In re Mahar; Mahar v. New Rez LLC d/b/a Shellpoint Mortgage Servicing
U.S. Bankruptcy Court, Eastern District of Virginia, Norfolk Division · Bankr. E.D. Va. · Virginia bar guidance
Conduct
Here, the debtor's opposition cited a case the court could not find anywhere and three cases with wrong district court numbers, Westlaw numbers, and dates.
Consequence
No sanction. The court flagged the citations at the hearing and in footnotes, then dismissed the adversary complaint without prejudice for lack of subject matter jurisdiction.
Lesson
Here the court recorded a nonexistent case and three incorrect citations in its opinion, identifying the brief by docket number, though it imposed no sanction.
Verified September 30, 2026
- Citation
- Mahar v. New Rez LLC (In re Mahar), Adv. Proc. No. 25-07035-SCS, Case No. 25-72454-SCS, Memorandum Opinion (Bankr. E.D. Va. July 31, 2026) (St. John, J.)
- Decided
- July 31, 2026
Summary
Chapter 7 debtor Alicia Ann Mahar, through counsel, filed an adversary complaint against NewRez, LLC d/b/a Shellpoint Mortgage Servicing and U.S. Bank, as trustee, challenging a postpetition foreclosure sale of her Virginia Beach property that occurred while no automatic stay was in effect. Her opposition to the defendants' motion to dismiss (ECF No. 34) contained citation problems that the court recounts in two footnotes of its July 31, 2026 memorandum opinion. The court "was unable to locate any case by the alleged name" for "the non-existent case titled In re Coastal Carolina Fruit Company," and its citation "returned a completely unrelated case that is criminal in nature." The same filing cited three cases (Jennings v. RoundPoint Mortgage Servicing Corporation; Mastin v. Ditech Financial, LLC; and Heflin v. PHH Mortgage Corporation) "for which the United States District Court and Westlaw case numbers, as well as the decision dates, are incorrect." In a separate footnote the court noted that two other cited opinions, Stoney Glen and Bourdelais, did not "uphold" good-faith claims as the brief said, but held only that such claims were adequately pleaded. The court had advised counsel of the nonexistent case and the incorrect case information at the March 26, 2026 hearings.
- AI tool:
- Unidentified (the court's opinion flags a nonexistent case and incorrect citations but does not attribute them to AI or name a tool)
How did the court address the AI-related conduct?
Judge Stephen C. St. John dismissed the adversary complaint without prejudice for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(h)(3), as incorporated by Fed. R. Bankr. P. 7012(b), after finding that Ms. Mahar had not carried her burden, under the court's March 2, 2026 order to show cause, of showing that her claims arose under, arose in, or were related to the bankruptcy case. The defendants' Rule 12(b)(6) motion to dismiss and Ms. Mahar's motion to reconsider the denial of a preliminary injunction were deemed moot, and a separate order was to issue. The opinion imposes no sanction and issues no warning or show-cause directive concerning the citations; the citation problems appear only in footnotes recounting what the court told counsel at the hearings.
Why does In re Mahar; Mahar v. New Rez LLC d/b/a Shellpoint Mortgage Servicing matter for law firms using AI?
In re Mahar is a jurisdictional ruling in a debtor’s eleventh bankruptcy case since 2012, and the citation problems are side notes to it. Judge St. John dismissed the adversary proceeding because the debtor’s claims against her servicer and the trustee claiming ownership of her loan were, in the court’s words, “purely a two-party dispute” whose outcome would not affect administration of the Chapter 7 estate. The motions that had been argued on the merits were deemed moot.
The footnotes record what happened with the debtor’s opposition brief. At the March 26, 2026 hearings the court told counsel that one of his cited cases, “In re Coastal Carolina Fruit Company,” does not exist; “[d]espite extensive efforts” the court could not locate any case by that name, and the citation led to an unrelated criminal case. The court also advised counsel that three other cases carried incorrect district court and Westlaw case numbers and decision dates. A further footnote observes that two real Eastern District of Virginia decisions did not “uphold” good-faith-and-fair-dealing claims, as the brief said, but only found them adequately pleaded.
The court did not attribute the errors to AI, did not order counsel to explain them, and imposed no sanction. The case is included because the Charlotin tracker lists it, and it is coded “other.” For firms, it shows a court documenting defective citations by docket number in an opinion that resolves the case on different grounds, which leaves the record available to anyone who later reviews counsel’s filings.
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.
- Verify docket numbers, Westlaw numbers, and decision dates, not just case names. Three of the defects the court identified were cases whose identifying numbers and dates were wrong.
- Review characterizations of holdings as well as citations. The court noted that two real opinions the brief said upheld good-faith claims held only that such claims survived a motion to dismiss.
- Consider that a court may raise defective citations with counsel at a hearing and then record them in a written opinion that rules on an unrelated jurisdictional ground, even without sanctions.
Sources
Primary sources
- AI attribution is a Charlotin tracker inference. The court's opinion does not mention artificial intelligence; the only AI reference in the Charlotin copy is a Westlaw editor's note ('unverified citations, likely generated by AI tools used by a party or counsel'), which is Westlaw's statement, not the court's.
- Plaintiff's counsel is not named in the opinion. The March 26, 2026 hearing transcript (ECF No. 61) that records what the court told counsel was not read.