Versant Funding LLC v. Teras Breakbulk Ocean Navigation Enterprises LLC
U.S. District Court, Southern District of Florida · S.D. Fla. · Florida bar guidance
Verified April 26, 2026
- Citation
- Versant Funding LLC v. Teras Breakbulk Ocean Navigation Enterprises LLC, No. 9:17-cv-81140 (S.D. Fla. May 20, 2025)
- Decided
- May 20, 2025
Summary
Attorneys Timothy R. Lord (pro hac vice) and local counsel Joel Bello, representing defendants and third-party defendants, filed an April 22, 2025 response containing a fabricated citation to "Travelers Casualty & Surety Co. v. J.P. Morgan Securities LLC, 73 A.3d 167, 174-75 (Del. 2013)." Opposing counsel could not locate the opinion on Westlaw or Lexis, and Lord acknowledged using AI without verifying the citation before filing. Chief U.S. Magistrate Judge William Matthewman noted that counsel accepted responsibility and apologized rather than attempting to obfuscate the error.
- AI tool:
- Unspecified generative AI
- Sanction amount:
- $1,500
What sanction did the court impose?
Judge Matthewman imposed a $1,000 monetary sanction on Lord and a $500 sanction on Bello, ordered both attorneys jointly and severally liable for opposing counsel's reasonable fees and costs incurred addressing the fabricated citation, and required each to complete continuing legal education on artificial intelligence with an ethics component.
Why does Versant Funding LLC v. Teras Breakbulk Ocean Navigation Enterprises LLC matter for law firms using AI?
Versant illustrates a measured judicial response when counsel candidly admits an AI verification failure rather than litigating around it. The order signals that even contrite, first-time offenders should expect a layered sanction package: monetary penalty, fee shifting, and mandatory AI ethics CLE. For managing partners, the takeaway is that documented citation-verification protocols are now the floor, not a nice-to-have.
Sources
Primary 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.