Courts on AI / Fabricated or misquoted citations
Forest Ridge Townhomes Corporation of Greensboro v. Heag Pain Management Center et al.
North Carolina Court of Appeals · State appellate courts · NC · · 2026 WL 762385 · No. COA 25-600 bankruptcy case · opinion
On 2026-03-18, North Carolina Court of Appeals affirmed the surplus-funds ruling and chastised counsel for relying on Perplexity.AI material without adequately checking irrelevant authorities. Counsel submitted a motion with fabricated or nonexistent authorities, including Benjamin v. Costco Wholesale Corp. The court resolved the merits while identifying the defective legal research.
- Disposition
- The court affirmed the surplus-funds ruling and chastised counsel for relying on Perplexity.AI material without adequately checking irrelevant authorities.
- Recorded conduct
- The motion used fabricated or nonexistent authorities, including Benjamin v. Costco Wholesale Corp, which the court found nonexistent, misquoted, or unsupported. — outcome: other; actor: lawyer
- Canonical record
- Incident tracker entry — verified outcome, regulator disposition and related rules
What the court wrote
Verbatim from the court's document (public domain). Ellipses mark omitted text; nothing is paraphrased.
prescribed by statute”); N.C.G.S. § 45-21.32(a) (a surplus-funds proceeding is a special proceeding). Respondents’ speculation on the alleged “impact” of this matter on mechanics’ liens, as well as their inapplicable FDCPA claim, strongly resemble similar arguments in a record filing titled “Perplexity.AI Answers,” attached as an exhibit to Respondents’ “Motion for New Trial / Amendment of Judgment and Order, for Reconsideration, and Rule 60 Relief.” In the motion, Respondents’ counsel explains that he “did traditional research but supplemented it with research through Perplexity.AI, Professional Version” and provides a URL link to the same: “https://www. perplexity.ai/.” To the extent that the irrelevance of Respondents’ cited legal authorities results from the failure of Respondents’ counsel to adequately review AI-generated work product, we chastise him for this regrettable oversight. See N.C. State Bar, Formal Op. 1 (2024) (holding attorney “individually responsible for reviewing, evaluating, and ultimately relying” on AI-generated work product); accord Benjamin v. Costco Wholesale Corp., 779 F. Supp. 3d 341, 347 (E.D.N.Y. 2025) (noting the “panoply of sanctions against attorneys who submitted fake cases” hallucinated by AI).
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