Banking and Finance Law Daily Wrap Up, ENFORCEMENT ACTIONS—Nonprofits oppose Colony Ridge settlement, argue proposed relief falls outside pleaded case, (Mar 12, 2026)

By Shashi Kant, BALLB, LL.M.

The groups contend the proposed dismissal and enforcement request would give judicial approval to settlement terms they say do not provide relief to harmed borrowers.

Eight nonprofit organizations have filed a motion for leave to file an amicus brief opposing the joint motion to dismiss in the Colony Ridge litigation, arguing that the proposed settlement asks the court to approve and enforce relief unrelated to the pleaded fair housing and lending claims while failing to provide meaningful relief to consumers harmed by the alleged scheme. The filing follows a February settlement under which the United States, the State of Texas, and the Consumer Financial Protection Bureau moved to dismiss the Colony Ridge actions after agreeing to terms that included $48 million for infrastructure and $20 million for law enforcement spending (see Banking and Finance Law Daily, Feb. 11, 2026). The proposed amici are the National Fair Housing Alliance, National Consumer Law Center, UnidosUS, Public Justice, Center for Responsible Lending, Poverty and Race Research Action Council, Southern Poverty Law Center, and League of United Latin American Citizens (Consumer Financial Protection Bureau v. Colony Ridge Development LLC, No. 4:23-cv-04729 (S.D. Tex. Mar. 3, 2026)).

Amici challenge settlement structure. In the motion, the organizations said they sought to assist the court’s review of the joint motion because, in their view, the parties were asking the court to approve and enforce relief “unrelated to the pleaded case or the civil rights statutes under which it was brought,” while the settlement “fails to provide adequate relief to those harmed by the predatory and discriminatory scheme at issue.” The motion states that approval of the joint motion would undermine civil rights enforcement and would be inconsistent with the principle that a consent decree must “spring from and serve to resolve a dispute within the court’s subject matter jurisdiction.” In an accompanying memorandum, amici argued that the parties’ Rule 41(a)(2) motion effectively asks the court to enter a consent decree by dismissing the case with prejudice while retaining jurisdiction to enforce the settlement. According to the memorandum, the court must therefore independently consider whether the proposed agreement is based on the pleaded case, furthers the purposes of the applicable statutes, and negatively affects third parties. The amici argued that those factors favor denial of the motion.

Objections to relief and law-enforcement funding. The amici memorandum states that the underlying complaint concerned a predatory and discriminatory scheme involving seller-financed lot sales targeted at Hispanic consumers and that the complaint sought damages for harmed consumers. The groups argued that the settlement fails to provide “meaningful relief” for those borrowers and instead includes terms “that have nothing to do with this case,” including a requirement that Colony Ridge direct $20 million toward increased law enforcement in the affected communities. The brief states that, instead of providing individual relief to victims of the alleged scheme, the settlement “appears intended to subject them to heightened surveillance,” and, for some, could create risks of “detention, family separation, or even deportation.” The amici also argued that the court lacks jurisdiction to enforce the law-enforcement funding provision because, in their view, that relief does not arise from the pleaded claims or the statutes under which the case was brought. The memorandum says the settlement goes beyond the “general scope of the case made by the pleadings” and asks the court to approve provisions that do not resolve the claims alleged in the complaint.

Government and Texas oppose amicus participation. The United States and the State of Texas opposed the motion for leave to file an amicus brief. In a March 5 response, the plaintiffs argued that the primary purpose of Rule 41(a)(2) review is to protect the nonmoving party from unfair treatment and that, where plaintiffs seek dismissal with prejudice after reaching settlement, there is no prejudice for the court to weigh. The response contends that the parties properly moved under Rule 41(a)(2) because they seek retention of jurisdiction in light of what they describe as “substantial relief” in the settlement agreement.

According to the response, the agreement obligates Colony Ridge to implement extensive reforms concerning lending, sales, marketing, and disclosures, and to invest $48 million in infrastructure improvements, including $18 million to reduce and prevent flooding, as well as $20 million for local law enforcement. The response states that these provisions are intended to ensure that Colony Ridge remains “a community that is habitable, safe, and where residents can reap all the benefits of homeownership.” Plaintiffs argued that retaining jurisdiction would allow the court to address any noncompliance more efficiently than requiring a new civil action.

The response further argues that amici are improperly attempting to second-guess the settlement after choosing not to intervene earlier in the litigation. The government and Texas stated that, if amici or aggrieved persons wanted to participate in shaping the resolution, they could have sought timely intervention under Rule 24. The response also states that the Fair Housing Act allows aggrieved persons to pursue their own remedies and that no timely motion to intervene was filed here.

Motion to appear at hearing. On March 9, the same nonprofit organizations filed a separate motion seeking leave to appear as amici at a forthcoming hearing on the joint motion. That filing states that the court held a hearing on March 6, noted it had “serious questions” about the joint motion, and adjourned the hearing so that a government attorney could appear in person to address those questions. The amici said adversarial argument would be useful because, in their view, important interests are at stake that are not represented by the parties and substantial issues raised by the settlement have not been sufficiently addressed in the briefing. In that motion, amici again argued that the joint motion asks the court to retain jurisdiction to enforce settlement terms that “have nothing to do with this case and do not provide relief to those most harmed by Defendants’ conduct.” They also disputed the government’s position that the court’s inquiry under Rule 41(a)(2) is limited to prejudice to parties, pointing to what they described as unresolved issues concerning whether the settlement relief arises from the pleaded case and whether the law-enforcement funding provision can properly be enforced in this action.

Attorneys: Elisabeth Assae-Bille for the CFPB. Elizabeth Frances Karpati, U.S. Attorney's Office, for U.S. Alexander Mark Dvorscak (Stone Hilton, PLLC) for Colony Ridge Development, LLC d/b/a Terrenos Houston d/b/a Terrenos Santa Fe d/b/a Lotes y Ranchos, Colony Ridge BV, LLC and Colony Ridge Land, LLC d/b/a Terrenos Houston d/b/a Lotes y Ranchos. Yiyang Wu and Nicholas Abbott (Relman Colfax PLLC), Elena Goldstein (Democracy Forward Foundation), Janell M. Byrd and Sasha Samberg-Champion (National Fair Housing Alliance) for amici curiae National Fair Housing Alliance, National Consumer Law Center, UnidosUS, Public Justice, Center for Responsible Lending, Poverty and Race Research Action Council, Southern Poverty Law Center, and League of United Latin American.

Companies: Center for Responsible Lending; Colony Ridge Development, LLC d/b/a Terrenos Houston d/b/a Terrenos Santa Fe d/b/a Lotes y Ranchos; Colony Ridge BV, LLC; Colony Ridge Land, LLC d/b/a Terrenos Houston d/b/a Lotes y Ranchos; League of United Latin American Citizens; National Consumer Law Center; National Fair Housing Alliance; Poverty and Race Research Action Council; Public Justice; Southern Poverty Law Center; UnidosUS

LitigationEnforcement: CFPB CommunityDevelopment DoddFrankAct EnforcementActions EqualCreditOpportunity ESGNews TexasNews UDAAP