Zigas v. Superior Court

Zigas and other tenants (plaintiffs) rented apartments in a San Francisco building financed with a federally insured mortgage. As a condition of that financing, the landlords (defendants) had an agreement with HUD barring them from charging rent above HUD-set maximums. The tenants sued the landlords in state court, alleging about two million dollars in excessive rents and claiming standing as third-party beneficiaries of the landlord-HUD agreement. The trial court held they lacked standing under both federal and state law. On appeal, the court agreed there was no standing under federal law and turned to the state-law claim.

Whether standing to sue as a third-party beneficiary of a government contract depends on the intent of the contracting parties as manifested by the contract and the circumstances surrounding its formation.