I wasn't expecting that! Yes, it does error with the same message using CLI. There are no other LIFS assigned to this SVM.
net int create -vserver mtnasmetap01-dr -lif mtnasmetap01dr_514 -role data -data-protocol cifs -home-node n1fsc1-02 -home-port a0b-514 -address 192.168.114.255 -netmask 255.255.254.0 -failover-policy nextavail -failover-group fg-vlan-514
Info: Failed to create virtual interface
Error: command failed: failed to add lif. (Lif in Use)
Unless you have any ideas, I guess I will have to open up a support case on this one.