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Incident Tracker / United States (federal)

In re Rosslyn2016, LLC, No. 25-34507 (Bankr. S.D. Tex.)

·US Bankruptcy Court for the Southern District of Texas, Houston Division·US-FEDSanctions

The US Bankruptcy Court for the Southern District of Texas held petitioning creditors' counsel in civil contempt and found a Rule 9011 violation after four motions to quash contained AI-hallucinated quotations and miscited authorities. Counsel and the creditors must jointly pay the Chapter 7 trustee USD 29,877 in fees, and counsel must complete six hours of generative-AI CLE.

Court
US Bankruptcy Court for the Southern District of Texas, Houston Division
Date
2026-07-14
Who used the AI
Lawyer
AI tool
Westlaw AI tools (per counsel, who denied using ChatGPT)
Conduct
Counsel for petitioning creditors in an involuntary bankruptcy (surname Mitchell; full name not captured) filed four motions to quash containing fabricated direct quotations and nonexistent or misused authorities, including a quotation misattributed to In re Dinnubilo and a citation to the wrong case, then defied a production order.
Outcome
Sanctions
Penalty
US$29,877
Regulatory outcome
No separate regulatory disposition recorded
Status
Verified against listed sources
Last checked
2026-09-03

What was fabricated or misused

  • Rule 2004 could not be used as a “premature and unauthorized substitute for formal discovery” — quotation attributed to In re Dinnubilo, 177 B.R. 932, 939-40 (E.D. Cal. 1993), but it does not appear there or in another published opinion
  • In re Table Talk, Inc. 51 B.R. 143, 146 (Bankr. D. Mass 1985) — misrepresented as addressing disproportionate burdens on non-debtor third parties
  • Rule 2004 cannot be “weaponized to extract full blown litigation discovery outside those procedural protections” — quotation attributed to In re Symington, 209 B.R. 678, 683 (Bankr. D. Md. 1997), but it does not appear there or in another published opinion
  • Rule “may not be used as a device for discovery in anticipated litigation” — quotation attributed to In re Wilcher, 56 B.R. 428, 433 (Bankr. N.D. Ill. 1985) and In re Bennett Funding Grp., Inc., 203 B.R. 24, 28 (Bankr. N.D.N.Y 1996), but it appears in neither case
  • Shields v. Sturm, Ruger & Co., 864 F.2d 379 — cited for moving for a protective order before a motion to compel; the case did not discuss that question
  • In re Grand Jury Subpoena, 870 F.2d 343, 346 (5th Cir. 1989) — non-existent case; the reporter citation is Grubbs v. Norris, 870 F.2d 343 (6th Cir. 1989)
  • United States v. Zolin, 491 U.S. 554, 562 (1989) — misrepresented as making attorney-client privilege absolute unless waived by the client
  • United States v. Zolin, 491 U.S. at 572 — misrepresented as requiring the Trustee to prove privilege did not apply before production could be ordered

What the court said

“The Petitioning Creditors, through Mitchell, responded with motions to quash containing fabricated quotations, non-existent citations, and invented legal authority apparently generated by artificial intelligence and submitted them to the Court without verification.”
US Bankruptcy Court for the Southern District of Texas, Houston Division, p. 1
“The Court finds that Mitchell submitted the Motions to Quash containing multiple fabricated quotations, citations to non-existent authority, and misleading descriptions of authority.”
US Bankruptcy Court for the Southern District of Texas, Houston Division, p. 19
“Whether the citations were generated by artificial intelligence, copied from prior filings without verification, or typed manually, the fundamental problem remains: Mitchell submitted citations and quotations that he had not verified and that do not support his legal contentions.”
US Bankruptcy Court for the Southern District of Texas, Houston Division, p. 27
“The Petitioning Creditors and Mitchell are JOINTLY AND SEVERALLY LIABLE to the Trustee for the payment of attorneys’ fees and costs in the amount of $29,877.00”
US Bankruptcy Court for the Southern District of Texas, Houston Division, p. 35

Timeline

  1. Petitioning creditors filed involuntary petitions against three debtors.
  2. Petitioning creditors filed proofs of claim totaling about USD 2.5 million.
  3. Trustee served Bankruptcy Rule 2004 document requests.
  4. Mitchell and the petitioning creditors filed motions to quash the requests.
  5. Court denied the motions to quash and issued an AI-authority show-cause order.
  6. Court held show-cause hearing; Mitchell admitted some citations were not accurate.
  7. Court ordered AI CLE and USD 29,877 in joint and several fees.

Why this case matters

Rosslyn2016 adds a bankruptcy version of the AI-citation problem. The false law was not a stray point; it supported motions to block a trustee's Rule 2004 investigation into claims the court later linked to a bad-faith abuse of bankruptcy process. Unlike Mata v Avianca, the sanction combined a Rule 9011 violation with inherent-power fees against both counsel and the petitioning creditors. The order also rejects a common excuse: whether the text came from Westlaw AI, an old template or manual drafting, the signer still had to verify it.

Practice note

Before filing a motion to quash bankruptcy discovery, counsel should read each cited case and confirm the quoted language appears in the decision. If a template is reused, its authorities need the same check as new research. Southern District of Texas General Order 2025-04 makes no exception for legal AI products, so Westlaw AI output still requires independent review.

Primary sources for this incident

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No related regulation record has been linked to this incident yet.

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Cite this record

SafeLegalAI Global Legal AI Incident Tracker, “In re Rosslyn2016, LLC, No. 25-34507 (Bankr. S.D. Tex.)”, safelegalai.com/tracker/in-re-rosslyn2016 (accessed 2026-10-07). Data: CC BY 4.0.

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