                                                                   NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                               ________________

                                 Nos. 17-3531 & 17-3633
                                   ________________

                   GEORGE H. WILLEKES; MARK R. WILLEKES;
                           ROBERT P. WILLEKES,
                                            Appellants in No. 17-3531
                                    v.

                   THE SERENGETI TRADING COMPANY;
    SLOAT BROS, LTD, d/b/a THE ANNEX; GEORGE R. GUTHRIE; GROUP G, LLC.,
                                                Appellants in No. 17-3633
                               ________________

                     On Appeal from the United States District Court
                             for the District of New Jersey
                              (D.N.J. No. 2-13-cv-07498)
                          District Judge: Hon. Esther P. Salas
                                   ________________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                    May 23, 2019

              Before: MCKEE, SHWARTZ, and FUENTES, Circuit Judges

                              (Opinion filed: July 25, 2019)

                                   ________________
                                       OPINION*
                                   ________________

FUENTES, Circuit Judge




*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
         These appeals arise from the District Court’s dismissal of a suit filed by appellants

George, Mark, and Robert Willekes, shareholders of European Coffee B.V. (the “Coffee

Group”). This suit was filed against Sloat Bros. Ltd, a warehouse owner; Serengeti

Trading Co., a coffee purchaser; and Group G, LLC and George Guthrie, a coffee broker

and its owner (collectively, “Defendants”), for allegedly aiding and abetting the

fraudulent transfer of several hundred thousand pounds of coffee by the Willekeses’

former business partner, Clemens Calis, who is not a party to this suit. Because we

conclude that the Willekeses do not have standing as shareholders to pursue harms

suffered by their corporation, we will vacate in part and remand with directions to

dismiss without prejudice those claims for which the Willekeses lack standing. We will

affirm the dismissal of their remaining claims with prejudice.

I.       Background1

         As noted above, this suit stems from the fraudulent transfer of coffee by the

Willekeses’ business partner, Clemens Calis. The Willekeses and Calis were

shareholders and officers of the Coffee Group. In 2010, the Coffee Group filed suit in

New Jersey state court at Calis’s direction, alleging that Calis had acquired the

Willekeses’ shares in the Coffee Group for one euro. The Willekeses filed a “Civil RICO

counterclaim” against Calis individually.2 While the state litigation was pending, Calis

attempted to transfer $600,000 in cash from the Coffee Group’s funds and $2.8 million

worth of its coffee, then located at a warehouse operated by Sloat Bros. Ltd. The



1
    We assume all well-pled allegations in the Third Amended Complaint are true.
2
    A110, 113.
                                               2
Willekeses prevented the transfer of the coffee by sending Sloat a cease and desist letter,

threatening to sue if it transferred the coffee to Calis. Sloat promised in a letter from its

attorney that it would not transfer the coffee “under the circumstances.”3

       In November 2011, the judge in the state litigation ordered that the Coffee Group,

at Calis’s direction, sell $2.85 million in uninsured coffee inventory and the funds be

placed in a trust. The coffee was sold to Serengeti Trading Co. in a deal brokered by

George Guthrie and Group G, LLC and released by Sloat from its warehouse. Despite

the court’s order, Serengeti deposited $1.4 million in Calis’s personal account, not a trust.

Although the Willekeses eventually prevailed in the state suit against Calis, he is “now an

international Fugitive from Justice,” and they have been unable to collect the state court’s

$4.92 million judgment against him.4

       The Willekeses subsequently filed this suit and were permitted to thrice amend

their complaint. The Third Amended Complaint (“Complaint”) alleges claims for

negligence, equitable estoppel, aiding and abetting Calis’s breach of fiduciary duty, and

unjust enrichment against Defendants. The District Court dismissed the Complaint in its

entirety with prejudice, reasoning that the Willekeses had failed to plead knowledge on

the part of Defendants. The District Court also denied Defendants’ Motion for Sanctions.

The Willekeses appealed and Defendants filed a cross appeal.

