## Facts

- Annbar Associates (Annbar) owned and operated the Muehlebach Hotel in Kansas City, Missouri.
- Annbar entered two related arrangements connected to American Express: (1) an agreement to accept American Express credit cards and (2) a membership agreement with American Express Reservations, Inc. (AER), a telephone-based, computerized hotel reservation service for member hotels.
- Annbar decided to terminate both relationships because it believed the combined services were too expensive for the benefits received.
- Because of a miscommunication during the transition, AER’s system continued to take and transmit reservations for the Muehlebach, and the hotel continued to receive and accept those reservations.
- During that period, Annbar did not pay invoices AER sent for reservation services.
- AER ultimately notified the hotel that reservation services were being terminated.
- After termination, individuals who called AER and asked for the Muehlebach were told the hotel was “not available” or “sold out.”
- Annbar alleged those statements were false at times when rooms were in fact available and that the statements caused the hotel to lose business.
- Annbar pursued American Express Company (AE) as well as AER, asserting AE’s involvement with the reservation computer system and the “Not Available” designation contributed to misleading communications to prospective guests.
- The jury found for Annbar and awarded $25,000 in actual damages and $100,000 in punitive damages against each defendant.

## Issues

1. Whether the evidence permitted the jury to find that AE and AER misrepresented the Muehlebach’s room availability to prospective patrons, causing Annbar to lose business.
2. Whether the evidence and submission supported punitive damages based on willful misconduct or reckless disregard (legal malice) rather than mere mistake or negligence.
3. Whether AE could be held liable along with its reservations affiliate based on its participation in the reservation system and the manner in which availability information was presented.

## Decision

- The Missouri Court of Appeals affirmed the judgment.
- The court held the evidence was sufficient for the jury to find actionable misrepresentation to prospective customers concerning room availability and resulting loss to the hotel.
- The court upheld the award of actual damages as supported by the proof and reasonable inferences the jury could draw about lost business.
- The court upheld punitive damages, concluding the record allowed a finding of aggravated conduct (legal malice/reckless disregard) justifying punishment and deterrence.

## Legal Principles

- A business may recover in tort when a defendant communicates false information to prospective customers about the business’s ability to provide services (such as room availability) and the false statements cause economic loss.
- Misrepresentation may be shown by direct or circumstantial evidence; where there is evidence from which reasonable jurors can infer falsity, causation, and resulting loss, the claim is for the jury.
- Lost-business damages need not be proven with mathematical certainty; it is enough that the plaintiff provides a reasonable basis for the jury to estimate damages from the facts shown.
- Punitive damages in Missouri require proof of legal malice—intentional wrongdoing or reckless disregard for the rights of others—and may be awarded in misrepresentation cases when the conduct is sufficiently aggravated.
- When the evidence supports a finding that a defendant’s conduct went beyond an innocent error and reflected reckless indifference to the consequences, an appellate court will not disturb a punitive-damages award simply because it is substantial.

## Conclusion

The court affirmed the jury’s verdict for Annbar, holding that the evidence supported findings that the American Express reservations operation conveyed false “unavailable/sold out” information about the hotel, that Annbar suffered compensable loss of business as a result, and that punitive damages were permissible because the jury could find reckless disregard amounting to legal malice.


Annbar Associates v. American Express Co., 565 S.W.2d 701 (1978)