Kheir v. Titan Team LLC, The Money Source Inc., and Auction.com
U.S. Bankruptcy Court, Southern District of Texas, Houston Division · Bankr. S.D. Tex. · Texas bar guidance
Verified April 26, 2026
- Citation
- Kheir v. Titan Team LLC, No. 24-35814, Adv. No. 25-3033 (Bankr. S.D. Tex. Nov. 4, 2025)
- Decided
- November 4, 2025
Summary
Plaintiff's counsel Derrick D. King filed adversary-proceeding briefing in a Chapter 7 matter that contained citations and quotations generated by ChatGPT, including a citation to a nonexistent case and a quoted passage falsely attributed to a real opinion. Chief United States Bankruptcy Judge Eduardo V. Rodriguez found that King had failed to verify the AI-generated authorities before filing and imposed sanctions.
- AI tool:
- ChatGPT
What sanction did the court impose?
Judge Rodriguez ordered King to (i) pay Auction.com's reasonable attorneys' fees and costs (amount to be set on a later fee application), (ii) complete six hours of CLE from the State Bar of Texas on generative AI in the courts, (iii) provide a copy of the order to his client, and (iv) referred King to Chief U.S. District Judge Randy Crane and the State Bar of Texas Chief Disciplinary Counsel for possible discipline. Compliance certificate due to the Clerk by December 31, 2025.
Why does Kheir v. Titan Team LLC, The Money Source Inc., and Auction.com matter for law firms using AI?
Kheir is a useful data point for managing partners because the sanction package, fee-shifting, mandatory generative-AI CLE, client notice, and a referral to both the Chief District Judge and state bar disciplinary counsel, is now appearing as a standard template in federal courts when AI-generated citations slip through. The fact that this happened in an adversary proceeding inside a consumer Chapter 7, not a high-stakes commercial matter, underscores that the risk surface includes routine docket work, not just headline litigation.
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.
- Charlotin CSV identifies the fabricated case as 'Brasher v. Stewart' and the false-quote source as a 'Reinaldo' opinion; the order text behind the S3 PDF could not be machine-extracted in this verification pass and the vLex mirror did not surface those specific names.
- Charlotin CSV lists a $1 monetary sanction; the order itself awards Auction.com's fees and costs in an amount to be determined on later fee application, so the CSV figure appears to be a placeholder rather than a final dollar amount.