Full Standard Properties, LLC v. SJ 6070, LLC
U.S. District Court, Northern District of California, San Jose Division · N.D. Cal. · California bar guidance
Conduct
Plaintiff's opposition to a fee motion cited nonexistent cases and pin cites to pages outside real cases; counsel took full responsibility at the hearing.
Consequence
Here the court discharged its show-cause order after counsel paid the defendant $14,500 in fees by agreement, and imposed no sanction of its own.
Lesson
Here a negotiated fee reimbursement resolved the show-cause proceeding before the court ruled, without any finding on how the citations were produced.
Verified September 29, 2026
- Citation
- Full Standard Properties, LLC v. SJ 6070, LLC, No. 25-cv-09451-BLF, Order Granting in Part and Denying in Part Defendant's Renewed Motion for Attorneys' Fees and Costs; and Discharging Order to Show Cause (N.D. Cal. Aug. 20, 2026) (Freeman, J.), ECF No. 41
- Decided
- August 20, 2026
Summary
After defaulting on a $19,500,000 commercial loan, Full Standard Properties, LLC sued the loan's holder, SJ 6070, LLC, in state court to stop a trustee's sale. SJ 6070 removed the case and moved to dismiss, and the plaintiff voluntarily dismissed. SJ 6070 then moved for attorneys' fees under the loan agreement. Judge Beth Labson Freeman denied that first fee motion without prejudice (ECF 29) and on May 21, 2026 issued a separate order to show cause (ECF 30), which states that the plaintiff's opposition brief contained "multiple citations to nonexistent cases" and that, where the cited cases do exist, "the pin citations are to pages that are not contained within the case or that discuss issues having no bearing on Defendant's motion." That order records that plaintiff's counsel "took full responsibility for the significant errors in the opposition brief" at the May 21 hearing, and directed counsel to show cause why sanctions should not be imposed consistent with defendant's letter request, in an amount sufficient to reimburse the defendant for its reply and hearing appearance. Neither order names plaintiff's counsel.
- AI tool:
- Unidentified (the orders flag citations to nonexistent cases but do not attribute them to AI or name a tool)
- Amount or terms:
- No sanction imposed; order to show cause discharged after plaintiff's counsel reimbursed defendant $14,500 in attorneys' fees by informal agreement
How did the court address the AI-related conduct?
In its August 20, 2026 order on SJ 6070's renewed fee motion, the court reported that "[t]he parties have resolved that issue informally, and Plaintiff's counsel has reimbursed Defendant for attorneys' fees in the amount of $14,500," and discharged the order to show cause. On the renewed motion, the court denied costs, reduced the $90,506 in fees incurred to defend the case by five percent to account for time on the rescission claim, and awarded $85,980.70 in attorneys' fees payable by the plaintiff under the loan agreement, subject to a setoff for the $14,500 counsel had already paid. The court made no finding on how the nonexistent citations came to be in the opposition brief and imposed no sanction of its own; the only consequence recorded for the citations is the fee reimbursement counsel paid by agreement before the order issued.
Why does Full Standard Properties, LLC v. SJ 6070, LLC matter for law firms using AI?
Full Standard is a short record in which the citation problem was resolved by agreement rather than adjudicated. Judge Freeman’s May 21, 2026 order to show cause identified “multiple citations to nonexistent cases” and pin citations to pages “not contained within the case or that discuss issues having no bearing on Defendant’s motion,” noted that plaintiff’s counsel “took full responsibility” at the hearing, and said it would consider a sanction measured by the defendant’s cost of the reply brief and the hearing.
By the time the court ruled on the renewed fee motion, counsel had paid the defendant $14,500 and the court discharged the order to show cause without further findings. Neither order mentions artificial intelligence, so the AI attribution rests on the tracker’s classification, not on anything the court said.
The August 20 order’s larger dollar figure is unrelated to the citations: the $85,980.70 award is a contractual fee-shifting award against the plaintiff, with a setoff for counsel’s payment. Firms documenting compliance may wish to consider recording, in the case file and on the docket, how a citation-related show-cause order was resolved, since this order discharged the proceeding on the parties’ report of an informal payment.
Implications for your firm
Operational steps a firm reading this case may wish to consider documenting. Strategic and rule-application calls belong to your firm's attorneys.
- Document any informal resolution of a citation-related show-cause order on the record. Here the court discharged its order after the parties reported counsel's $14,500 reimbursement.
- Verify pin citations as well as case existence; the show-cause order faulted pin cites to pages not contained in the cited cases.
- Review whether a fee-shifting contract already exposes the client to the opponent's fees; here the separate $85,980.70 award ran against the plaintiff under the loan agreement.
Sources
Primary sources
- AI attribution is a Charlotin tracker inference: neither the August 20, 2026 order (ECF 41) nor the May 21, 2026 order to show cause (ECF 30) mentions artificial intelligence or any tool.
- Plaintiff's counsel is not named in either order and is not identified here.