Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_20-cv-01925/USCOURTS-cand-5_20-cv-01925-1/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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Case No.: 5:20-cv-01925-EJD

ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY RESTRAINING ORDER

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

GREGORY MALLEY,

Plaintiff,

v.

SAN JOSE MIDTOWN DEVELOPMENT 

LLC, et al.,

Defendants.

Case No. 5:20-cv-01925-EJD 

ORDER DENYING PLAINTIFF’S

MOTION FOR A TEMPORARY 

RESTRAINING ORDER

Re: Dkt. No. 2

On March 19, 2020, Plaintiff Gregory Malley filed a motion for a temporary restraining 

order against Defendants San Jose Midtown Development LLC (“SJMD”), Sangeeth Peruri, and 

Thomas Malgesini. Motion for Temporary Restraining Order (“TRO Mot.”), Dkt. No. 2. On 

March 19, 2020, the case was reassigned to the undersigned. Dkt. No. 8. For the reasons 

discussed below, the Court DENIES the motion.

This case arises under California contract law and federal civil RICO (18 U.S.C. § 1964). 

Defendant Peruri leads an investment consortium that holds a majority stake in SJMD. TRO Mot.

at 6. Defendant Malgesini belongs to Defendant Peruri’s majority group. Id. In September 2014, 

Plaintiff and two other investors contributed property located at 777 West San Carlos Street, San 

Jose, California (“the Property”) to SJMD. Id. at 6–7. Plaintiff entered into an amended operating 

agreement with Defendant SJMD regarding the Property, which gave Plaintiff a 16.66% economic 

interest in SJMD. Id. at 7. Defendant SJMD recently entered into an agreement to sell the 

Property. Id. at 7–8. Escrow closed March 18, 2020 and the funds for the property were 

deposited into Defendant SJMD’s bank account on March 19, 2020. Id. at 7. The Property sold 

for $11.2 million. Id. at 8. 

Plaintiff alleges that majority stakeholder Defendant Peruri forced minority stakeholders to 

Case 5:20-cv-01925-EJD Document 11 Filed 03/19/20 Page 1 of 3
Case No.: 5:20-cv-01925-EJD

ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY RESTRAINING ORDER

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United States District Court

Northern District of California

bear the brunt of all costs associated with developing the Property by (1) retiring debt payable at 

10 percent and (2) requiring the minority members to take out usury loans ranging from 20 to 40 

percent. Id. at 7. Plaintiff contends these usury rates are illegal. See Complaint for Damages and 

Equitable Relief (“Compl.”) ¶ 8, Dkt. No. 1. Defendants collected such rates by: 

1. Adopting the “Second Amendment” to the SJMD Operating Agreement, which allows 

Defendant SMJD to charges its Members usury interest and amend its Operating 

Agreement without the unanimous, written consent of its Members. Id. ¶ 14. 

2. Adopting the “Fifth Amendment” to the SJMD Operating Agreement, which gave 

Defendant SJMD further authority to charge its Members usury interest and gave 

Defendant SJMD the power to withhold a Member’s distribution unless he or she agreed to 

waive his or her claims against SJMD. Id. ¶ 15. 

Based on these amendments, Defendants argue they are able to charge Plaintiff late fees 

for overdue usuries. Id. ¶ 18. Defendants allegedly plan to take these fees out of Plaintiff’s share 

of the Property proceeds. Id. ¶ 19. Pursuant to the Fifth Amendment to the Operating Agreement, 

Defendants plan to withhold the rest of Plaintiff’s distribution because Plaintiff refuses to waive 

his legal claims against SJMD. Id. ¶ 20. 

Plaintiff also entered into a Joint Venture Agreement with Defendant Malgesini. TRO 

Mot. at 17. Under this agreement, Defendant Malgesini loaned Plaintiff $200,000 in connection 

with another real-estate transaction. Id. Pursuant to the agreement, if Plaintiff had not repaid 

Defendant Malgesini before the close of escrow on the Property, then Defendant Malgesini could 

garnish $250,000 of Plaintiff’s share of proceeds from the Property. Id.

“The same legal standard applies to a motion for a temporary restraining order and a 

motion for a preliminary injunction.” Henry Schein, Inc. v. Cook, 191 F. Supp. 3d 1072, 1076 

(N.D. Cal. 2016). “A plaintiff seeking either remedy must establish that he is likely to succeed on 

the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the 

balance of equities tips in his favor, and that an injunction is in the public interest.” Id. (internal 

citation and quotation omitted). On a temporary restraining order, a plaintiff must demonstrate 

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Case No.: 5:20-cv-01925-EJD

ORDER DENYING PLAINTIFF’S MOTION FOR A TEMPORARY RESTRAINING ORDER

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that there exists a significant threat of irreparable injury. See, e.g., Baker DC v. NLRB, 102 F. 

Supp. 3d 194, 198 (D.D.C. 2015); Towery v. Brewer, 672 F.3d 650, 657 (9th Cir. 2012) (“Under 

the ‘serious questions’ version of the [preliminary injunction] test” a plaintiff must still show that 

“there is a likelihood of irreparable injury.”); cf. TRO Mot. at 18 (using “serious questions” test 

but failing to include requirement of irreparable injury).

Here, Plaintiff has failed to show that a significant threat of irreparable harm exists. 

Plaintiff argues the two contractual amendments and the Joint Venture agreement are null and void

and asks the Court to enjoin Defendant SJMD from enforcing these provisions.1 See Compl. at 22 

(Prayer for Relief); TRO Mot. at 23–24. In Plaintiff’s view, allowing the amendments and Joint 

Venture Agreement to stand will cause Plaintiff “irreparable harm” because these provisions allow

Defendant SJMD to detain Plaintiff’s Property proceeds, which deprives Plaintiff of the economic 

means to litigate this lawsuit. Id. at 23. Plaintiff, however, neither cites support for his 

proposition that an inability to retain counsel constitutes irreparable harm nor explains why he 

cannot find counsel on a contingency fee basis. Moreover, Plaintiff’s claims for relief are 

economic. He seeks treble damages, a finding that Defendants improperly withheld money

pursuant to the amendments and Joint Venture Agreement, and other special damages. Compl. at 

22–23 (Prayer for Relief). Such economic damages can be redressed through monetary 

damages—Plaintiff does not need equity to redress his harms. Plaintiff thus has not meet the 

requisite “irreparable harm” standard and the Court DENIES Plaintiff’s motion for a temporary 

restraining order. 

IT IS SO ORDERED.

Dated: March 19, 2020

______________________________________

EDWARD J. DAVILA

United States District Judge

1 Plaintiff also asked the Court to enjoin Defendant SJMD from disbursing 15 percent of the 

Proceeds from the $11.2 million sale of the Property. This request is now moot as 15 percent has 

already been disbursed. See Dkt. No. 9.

Case 5:20-cv-01925-EJD Document 11 Filed 03/19/20 Page 3 of 3