New York State Of Hallucination

By: David Paul Horowitz, Tracy Catapano-Fox, & Katryna L. Kristoferson | January 16, 2026

Introduction

By now, everyone is familiar with the problems associated with AI hallucinations, and all lawyers are familiar with the dangers associated with using AI in preparing court filings (and anything law-related) as part of their practice. Unfortunately, forewarned has not translated into attorneys being forearmed so as to ensure proceeding with extreme caution when utilizing this new technology as the never-ending torrent reporting on attorneys’ AI missteps makes clear.

It may come as a surprise that, although the technology and its accompanying and apparently inherent problems have been much discussed for years, it was only on January 8th of this year that a New York Appellate Court confronted the issue. In Deutsche Bank Nat’l Trust v. LeTennier, 2026 NY Slip Op 00040 (3d Dep’t 2026), the Third Department issued a thoughtful decision addressing AI hallucinations in court-filings, and touched on an interesting facet of motion practice practitioners should consider in the future.

‘Deutsche Bank Nat’l Trust v. LeTennier’

Deutsche Bank began as a run-of-the-mill foreclosure action after defendant defaulted on a note secured by real property. In answering, defendant challenged plaintiff’s standing. Both parties moved for summary judgment, and the motion court granted plaintiff summary judgment holding “that plaintiff established standing by physical delivery of the note prior to commencement of this action and defendant failed to demonstrate any bona fide defense to this foreclosure.”

Defendant, acting pro se, filed numerous motions (more on that later) seeking to renew, reargue, and/or vacate the order granting summary judgment, all of which were denied. Defendant was thereafter represented by counsel, but continued to make motions for relief pro se, all of which were denied, and defendant appealed from three orders of the motion court’s orders, including one holding him to be a vexatious litigant and imposing sanctions. Defendant’s counsel and defendant pro se submitted the papers to the court discussed below.

“Initially, The Merits Of This Appeal Are Unremarkable In Nature”

This introduction by the Third Department foreshadows something remarkable is coming next:

Where this appeal becomes unconventional, however, is that defendant’s opening brief cites six cases which do not exist. Plaintiff identified these fabricated cases as possibly being the product of artificial intelligence (hereinafter Al), and moved for an order seeking, among other things, sanctions against defendant and defense counsel. Defendant claimed the nonexistent cases were citation or formatting errors that he would correct in his reply brief, and then opposed the motion for sanctions with more fake cases and interpretations for existing cases that are at best strenuously attenuated, and at worst entirely inapposite. Defendant’s subsequent reply brief acknowledged that his “citation of fictitious cases is a serious error” and that they are “problematic,” but failed to offer any corrections or further explanation as previously stated. He then proceeded to include more fake cases and false legal propositions in two subsequent letters to this court that requested judicial notice of a bankruptcy stay. In examining the propriety of defendant’s previously filed papers, more nonexistent cases were discovered in a motion that granted affirmative relief to defendant. Defense counsel reluctantly conceded during oral argument that he used Al in the preparation of his papers and, although he told the court that he checked his papers, the filings themselves demonstrate otherwise. In total, defendant’s five filings during this appeal include no less than 23 fabricated cases, as well as many other blatant misrepresentations of fact or law from actual cases.

Now, the incorporation of AI-generated fake citations and holdings into legal papers is no longer news. However, counsel’s recidivist continued reliance on AI hallucinated cases is likely in a class of its own (hopefully). The Third Department detailed the conduct:

Here, defendant submitted at least 23 fabricated legal authorities across five filings during the pendency of this appeal. He has also misrepresented the holdings of several real cases as being dispositive in his favor—when they were not. It is axiomatic that submission of fabricated legal authorities is completely without merit in law and therefore constitutes frivolous conduct (citation omitted). It cannot be said that fabricated legal authorities constitute “existing law” so as to provide a nonfrivolous ground for extending, modifying or reversing existing law (citations omitted). Defense counsel acknowledged during oral argument that the papers were his own, and, nevertheless, “[b]y signing a paper, an attorney or party certifies that, to the best of that person’s knowledge, information and belief, formed after an inquiry reasonable under the circumstances… the presentation of the paper or the contentions therein are not frivolous” (citation omitted). However, the excuse for fabricated legal authorities offered by defendant in his papers is incredible. Moreover, during oral argument defense counsel estimated that 90% of the citations he used were accurate, which, even if it were true, is simply unacceptable by any measure of candor to any court (citation omitted). Where we are most troubled is that more than half of the fake cases offered by defendant came after he was on notice of such issue, whereby his reliance on fabricated legal authorities grew more prolific as this appeal proceeded—despite it being apparent to him that such conduct lacked a legal basis (citations omitted). Rather than taking remedial measures or expressing remorse, defense counsel essentially doubled down during oral argument on his reliance of fake legal authorities as not “germane” to the appeal. (Footnotes omitted).

