Former San Jose mayor sued by nephew after business deal tanks

A former San Jose mayor is being sued by his nephew for allegedly spoiling a business deal.

John McEnery IV filed a lawsuit in federal court on Monday against his uncle, former Mayor Tom McEnery, who is also his business partner in a bar on San Pedro Square Market, along with businessman Martin Menne.

According to the seven-page filing, John wanted to sell a portion of his shares in two companies, Urban Markets LLC and Urban Markets Entertainment LLC, both of which are invested in the market. Tom allegedly ruined the proposal by visiting the potential buyer—another nephew, Oliver Herning—and badmouthing the deal.

The complaint claims Tom told Herning that John had provided an “oversized valuation” of the companies. Tom also disparaged John’s morals and character and allegedly insinuated Herning might wind up in litigation if he continued business discussions with John. Tom also allegedly offered Herning an alternative investment opportunity.

The lawsuit—which alleges intentional interference and demands various damages—focuses on the operating agreements of the two investment companies. According to the complaint, if John found a purchaser willing and able to purchase his entire stake, Tom and Menne had the right of first refusal. But this clause wouldn’t be triggered if John sold only part of his interests. According to the suit, Tom did not share this detail with Herning. It’s unclear how much money John McEnery is seeking in damages, but it is for an amount greater than $75,000.

Attorney James McManis, who represents John, likened the dispute to a divorce and said his client’s investment in the companies was in the seven-figure range.

“I think this is a very sad case,” McManis told San José Spotlight. “John felt very badly (about) how he was treated by his uncle.”

Tom did not immediately respond to a request for comment.

The complaint states John grew up idolizing his successful uncle, who served two terms as San Jose’s mayor from 1983 to 1991 and is a prominent businessman. John has investments in other properties scattered throughout Northern California. On Twitter, he represents himself as a developer of San Pedro Square Market, San Jose & Abbott Square Market and Jack London Square in Oakland.

The former mayor has engaged in several business ventures since leaving public service, including a deal where he once held a stake with the ownership group that controls the San Jose Sharks hockey team. Tom was also a prominent developer of the San Pedro Square Market food hall. In 2019, he set out to redevelop the popular bar and restaurant, Manny’s Cellar. He also helped set up a statue of Captain Thomas Fallon, which in November the city voted to remove because it glorifies a colonizer.

John and his father were charged with insider trading by the SEC in 2015 in connection with General Electric Company’s purchase of a cancer diagnostics company, according to media reports. The case settled and the pair did not admit any wrongdoing.

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.