1S REO Opportunity 1, LLC v. 223 Howard LLC
U.S. District Court, Eastern District of New York · E.D.N.Y. · New York bar guidance
Verified May 14, 2026
- Citation
- 1S REO Opportunity 1, LLC v. 223 Howard LLC, No. 24-CV-2877 (PKC) (VMS) (E.D.N.Y. Feb. 3, 2026)
- Decided
- February 3, 2026
Summary
Counsel for plaintiff 1S REO Opportunity 1, LLC submitted a summary judgment reply brief citing "Gustavia Home, LLC v. Rice, 2020 WL 4917915 (E.D.N.Y. Aug. 21, 2020)" for the proposition that a prior lender's conduct is legally irrelevant to an assignee's enforcement rights. Judge Pamela K. Chen identified the citation as fabricated: the Westlaw number 2020 WL 4917915 actually belongs to Durrett v. IKO Industries, a Kentucky Court of Appeals decision, and the real Gustavia Home, LLC v. Rice, 2016 WL 6683473 (E.D.N.Y. Nov. 14, 2016) states the opposite proposition, that a mortgage assignee takes subject to defenses against the assignor.
- AI tool:
- Unidentified (the order flags a fabricated citation but does not attribute it to AI or name a tool)
What sanction did the court impose?
No sanctions were imposed. The court flagged the nonexistent citation in footnote 9 of the Memorandum and Order but did not order a show-cause hearing, monetary penalty, or referral. Plaintiff's underlying motion for summary judgment was granted on other grounds, and the motion to strike defendant's affirmative defenses was denied as moot.
Why does 1S REO Opportunity 1, LLC v. 223 Howard LLC matter for law firms using AI?
This case illustrates a quieter variant of the AI hallucination problem: a fabricated citation surfaces in a federal filing, the court notices it, and the matter ends with a footnote rather than a sanctions order. Managing partners should not read the absence of a penalty here as reassurance. Judge Chen’s footnote is now part of the public record tying the firm’s brief to a nonexistent case, and the next judge to encounter a similar filing from the same lawyer is unlikely to be as restrained.
Sources
Primary sources
Further reading
Source PDF is a Westlaw printout mirrored from the Damien Charlotin hallucination database. We are working to add the underlying court docket (PACER, CourtListener, or court website) as a second source.
- The AI attribution is an inference, not a court finding. Judge Chen's February 3, 2026 Memorandum and Order flags the fabricated Gustavia Home citation in footnote 9 but does not attribute it to AI or name any tool. This entry is included because the matter appears in the Charlotin AI-hallucination tracker; the primary order itself is silent on AI.