In its complaint, U.S. Liability Insurance Co. said Retsel Corp., operating as Grand Gateway Hotel and Cheers Sports Lounge and Casino, has deluged the insurer with hundreds of emails instructing counsel to file "meritless motions" using AI in a way that could violate ethical rules.
"These emails and proposed filings rely heavily upon open source artificial intelligence and, if filed by attorneys, would violate ethical rules propounded by the American Bar Association regarding the use of artificial intelligence in court filings," according to U.S. Liability's complaint.
The insurance company wants the court to find that because of the ethical breaches it alleged, U.S. Liability should not have to insure the hotel. The carrier is seeking more than $1.5 million in costs it has already incurred defending the hotel owner.
In the underlying case, Indigenous advocacy group NDN Collective and its associate director of organizing, Sunny Red Bear, sued the hotel in March 2022, alleging the business threatened to ban all Native American people following a shooting in one of its rooms. They also named the hotel's owner, Connie Uhre, as a defendant, accusing her of making a racially discriminatory statement about Native Americans on social media. According to the group's complaint, Uhre "posted on social media that she will 'not allow a Native American to enter our business including Cheers' because she is unable to tell 'who is a bad Native or a good Native.'"
A federal judge trimmed NDN's claims in August 2024, allowing its civil allegations to move forward but denying class certification, among others. A federal jury found in favor of the group in December 2025. The hotel appealed the verdict to the Eighth Circuit in January.
Separately, the U.S. Department of Justice filed a similar suit in October 2022. Retsel Corp. and the government reached a consent decree in 2023 that required the hotel to part with Uhre for four years and issue a public apology.
Throughout the two federal court cases, U.S. Liability has provided more than $1.5 million in defending the hotel and its owner and management under an employment practices liability policy, the insurer said Tuesday, alleging the defendants have failed to cooperate with defense counsel.
The carrier said the hotel has submitted its own filings, while counsel has also submitted filings. U.S. Liability asserted that these additional filings could expose the company to further losses.
The insurer added that it has been ethically bound to respond to hundreds of emails it said the hotel has sent requesting counsel use filings relying on AI.
"Retsel's defense counsel is ethically bound to review and consider each of these hundreds, if not thousands, of frivolous communications which propound conspiracy theories regarding the judiciary and parties to the litigation," U.S. Liability alleged.
Representatives of the insurer didn't immediately respond to requests for comment. The hotel and its owner couldn't immediately be reached for comment.
U.S. Liability is represented by Bonnie M. Boryca of Erickson Sederstrom PC.
Counsel information for the hotel in the instant action wasn't immediately available.
The case is U.S. Liability Insurance Co. v. Retsel Corp. et al., case number 8:26-cv-00066, in the U.S. District Court for the District of Nebraska.
--Additional reporting by Crystal Owens. Editing by Covey Son.
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