Annbar Associates v. American Express

Citation: Annbar Associates v. American Express Co., 565 S.W.2d 701 (Mo. Ct. App. 1978).

Factual Background
Annbar Associates, a partnership owning the Muehlebach Hotel in Kansas City, was a member of a computerized reservations system for hotels ("Space Bank"), operated by the American Express. In mid-1973, the hotel experienced a serious "cash crunch" and was unable to pay the bill for the computerized reservation services. The Muehlebach Hotel was therefore placed "offline" and was ineligible to receive reservations from the Space Bank. During this time, the responses from the Space Bank computer read "NOT AVAILABLE," and the reservation agents were directed to tell prospective hotel clients: "I'm sorry that hotel is not available."

Trial Court Decision
Annbar sued American Express for damages for the injurious falsehood arising out of the alleged misrepresentation to potential hotel customers that the hotel could not accommodate them, when in fact it could. The trial court entered a judgment for Annbar for actual and punitive damages.

Appellate Court Decision
The court of appeals reversed and remanded, finding, inter alia, that although Annbar's failure to pay the bill for American Express' services may have given rise to a right to cancel the hotel's membership in the computerized reservation service, it did not give American Express the right to provide false information calculated to discourage future transactions between the hotel and its prospective clients. The court held, however, that absent evidence of a spite motive on the part of the reservation agents or evidence of purposeful harm to Annbar, Annbar could recover only if the reservation agents knew that the "NOT AVAILABLE" response on the computer was false, or if the reservation agents acted in "reckless disregard" of the truth or falsity of the "NOT AVAILABLE" response.