II.    Discussion5


3
  A148.
4
  A141.
5
  The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have jurisdiction
pursuant to 28 U.S.C. § 1291. Defendants argue that the Willekeses lack standing under

                                               3
       As we will explain: (1) the Willekeses lack shareholder standing to pursue the

harm alleged in their counts for negligence and unjust enrichment6; (2) the Willekeses

fail to state a claim for the remaining counts of their Third Amended Complaint7; and

(3) the District Court did not abuse its discretion in denying the Motion for Sanctions.

              A.     The Willekeses Lack Shareholder Standing for Certain Counts
                     of the Third Amended Complaint

       Defendants argue the Willekeses lack standing to pursue their claims under

Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). An attack on standing under

Rule 12(b)(1) prior to the filing of an answer is a “facial attack” and is considered under

the same standard as a motion under Rule 12(b)(6).8 Under Rule 12(b)(6), a court

accepts all well-pleaded factual allegations as true and draws all reasonable inferences in

favor of the nonmoving party9 to “determine whether they plausibly give rise to an




Article III and that we therefore lack jurisdiction. That argument, however, is unavailing;
the Willekeses have pled an actual injury, traceable to defendants, that a court may
redress. See Franchise Tax Bd. v. Alcan Aluminium, 493 U.S. 331, 335 (1990).
6
  Counts 2, 4, 5, 8, 9, 11 of the Third Amended Complaint. Although Defendants argue
shareholder standing primarily with respect to the Second Amended Complaint, they also
raised the issue with respect to the Third Amended Complaint. To avoid remanding both
complaints to the District Court, we limit our discussion to the Third Amended
Complaint and do not reach Defendants’ arguments regarding the Second Amended
Complaint or the District Court’s order entered September 22, 2016.
7
  Counts 1, 3, 7, 10 of the Complaint.
8
  Constitution Party v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014). Because the standards
are the same, we do not decide which Rule is applicable to a challenge to prudential
standing such as shareholder standing. Cf. Maher Terminals, LLC v. Port Auth. of N.Y. &
N.J., 805 F.3d 98, 104 (3d Cir. 2015).
9
  See Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).

                                             4
entitlement to relief.”10 However, allegations that “are no more than [legal] conclusions[]

are not entitled to the assumption of truth.”11

       We conclude that the Willekeses lack standing as shareholders to file suit for

harms sustained by the Coffee Group. The Supreme Court has held that “standing” is

composed of “two related components: the constitutional requirements of Article III and

nonconstitutional prudential considerations.”12 Prudential standing prohibits a plaintiff

from asserting “the legal rights or interests of third parties”13; in shareholder suits, that

prohibition precludes “shareholders from initiating actions to enforce the rights of the

corporation.”14 Thus, “a shareholder (even a shareholder in a closely-held corporation)

may not sue for personal injuries that result directly from injuries to the corporation.”15

However, a shareholder may have standing “to recover for injuries that were inflicted on

him individually rather than on the corporation.”16 This rule is built on “the fundamental

tenet of corporation law which treats the corporate body as an entity—indeed, as a

person—separate and distinct from those who own shares of its stock.”17

       Here, the Willekeses have not alleged an individual, personal harm in their counts

for negligence and unjust enrichment for two reasons. First, the state court’s November


10
   Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
11
   Id.
12
   Alcan, 493 U.S. at 335 (quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)).
13
   Id. at 336 (quoting Warth, 422 U.S. at 499).
14
   Id. (citing Alcan Aluminium v. Franchise Tax Bd., 860 F.2d 688, 693 (7th Cir. 1988)).
15
   Kaplan v. First Options (In re Kaplan), 143 F.3d 807, 811–12 (3d Cir. 1998); accord
Pepe v. Gen. Motors Acceptance Corp., 604 A.2d 194, 196 (N.J. Super. Ct. App. Div.
1992).
16
   Kaplan, 143 F.3d at 812.
17
   Kauffman v. Dreyfus Fund, Inc., 434 F. 2d 727, 733 (3d Cir. 1970).

