on open (_location)
    try
        tell application "LaunchBar" to activate

        set _textFile to choose file name with prompt "Create text file:" default name "untitled.txt" default location _location
        open for access _textFile with write permission
        close access _textFile
		
        tell application "TextEdit"
            open _textFile
            activate
        end tell
    end try
end open

Copy the above script into a new AppleScript Editor document, and save it as:

~/Library/Application Support/LaunchBar/Actions/Create Text File Here.scpt

Now select a folder in LaunchBar, press Tab, and type some abbreviation like CTFH to choose the Create Text File Here action.