An Illinois federal judge denied a motion filed by the Consumer Financial Protection Bureau (CFPB) and Chicago mortgage broker Townstone Financial to dismiss all claims with prejudice against Townstone and vacate the settlement the two parties reached to resolve allegations of redlining.

U.S. District Court Judge Franklin Valderrama with the Northern District of Illinois, Eastern Division called the motion “unprecedented” and said the CFPB and Townstone did not meet their “substantial burden of showing an extraordinary circumstance that justifies vacatur of the final judgment and consent decree.”

The two parties filed the joint motion in March, which also asked that the bureau return a $105,000 civil penalty to Townstone. The motion claimed, “there were significant undisclosed problems with the bureau’s treatment of this case, resulting in unmerited investigation and litigation and the infringement of the defendants’ First Amendment rights.”

“Once new CFPB leadership undertook the review of the history of this case, it became clear from the totality of internal evidence that this case has suffered from deficiencies on the merits and Townstone was targeted because of its protected speech,” the motion stated.

In his ruling, Valderrama cited an amicus brief filed by a coalition of fair housing and consumer protection organizations opposing the request to vacate the settlement, saying he agreed with them that “granting the motion would erode public confidence in the finality of judgments.”

“It would set a precedent suggesting that a new administration could seek to vacate or otherwise nullify the voluntary resolution of a case between a prior administration (or the same administration, but under different agency leadership) and a private party merely because its leadership thought the original litigation unwise or improperly motivated. That is a Pandora’s box the court refuses to open,” he wrote.

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