                                               5
2011 Order for the sale of the coffee clearly shows the coffee belonged, not to the

Willekeses, but to the Coffee Group. Second, the Complaint explicitly refers to the

Coffee Group as the “Title Owner of the coffee.”18 Thus, the injury in the fraudulent sale

of coffee was sustained by the Coffee Group, and the Willekeses do not have shareholder

standing to pursue a suit in their own name, as opposed to that of the Coffee Group, in

their counts for negligence and unjust enrichment. As a result, we will vacate the order

dismissing those claims with prejudice and remand with direction that the District Court

dismiss the claims without prejudice.19

       On the other hand, the Willekeses have sufficiently alleged a personal harm in

their counts for aiding and abetting and equitable estoppel and have standing to pursue

those claims. The aiding and abetting claims assert that Defendants facilitated Calis’s

breach of his fiduciary duty when he absconded with the proceeds of the coffee sale in

violation of the November 2011 state court order. The order directed the Coffee Group,

by and through Calis, to sell coffee and provide updates to the Willekeses. Therefore, to

the extent that Calis breached a fiduciary duty20 under the November 2011 court order

and Defendants aided that breach, the duty was owed to the Willekeses individually, as

parties to the state court litigation. The equitable estoppel claim asserts that the



18
   A137; see also A134.
19
   McInnis-Misenor v. Maine Med. Ctr., 319 F.3d 63, 73 (1st Cir. 2003) (“The prudential
reasons alone provide adequate basis to affirm the order dismissing . . . without
prejudice.”).
20
   The duty here would be Calis’s obligation to comply with the terms of the November
2011 court order, directing him to confirm the sale with the court and the Willekeses and
to deposit the net proceeds in the trust account. We decline to decide whether this duty
arises from Calis’s role as a fiduciary.
                                              6
Willekeses declined to sue Sloat, relying on representations Sloat’s attorney made

promising not to transfer the coffee to Calis. We believe that the Willekeses have

sufficiently alleged that this was an injury that may have harmed them personally.

       Accordingly, the District Court properly held that the Willekeses have standing to

sue on their aiding and abetting and equitable estoppel claims, and we next examine

whether the Court properly dismissed those claims under Federal Rule 12(b)(6).

       B.     The District Court Properly Concluded that the Willekeses Fail to
              State a Claim for Aiding and Abetting and Equitable Estoppel.

       In the alternative, Defendants argue that those remaining claims should be

dismissed under Rule 12(b)(6).21 We agree with Defendants with respect to this issue.

       In Counts 1, 7, and 10 of the Third Amended Complaint, the Willekeses plead that

Defendants aided and abetted Calis’s breach of his fiduciary duty to turn over the net

proceeds of the sale to the trust account when he had the money sent to his personal

account. Under New Jersey law, “[t]he elements of aiding and abetting are: (1) the

commission of a wrongful act; (2) knowledge of the act by the alleged aider-abettor; and

(3) the aider-abettor knowingly and substantially participated in the wrongdoing.”22 “A

claim for aiding and abetting fraud also requires proof of the underlying tort[.]”23




21
   Our review is plenary, and as noted above, we disregard the pleading’s “legal
conclusions” but “assume all remaining factual allegations to be true,” which we construe
in the light most favorable to the plaintiff. Connelly v. Lane Constr. Corp., 809 F.3d 780,
786 n.2, 790 (3d Cir. 2016).
22
   Morganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406, 415
(3d Cir. 2003); see also State, Dep’t of Treasury, Div. of Inv. ex rel. McCormac v. Qwest
Commc’ns Int’l, Inc., 904 A.2d 775, 784 (N.J. Super. Ct. App. Div. 2006).
23
   Qwest Commc’ns Int’l, Inc., 904 A.2d at 784.
                                               7
       Assuming, as the District Court did, that Calis breached a fiduciary duty created

by the November 2011 order, the Willekeses have not pled that Defendants had the

requisite knowledge or knowing participation to have aided and abetted a breach of that

duty. The Willekeses assert, and attach documents suggesting, Defendants were aware of

an ownership dispute between Calis and the Willekeses. That knowledge, however, does

not constitute knowledge that Calis would abscond with the funds of the sale in violation

of his duties under the order, let alone knowing participation in and facilitation of that

breach. Although Serengeti deposited the funds in Calis’s personal account, the order did

not obligate it to deposit the funds in the special master trust account—it simply directed

that the net proceeds of the sale “shall until further Order of the Court be distributed” to

the trust account,24 so it is reasonable to infer that Serengeti expected Calis to transfer the

funds to the trust account.25 Nothing in the pleading provides a basis to dispel this

inference.

