In re Rosslyn2016, LLC
U.S. Bankruptcy Court, Southern District of Texas, Houston Division · Bankr. S.D. Tex. · Texas bar guidance
Conduct
Counsel for petitioning creditors filed motions to quash Rule 2004 requests built on quotations and case citations that do not exist or do not say what he claimed.
Consequence
Here the court imposed six hours of AI CLE under Rule 9011 and, for bad faith and contempt, $29,877 in Trustee fees jointly with his clients.
Lesson
In this case the court treated legal research AI no differently from general AI tools: the signer answers for unverified citations whatever their source.
Verified September 30, 2026
- Citation
- In re Rosslyn2016, LLC, No. 25-34507, Memorandum Opinion (Bankr. S.D. Tex. July 14, 2026) (Rodriguez, C.J.), ECF No. 312
- Decided
- July 14, 2026
Summary
Three entities filed involuntary Chapter 7 petitions against Rosslyn2016, LLC and two affiliated debtors, represented by attorney Gregory W. Mitchell, shortly after the debtors' own Chapter 11 cases were dismissed with prejudice. When the Chapter 7 Trustee served Bankruptcy Rule 2004 document requests to test their approximately $2.5 million in claims, Mitchell filed four motions to quash (ECF Nos. 218 to 221) arguing that Rule 2004 cannot be used when litigation is contemplated. The court found the motions contained "multiple fabricated quotations, citations to non-existent authority, and misleading descriptions of authority," tabulating quotations attributed to Dinnubilo, Symington, Wilcher, and Bennett Funding that do not appear in those cases, a reporter citation given as "In re Grand Jury Subpoena" (5th Cir.) that belongs to a Sixth Circuit case on a different topic, and misdescriptions of Table Talk, Shields, and Zolin. In a written response Mitchell said his "Precision" version of Westlaw, "upon information and believe [sic], does incorporate AI capabilities," and, on information and belief, that the citations were taken from a prior filing; at the June 10, 2026 hearing he testified they came from a prior template he could not identify, that he did not verify any of them, and that he does not use ChatGPT but uses Westlaw's AI tools. He missed the court's May 7 document-production deadline.
- AI tool:
- Unidentified (the court describes the authority as 'apparently generated by artificial intelligence'; counsel said his Westlaw 'Precision' version, 'upon information and believe [sic],' incorporates AI capabilities, but attributed the citations to a prior filing or template)
- Sanction amount:
- Six hours of State Bar of Texas CLE on generative AI in the courts (the Rule 9011 sanction for the citations; non-monetary). Separately, under inherent power and 11 U.S.C. § 105(a), civil contempt of the turnover order and a bad-faith fee award to the Trustee, joint and several with the petitioning creditors (amount in the outcome)
What sanction did the court impose?
Chief Bankruptcy Judge Eduardo V. Rodriguez granted the Trustee's motion to enforce and supplemental motion. Proceeding on his own April 30, 2026 show-cause order under Rule 11(c)(3), made applicable by Bankruptcy Rule 9011, he found Mitchell violated Rule 11(b) and, as the Rule 11 sanction, ordered him to complete six hours of State Bar of Texas continuing legal education on the use of generative AI in the courts and file a certificate by August 31, 2026. Because fees cannot be awarded as a sua sponte Rule 11 sanction in the Fifth Circuit, the court turned to its inherent power and 11 U.S.C. § 105(a): it held Mitchell and the petitioning creditors in civil contempt of the April 30 turnover order, found that both acted in bad faith as part of a scheme to manufacture standing, and made them jointly and severally liable for $29,877.00 of the Trustee's attorney's fees, payable by August 31, 2026. The court also rejected the argument that a legal research AI tool deserves different treatment, noting that S.D. Tex. General Order 2025-04 names Harvey.AI as an example.
Why does In re Rosslyn2016, LLC matter for law firms using AI?
The opinion separates two tracks. On the citations, Chief Judge Rodriguez proceeded on his own show-cause order under Rule 11(c)(3), which carries no 21-day safe harbor, and found a Rule 11(b) violation. Because Fifth Circuit precedent bars an award of attorney’s fees as a sanction the court imposes on its own initiative, the Rule 11 sanction is nonmonetary: six hours of State Bar of Texas CLE on generative AI in the courts. The fee award rests separately on the court’s inherent power and 11 U.S.C. § 105(a), after findings that Mitchell and the petitioning creditors acted in bad faith by filing unsupported proofs of claim, filing “frivolous” motions to quash, missing the turnover deadline, and withdrawing the claims without ever producing evidence that they had advanced funds to the debtors.
The court’s treatment of the AI explanation is the part most relevant to firm policy. Mitchell’s written response pointed to his “Precision” version of Westlaw and said he had never had issues with Westlaw’s AI feature; the court read that as a suggestion that a legal research AI tool deserves different treatment and rejected it, noting that S.D. Tex. General Order 2025-04 “does not differentiate between legal AI services and general AI services” and names Harvey.AI as an example. It concluded that “whether the citations were generated by artificial intelligence, copied from prior filings without verification, or typed manually, the fundamental problem remains.”
The opinion also records that Mitchell was a sole practitioner who drafted the motions without help from any other lawyer or legal professional, and that he admitted at the hearing that some citations were “clearly” not accurate. Firms documenting compliance may wish to consider how their review process applies to recycled briefing, which in this matter was the explanation counsel gave for the defective authority.
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 citations drawn from templates and prior filings. Mitchell attributed the defective authority to a template from an earlier filing, and the court held that the source (AI, a prior filing, or manual typing) does not change the Rule 11 analysis.
- Review whether the firm's AI policy covers legal research platforms. The court rejected the suggestion that Westlaw Precision should be treated differently from non-legal AI tools, pointing to General Order 2025-04's mention of Harvey.AI.
- Document calendaring of court-ordered production deadlines. Mitchell's testimony that he forgot to calendar the turnover deadline did not avoid the civil contempt finding.
- Consider that a sua sponte Rule 11 proceeding in the Fifth Circuit cannot shift fees, but here the court reached fees through its inherent power and § 105(a) after a bad-faith finding.
Sources
Primary sources
- Whether AI actually produced the citations is not determined. The court's opening describes the authority as 'apparently generated by artificial intelligence'; Mitchell attributed the citations to a prior filing or template and said his Westlaw Precision subscription incorporates AI capabilities. The court held that the source does not matter under Rule 11 and General Order 2025-04.