Sanctions Imposed

The Third Department explained that in determining “the appropriate sanction, courts must consider that sanctions are both retributive, in that they punish past conduct, but are also ‘goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the [b]ar at large.’” Given that the patent nature of the frivolous conduct, the court turned to the appropriate sanction to impose:

Accordingly, recognizing this as the first appellate-level case in New York addressing sanctions for the misuse of GenAI, we find the imposition of a monetary sanction on defense counsel Joshua A. Douglass in the amount of $5,000 to be appropriate under the circumstances, with the further goal of deterring future frivolous conduct by defendant and the bar at large (citation omitted).

However, that was not the end of the sanctions imposed by the court:

Where most cases involving GenAI would conclude here, we turn to plaintiff’s further contentions that the appeal itself is frivolous. We find this contention to have merit. Defendant filed no less than seven motions before Supreme Court challenging either the decision granting summary judgment or the judgment of foreclosure and sale – or both. The gravamen of each application related to the issue of standing. The conduct by defendant continued to escalate, culminating in multiple warnings of frivolous conduct by Supreme Court. At one point, defendant filed over 20 irrelevant documents which had to be stricken and resulted in a sanction. Despite being represented by counsel, some of these motions were filed pro se by defendant. The misuse of GenAI represents an escalation in such unabashed misconduct, and the present appeal is a “continuation[ ] of the underlying protracted and frivolous litigation pursued by defendant undeterred by the repeated” warnings and imposition of sanctions by Supreme Court (citation omitted). As already noted, defendant’s contentions on appeal—which this court previously considered and rejected (citation omitted) – “are not ultimately unpersuasive, yet good-faith, arguments requiring our review of existing law, but, rather, part of a continuing effort to delay the [foreclosure] action and harass plaintiff” (citation omitted). Although defense counsel signed the papers filed with this court, which were uploaded through his NYSCEF account, it is further not unnoticed that the metadata of numerous documents indicate they originated from a program in his client’s name. Such result would be consistent with defendant filing papers pro se before Supreme Court, and defense counsel’s apparent unfamiliarity during oral argument with certain papers he allegedly filed during the pendency of this appeal. Given the baseless nature of this appeal, and recognizing that sanctions must be goal oriented to deter future conduct to prevent the waste of judicial resources and continued vexatious litigation of specific individuals too (citation omitted), we conclude that an additional sanction of $2,500 shall be imposed on defense counsel Joshua A. Douglass and $2,500 shall be imposed on defendant Jean LeTennier for pursing this appeal.

It’s noteworthy that the sanctions for AI hallucinations and frivolous appeal were not the only sanctions imposed on defendant. Earlier the motion court determined that defendant’s repetitious filing of motions seeking the same relief was frivolous and warned that future frivolous conduct might result in sanctions. Thereafter:

Defendant then moved to meet with Supreme Court ex parte in chambers and for a forensic accounting, and plaintiff cross-moved to strike certain documents filed by defendant and for other related relief. Supreme Court denied defendant’s motion and granted plaintiff’s cross-motion in an August 2024 decision, striking over 20 documents filed by defendant, finding him to be a vexatious litigant that must bring future motions by order to show cause, and awarding costs and legal fees to plaintiff for defendant’s frivolous conduct.

Dare To Use AI?

Deutsche Bank should not be read as barring the use of AI in law practice:

To be clear, attorneys and litigants are not prohibited from using GenAI to assist with the preparation of court submissions. The issue arises when attorneys and staff are not sufficiently trained on the dangers of such technology, and instead erroneously rely on it without human oversight. As with the work from a paralegal, intern or another attorney, the use of GenAI in no way abrogates an attorney’s or litigant’s obligation to fact check and cite check every document filed with a court. To do otherwise may be sanctionable, depending on the facts and particular circumstances of each case.

Conclusion

By now we have learned that AI is capable of writing well-reasoned, legal arguments and decisions that rival the best orators in legalese. Nevertheless, forewarned is forearmed, and it is clear that complete and unchecked reliance on this brave new world will come at a price.

We are certain most of us (your authors included) have chuckled at the predicament lawyers have gotten themselves into using AI, patting ourselves on the back because we would never allow ourselves to rely on a tool with well-documented problems without carefully checking, and double checking, law and facts asserted in the work product we produce.

And yet, the pressures of law practice (and judging) are intense, and many of us (lawyer authors included) often resort to short-cuts in generating the work we produce. So let’s heed the Third Department’s reminder of our obligation to “fact check and cite check every document filed with a court.”

We leave it to others to prognosticate as to if (when?) AI will replace us, and whether it will ultimately make the film “Terminator” seem like a RomCom. As we use AI in our personal and professional lives, best do so with caution and care.

David Paul Horowitz is the principal and managing partner of the Law Offices of David Paul Horowitz, PLLC. Katryna L. Kristoferson is a partner at the firm. Tracy Catapano-Fox is a Supreme Court Justice in the Eleventh Judicial District.

Please see ALM.com for the full printed article.