to pay benefits in the event of death, and thus an insurer would be interested in learning of activities that increase the chance of premature death. Question 5 asks applicants whether they engage in hazardous activities and provides as examples of hazardous activities, skydiving, motorized racing, and scuba diving. A reasonable applicant understands these examples are provided to have the applicant determine if she engages in activities that might pose risks similar to those posed by the enumerated activities. WCLI presented evidence indicating a heli-skier is approximately 18,702 times more likely to be killed in an avalanche than an individual skiing inbounds at a ski area. [3] In addition, the heli-skiing operator Butts skied with required its clients to: (1) demonstrate proficiency in avalanche rescue techniques and equipment, (2) undergo training on safety protocols associated with helicopter loading, flight, offloading, and landing, and (3) carry an avalanche beacon while skiing. Such training took place prior to the execution of a waiver and release agreement in which Butts recognized: (1) wilderness skiing involves risks, dangers and hazards in addition to those normally associated with downhill skiing, (2) avalanches occur frequently in the alpine terrain used for wilderness skiing, (3) the ski outfitter's staff may fail to predict whether the alpine terrain is safe for skiing or whether an avalanche may occur, and (4) the alpine terrain used for wilderness skiing is uncontrolled, unmarked, not inspected and involves many risks, dangers and hazards in addition to that of avalanche. Additionally, Butts chose to purchase and carry an Avalung avalanche emergency air supply while heli-skiing. Based on these facts, a reasonable person in Butts's position would understand Question 5 calls for an applicant to report heli-skiing. As the district court explained, a reasonable, ordinary person would understand that a sport whose participants equip themselves with `avalanche beacons' and `Avalungs' and then ride in helicopters to the summits of isolated backcountry mountains in order to ski down ungroomed alpine terrain . . . falls along with sky diving, hang gliding, and scuba diving into the commonsense category of `hazardous' activities. Butts's status as an experienced heli-skier who engaged in the activity in the past without incident does not change the conclusion it was unreasonable for an individual in his position to answer no to Question 5. Butts knew of the great risks of heli-skiing. Notably, Defendants' expert declined to refute the Utah Avalanche Center's statement that [a]lmost all avalanche accidents occur to recreationists who are very skilled at their sport. Defendants contend this court should rely on the expert opinion of Vincent Anderson, a certified alpine and ski mountaineering guide who, without citing any statistical evidence, states in a report that, in his opinion, the risks involved in heli-skiing are not unreasonably high and are not greater than those involved in skiing at a resort. This opinion, however, does little to rebut the statistical evidence presented by WCLI demonstrating a heli-skier is approximately 19,000 times more likely to die in an avalanche than someone skiing within bounds at a ski resort. Moreover, it is difficult to see how the subjective opinion testimony of this one individual, lacking any statistical support, does much to support the proposition a reasonable person with Butts's characteristics would not understand heli-skiing to be a hazardous activity. This is especially true where heli-skiers such as Butts were required to sign a waiver explicitly acknowledging heli-skiing was far more dangerous than resort skiing. Finally, Defendants argue that because of the language at the end of the Butts Application, wherein Butts affirmed all answers in the application [were] full, complete and true to the best of [his] knowledge and belief, Question 5 solicited a subjective answer and thus could not be a false statement of fact. In support of this argument Defendants cite to Hauser v. Life General Security Insurance Co., 56 F.3d 1330, 1335 (11th Cir.1995), in which the Eleventh Circuit stated, [w]here an insurer only requests the disclosure of information to the best of the insured's `knowledge and belief,' and where the applicant so complies, we will decline to protect the insurer from a risk it assumed by virtue of the contractual language it drafted. Id. at 1335 (quotation omitted). The court went on to state, however: [w]hat the applicant in fact believed to be true is the determining factor in judging the truth or falsity of his answer, but only so far as that belief is not clearly contradicted by the factual knowledge on which it is based. In any event, a court may properly find a statement false as a matter of law, however sincerely it may be believed. To conclude otherwise would be to place insurance companies at the mercy of those capable of the most invincible self deception. . . . Id. (quotation omitted). Here, even assuming Colorado courts would follow the reasoning of Hauser, any belief Butts may have had in the non-hazardous nature of heli-skiing is contradicted by his underlying knowledge of the significant risks inherent in heli-skiing as indicated by the training he was required to undertake, waivers he signed, and equipment he used. We therefore affirm the district court's conclusion that as a matter of law Butts knowingly made a false statement of fact.