Adams v. Raintree Vacation Exchange, LLC

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
January 22, 2013
Before
RICHARD A. POSNER, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
No. 11-3576
C HARLES A DAMS, et al.,
Plaintiffs-Appellants,
v.
R AINTREE V ACATION E XCHANGE, LLC, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 10 C 3264—Virginia M. Kendall, Judge.
ORDER
On January 3, 2013, plaintiffs-appellants filed a petition
for rehearing en banc. All of the judges on the original
panel have voted to deny the petition, and none of the
2 No. 11-3576
active judges has requested a vote on the petition for
rehearing en banc. The petition is therefore D ENIED.
The petition for rehearing is based on speculation
about the contents of a sealed 2006 settlement agree-
ment between Starwood and Raintree that was
submitted in camera to the district judge, who correctly
ruled that it was irrelevant to the fraud. Our opinion
allows Starwood to invoke the forum selection clause
on the basis of mutuality. The plaintiffs could invoke it
against Starwood, even though Starwood was not a
party to the contract containing the clause, because
they allege that it was conspiring with Raintree, whose
subsidiary signed the contract containing the clause;
mutuality means that Starwood can invoke it against
them. The plaintiffs’ counsel stated at oral argument
that Starwood concedes that a settlement with Raintree
severed all ties between the two companies, and further
stated that Starwood cannot invoke mutuality because
“as of the time of the filing of this lawsuit Starwood was
a complete stranger to the original project and also a
complete stranger to the company or any later entity [i.e.,
Raintree] that supposedly owned or acquired the forum
clause.” But the premise of the suit is that Starwood
conspired with Raintree to defraud them and that the
contracts that the plaintiffs signed in 2004 with an
alleged puppet of Raintree were instruments of the
fraud. Whether Starwood’s and Raintree’s alleged con-
spiratorial venture subsequently went south, leading
them to sever ties with each other in 2006, is irrelevant.
We note finally that in MB Financial, N.A. v. Stevens,
678 F.3d 497 (7th Cir. 2012), we upheld sanctions against
No. 11-3576 3
David Novoselsky, the plaintiffs’ lawyer in this case, and
we take this opportunity to remind him that frivolous
arguments are sanctionable.
1-28-13