Hoagland Family Limited Partnership v. Town of Clear Lake

What did the court warn about?

In a published opinion by Judge Felix, with Judges May and Mathias concurring, the court affirmed the trial court on all issues, including the supplemental fee award (it held that any error in not holding a hearing was harmless). On the citation, the court imposed no sanction. It quoted its earlier decisions that "Citations to fictitious, AI-generated authority is a growing problem nationwide" and "We caution attorneys and pro se litigants alike against using AI to conduct legal research without independently verifying the citations generated," and then wrote: "We remind Hoagland's counsel of his obligations under the Professional Conduct Rules, particularly his duty to not 'knowingly . . . fail to correct a false statement of . . . law previously made to the tribunal by the lawyer,' Prof. Cond. R. 3.3(a)(1)." The reminder appears in footnote 14. The opinion closes by reminding both parties that they have been ordered to move on in good faith after nearly 20 years of litigation.

Why does Hoagland Family Limited Partnership v. Town of Clear Lake matter for law firms using AI?

The court handled the citation in one footnote attached to Hoagland’s argument that the trial court should have held a hearing on the Town’s supplemental fee petition. It first showed its work. The reporter citation, 521 N.E.2d 1240, led to People v. Pira, an Illinois appellate decision, and the pincite to Hauk v. Day, another Illinois case. The court listed the “Fox v. Fox” decisions it had actually issued, none from 1988, and reported that a search of Indiana cases for the quoted sentence returned nothing relevant. Only then did it draw its inference, and it kept it hedged: because the citation and quotation do not exist, “it is likely they were created using generative artificial intelligence.”

What drew the court’s pointed language was the sequence after the defect was raised. The Town brought the nonexistent citation and quotation to Hoagland’s attention in its appellee’s brief, and Hoagland’s reply brief did not explain why it had cited and quoted a nonexistent source. The court did not impose a sanction or disregard the argument; it decided the hearing issue on the merits under Care Group Heart Hospital, LLC v. Sawyer and found any error harmless. Instead it reminded Hoagland’s counsel of Indiana Professional Conduct Rule 3.3(a)(1), quoting the duty not to “knowingly … fail to correct a false statement of … law previously made to the tribunal by the lawyer.”

For firms documenting compliance, the opinion frames its reminder chiefly in terms of candor, while also quoting a caution about verifying AI output. The court did not find that counsel used AI and recorded no explanation from counsel; its reminder addressed what happened after the opponent identified the problem. Firms documenting compliance may wish to consider how they respond when an opposing brief flags an authority as nonexistent, including whether a reply or notice to the court addresses it.