Glendale Federal Savings Bank gained control of Bel Aire Apartments, the complex where Diaz lived, after the previous owners defaulted on their mortgage loan. Glendale Federal foreclosed on the property and hired Real Estate Concepts, Inc. to manage it. Soon after Glendale Federal took control of the building, Diaz and the other tenants received letters saying that their tenancy was being terminated so that the building could be renovated.
Diaz and the other tenants sued both Glendale Federal and Real Estate Concepts, claiming violations of the Fair Housing Act. Bel Aire Apartments was located in a mainly white area near the University of California at Santa Barbara. The plaintiffs claimed that Glendale Federal had evicted Hispanic tenants and families with children so that they could be replaced with white college students with no children.
The plaintiffs argued that evictions were not necessary because the renovations being done at Bel Aire Apartments could have been made while the tenants lived there. The eviction of all the tenants, the plaintiffs claimed, had a disparate impact on Hispanic tenants and families with children.
Glendale Federal and Real Estate Concepts agreed to pay $440,000 to settle the tenants' claims. Glendale Federal also agreed to have the employees of any future management companies trained in the provisions of the Fair Housing Act and California's housing laws.