Zigas v. Superior Court

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Zigas v. Superior Court
Court California Court of Appeal
Citation 174 Cal.Rptr. 806, 120 Cal.App.3d 827
Date decided June 24, 1981

Facts

  • Several landlords who financed an apartment building in San Francisco with a federally insured mortgage = defendants
  • U.S. Department of Housing and Urban Development (HUD) provided financing insurance to these landlords provided that they refrained from charging excessive rents
  • Zigas = plaintiff in a class-action lawsuit against the landlords of the apartment building

Procedural History

  • Zigas sued the landlords claiming that the landlords had breached their HUD contracts because they were over-charging rents in the apartment community in San Francisco, California
  • Zigas & the other tenants stated that they were the 3rd-party intended beneficiaries of the financing contracts of the landlords & HUD
  • The trial court sustained the demurrers of the landlords

Issues

Does a 3rd party (the tenants) benefitting from a government contract (between the landlords & HUD) have standing to sue if a breach of that contract causes the beneficiary to suffer damages?

Arguments

  • The class of tenants claimed the excessive rents totalled over $2,000,000 around 1980

Holding

Yes; a 3rd-party benefitting from a government contract may have standing to sue if a breach of that contract causes the beneficiary damages.

This court applies California state contract law to issue a writ of mandamus. The trial court's judgment is reversed.

Judgment

Reversed

Rule

HUD publishes "fair market rents" online based on the state, county, and ZIP code at FY 2024 Final Fair Market Rents Documentation System — Select Geography (huduser.gov)

Resources