By Michael Phillips | MDBayNews
A federal lawsuit alleging racial discrimination in Annapolis public housing is heading to court-ordered mediation under new Mayor Jared Littmann, following a controversial legal filing accused of containing AI-generated errors and the abrupt departure of the city’s longtime attorney.
The case—Johnson v. City of Annapolis—was filed in 2021 in the U.S. District Court for the District of Maryland. It is primarily brought against the City of Annapolis, with the Housing Authority of the City of Annapolis (HACA) implicated in related claims and earlier settlements.
Allegations of Unequal Enforcement
Plaintiffs allege the city violated the Fair Housing Act by exempting public housing units—where more than 90 percent of residents are Black—from rental inspections and licensing requirements that were enforced on private landlords. The alleged policy, plaintiffs say, contributed to hazardous conditions including mold, lead paint exposure, pests, and chronic maintenance failures.
The court certified a class of more than 1,500 residents in 2023, significantly expanding the scope and potential liability of the case. The lawsuit builds on earlier litigation, including a 2020 settlement for 52 residents that cost the city and HACA a combined $1.8 million and resulted in a consent decree requiring inspections to resume. A related wrongful death case is also moving alongside the main action.
AI Allegations Spark Scrutiny
The dispute took a dramatic turn in late November when the city—under then–City Attorney D. Michael Lyles—filed motions seeking summary judgment and decertification of the class. On December 9, plaintiffs’ attorneys, led by Peter Holland, accused the filings of citing at least one nonexistent case and including multiple “phantom” quotations attributed to real decisions.
In their opposition, plaintiffs wrote that the errors bore “hallmarks of an AI-generated motion with ‘hallucinations,’” while noting they could not definitively confirm AI use. The accusation echoed a growing national concern as courts sanction attorneys for submitting unverified AI-assisted filings.
City Attorney Exit and Withdrawal of Filings
One day after the allegations were filed, Mayor Littmann announced Lyles’ immediate departure, citing the need for a “fresh perspective” as he builds his administration. Littmann publicly denied any link between the lawsuit controversy and the personnel change, saying it was “unrelated to any specific case.”
The city soon withdrew the challenged motions and removed Lyles and an assistant city attorney from the docket. Kerry Berger was named acting city attorney as a search for permanent leadership began.
Lyles, when contacted by media, denied that the filings contained fabricated citations and said his departure “had nothing to do” with the allegations.
Shift to Mediation
By mid-December, both sides jointly requested a referral to mediation, which the court approved. The move aligns with Littmann’s campaign promise to seek settlement rather than prolong litigation that could expose taxpayers to substantial costs.
Plaintiffs’ counsel welcomed the change. Holland said the new posture reflects a “much-needed shift” that could allow the parties to engage in good-faith negotiations after years of stalled proceedings.
HACA Executive Director Melissa Maddox-Evans also endorsed mediation, saying it would “free up time and resources to focus on improving conditions for residents,” particularly after HACA’s recent financial strain.
This is the second attempt at mediation. A prior effort under the previous administration collapsed after less than a day.
Broader Implications
No formal sanctions have been imposed on the city or its former attorneys, but the episode underscores mounting ethical risks surrounding artificial intelligence in legal practice. Courts and bar associations have emphasized that attorneys remain fully responsible for verifying citations and ensuring accuracy, regardless of whether AI tools are used.
As of December 22, 2025, mediation is ongoing and confidential, with no settlement announced. Still, the combination of leadership change, withdrawn filings, and renewed talks signals a decisive break from the city’s prior approach—and a stronger push toward resolution than residents have seen in years.
Editor’s note: This article reflects the status of the case as of December 22, 2025. No public updates on mediation progress or terms have been released.
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