Snisko v. Cascade Funding Mortgage Trust HB4
U.S. District Court, Northern District of Illinois, Eastern Division (appeal from the U.S. Bankruptcy Court) · N.D. Ill. · Illinois bar guidance
Conduct
Appellant's bankruptcy-appeal brief contained false quotations from real cases and misstated holdings; counsel repeated them in reply after appellee flagged them.
Consequence
Here the court affirmed against appellant and ordered counsel Martin Spencer to show cause why he should not be sanctioned; the ruling is pending.
Lesson
Here the court treated repeating challenged quotations in a reply brief, after the other side flagged them, as continuing to try to mislead the court.
Verified September 30, 2026
- Citation
- Snisko v. Cascade Funding Mortgage Trust HB4, No. 25 CV 13339, Memorandum Opinion and Order (N.D. Ill. Aug. 19, 2026) (Shah, J.), ECF No. 33
- Filing date
- August 19, 2026
Summary
Peter J. Snisko, a Chapter 13 debtor, appealed a bankruptcy court order permissively abstaining from his adversary complaint against Cascade Funding Mortgage Trust HB4, which sought to void a mortgage on a Morton Grove, Illinois property on the ground that his father lacked capacity to comprehend the transaction, an issue Snisko had first raised as an affirmative defense in a Cook County foreclosure action. District Judge Manish S. Shah found that appellant's brief "is replete with false quotations and erroneous statements of law." It cited In re Chicago, Milwaukee, St. Paul & Pacific R.R. Co., 6 F.3d 1184, for a de novo standard of review when that case "makes clear that the proper standard of review for a permissive-abstention case is abuse of discretion," and it contained "apparent quotations that do not appear in the cited cases," including quotations attributed to In re Tarnow, In re Aguirre, In re Boughton and the Chicago, Milwaukee decision itself. Other cases, including In re Pajian and In re K&R Mining, were cited for propositions they do not make. The court found that counsel "doubled down on these quotations and propositions in his reply brief, after appellee pointed out these errors," and that he also misrepresented the bankruptcy-court record by arguing the abstention motion had been stricken when only the hearing date had been.
- AI tool:
- Unidentified (the order refers to "fabricated legal citations" and false quotations but does not mention AI or name a tool)
- Amount or terms:
- None yet; appellant's counsel Martin Spencer ordered to show cause why he should not be sanctioned, response due September 9, 2026
What is the current procedural posture?
The court affirmed the bankruptcy court's abstention order, holding that it reasonably exercised its discretion under 28 U.S.C. § 1334(c)(1), and entered judgment for appellee. On the briefing, the court wrote that counsel "had the opportunity to respond to this allegation and correct his mistake. Instead, he continued to try to mislead the court." It ordered: "I order appellant's counsel, Martin Spencer, to show cause why he should not be sanctioned for the fabricated legal citations and other misrepresentations." The response was due September 9, 2026, and a footnote explained that a court may consider sanctions after judgment for conduct that occurred before judgment. As of the CourtListener docket read on 2026-09-30, the most recent entries were a September 9, 2026 motion for an extension of time to respond (ECF No. 35) and a September 11, 2026 order on that motion (ECF No. 36); no sanctions ruling appeared. The order does not mention artificial intelligence.
Why does Snisko v. Cascade Funding Mortgage Trust HB4 matter for law firms using AI?
Snisko is a bankruptcy appeal in which the district court resolved the merits against the appellant and, in a separate section headed “Appellant’s Counsel’s Misconduct,” set a sanctions proceeding against his lawyer. The defects the court describes are not invented case names. They are quotations attributed to real Seventh Circuit and Northern District of Illinois decisions that do not contain them, a standard-of-review citation to a case that holds the opposite, and propositions attributed to cases that do not address them. The order does not mention artificial intelligence; the tracker’s AI coding is an inference.
The court also emphasized what happened after the problem was flagged. The appellee’s brief pointed out that “Debtor claims a case stands for a proposition that is nowhere to be found in the case,” and called it “a common issue throughout Debtor’s brief.” Counsel’s reply repeated the same material. Judge Shah wrote that counsel “had the opportunity to respond to this allegation and correct his mistake. Instead, he continued to try to mislead the court,” and quoted the Seventh Circuit’s statement in Secrease that falsifying information “undermines the most basic foundations of our judicial system.”
The sanctions question remains open. The court set the response for September 9, 2026, after closing the case, and noted that a court may consider sanctions after judgment for conduct that occurred before it. Firms documenting compliance may wish to consider that in this case the court specifically faulted counsel for standing on the challenged quotations and propositions after the opposing brief identified them.
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 each challenged citation before filing a reply. The court here faulted counsel for repeating quotations and propositions in the reply after the appellee identified them as unsupported.
- Review the standard-of-review section against the cited authority. Here the case cited for de novo review held that abuse of discretion applies.
- Document the procedural record accurately in appellate briefs. The court's show-cause order here also rested on counsel's misstatement that the abstention motion had been stricken.
- Consider that sanctions exposure can survive the end of the case. The court here set the show-cause response after entering final judgment, citing authority that sanctions may be considered after judgment.
Sources
Primary sources
- AI involvement: the order is silent on AI and does not name a tool. The AI attribution is a Charlotin tracker inference.
- Outcome of the show-cause order: pending as of the 2026-09-30 docket read; the text of ECF Nos. 35 and 36 was not read.