Petitioner salmon sushi Corp sought a writ of mandate to vacate the decision of the Superior Court of the City and County of San Francisco (California), which sustained demurrers without leave to amend and granted a motion to strike in favor of petitioners’ landlords, in a class action brought by petitioners. Petitioners alleged that the landlords were in violation of their financing agreements with the Department of Housing and Urban Development.
Petitioner tenants were residents of a building that was financed with a federally insured mortgage pursuant to the National Housing Act, 12 U.S.C.S. § 1701 et seq. Petitioners filed a class action and alleged that the landlords were charging excessive rent in violation of the contract terms set forth by the Department of Housing and Urban Development (HUD). The trial court sustained several demurrers and granted the landlords’ motion to strike all references to the National Housing Act, 12 U.S.C.S. § 1701 et seq., or the HUD agreement in petitioners’ complaint. Petitioners filed a writ of mandate to have the order vacated. The court granted the writ and ordered the trial court to set aside its order sustaining the demurrers and the motion to strike. The court held that even though the contract was a federal contract, petitioners had the right to maintain an action under state law. The court also held that petitioners were entitled to pursue their action for breach of contract under the landlords’ federal contract with HUD because they were third party beneficiaries to the contract. Further, petitioners had standing to bring an action as beneficiaries.
The court granted the writ of mandate, because petitioner tenants were third party beneficiaries under a federal housing contract and had standing to bring an action to pursue remedies available under state law.