       In Count 3, the Willekeses allege a claim of equitable estoppel against Sloat. They

plead that the letter they received from Sloat’s attorney in response to their cease and

desist letter induced them not to join Sloat as a party in the state court action. “[T]o

establish equitable estoppel, plaintiffs must show that defendant engaged in conduct,

either intentionally or under circumstances that induced reliance, and that plaintiffs acted

or changed their position to their detriment.”26


24
   A187.
25
   See Sloat Br. at 12 (“[N]othing in the State Court Order precluded the funds from being
transferred to Calis’[s] account and, thereafter, to the Trust Account.”).
26
   Knorr v. Smeal, 836 A.2d 794, 799 (N.J. 2003).

                                               8
       While the Willekeses’ cease and desist letter threatened Sloat with litigation if it

released the coffee,27 and we assume that the letter the Willekeses received from Sloat’s

attorney caused the Willekeses not to sue Sloat, the Willekeses have not pled any facts to

conclude that Sloat sent the letter to induce the Willekeses to not bring them into the state

suit. Moreover, the doctrine of equitable estoppel “is only applied in compelling

circumstances where the interests of justice, morality and common fairness dictate.”28

The pleadings provide no basis for concluding that equitable estoppel should apply here.

       The District Court properly dismissed the Willekeses’ claims for their aiding and

abetting and equitable estoppel.29

       C.     The District Court Did Not Abuse Its Discretion in Denying Sanctions

       Next, Defendants challenge the District Court’s denial of economic sanctions

under Federal Rule of Civil Procedure 11. Under Rule 11, any “pleading, written motion,

or other paper” presented to the court by an attorney certifies that “the claims, defenses,

and other legal contentions are warranted by existing law or by a nonfrivolous argument

for extending, modifying, or reversing existing law” and that “the factual contentions




27
   A149 (“If we do not hear from you by 12:45pmPT, we will have no choice that to file
a lawsuit in Superior Court . . . . To avoid that unnecessary emergent litigation, please
confirm in writing . . . .”).
28
   First Union Nat’l Bank v. Nelkin, 808 A.2d 856, 862 (N.J. Super. Ct. App. Div. 2002).
29
   The District Court also properly dismissed the Willekeses’ failure to mitigate claim in
Count 6 of the Complaint, as this is not a freestanding cause of action under New Jersey
law, but rather is an affirmative defense. See O’Lone v. Dep’t of Human Servs., 814 A.2d
665, 671 (N.J. Super. Ct. App. Div. 2003).

                                              9
have evidentiary support.”30 The District Court’s denial of a motion for sanctions is

reviewed for abuse of discretion.31

       The District Court did not abuse its discretion in denying the Motion for

Sanctions. The District Court stated, “[I]t’s very clear this is not an action that rises to a

level, under Rule 11, for economic sanctions.”32 Explaining its reasoning, the Court

stated it “invite[d] plaintiffs’ counsel to look at and to reassess whether claims could [be]

brought. And with that, counsel did, I believe, arguably raise[] those claims that he felt

he could raise as a matter of fact and as a matter of course.”33 The District Court

concluded the Complaint sufficiently differed from previous versions to avoid sanctions.

We cannot say the District Court’s conclusion was “contrary to reason or without a

reasonable basis in law and fact.”34

III.   Conclusion

       For the foregoing reasons, we will affirm in part, vacate in part, and remand with

direction to dismiss without prejudice those claims for which the Willekeses lack

standing. The District Court’s order denying the motion for sanctions is affirmed.




30
   Fed. R. Civ. P. 11(b)(2)–(3).
31
   Simmerman v. Corino, 27 F.3d 58, 61 (3d Cir. 1994).
32
   A479.
33
   A480–81.
34
   Moeck v. Pleasant Valley Sch. Dist., 844 F.3d 387, 390 (3d Cir. 2016) (citations and
internal quotations omitted).
                                            10
