Acceleprise Accelerator Fund III, L.P. v. Alethea Tech PTE Ltd

Background

Acceleprise Accelerator Fund III, L.P. sued Alethea Tech PTE Ltd in New York State Court on August 23, 2024, alleging breach of contract and conversion. The opinion describes Acceleprise as a limited partnership investment fund and Alethea as a Singapore-based technology company in which Acceleprise invested.

Alethea removed the case to the U.S. District Court for the Southern District of New York under the federal removal statute, asserting diversity jurisdiction. Diversity jurisdiction generally requires complete diversity of citizenship between the parties. Acceleprise moved under 28 U.S.C. § 1447(c) to remand, meaning to return the case to state court, and requested attorneys’ fees incurred because of the removal. Alethea consented to remand but opposed the fee request.

Court’s analysis

The court held that diversity jurisdiction did not exist because one of Acceleprise’s limited partners was a foreign citizen and Alethea was a foreign entity. For diversity purposes, a limited partnership has the citizenship of all its partners. The court therefore ordered the case remanded to state court.

The court also considered whether Acceleprise should receive attorneys’ fees under § 1447(c). Fees may be awarded when the removing party lacked an objectively reasonable basis for removal, while courts also consider the need to deter removals that prolong litigation and impose costs and the general right to remove cases.

The court found that Alethea lacked an objectively reasonable basis for removal. Alethea’s notice of removal did not allege the citizenship of Acceleprise’s partners, even though the rule requiring that information was well established and Alethea acknowledged the rule in its notice. The court rejected Alethea’s argument that it reasonably relied on the state-court complaint’s description of Acceleprise as a Delaware limited partnership and references to its management company’s New York location. Those allegations did not establish the partnership’s citizenship for federal diversity purposes.

The court also found that Alethea continued the litigation after Acceleprise informed it that Acceleprise had a Canadian limited partner. Acceleprise provided additional information, including a spreadsheet and a sworn declaration, but Alethea did not consent to remand until responding to the fee motion. The court rejected Alethea’s argument that Acceleprise was responsible for confirming the facts supporting removal, stating that the party invoking federal jurisdiction bears responsibility for ensuring that removal is proper.

Order

The court granted Acceleprise’s motion to remand and granted Acceleprise’s motion for reasonable attorneys’ fees under 28 U.S.C. § 1447(c). Acceleprise must file an affidavit and supporting documentation showing the fees reasonably incurred in connection with the remand motion within 14 days. Alethea may oppose that submission within seven days after it is filed. The court retained jurisdiction to determine the appropriate amount of fees and directed the Clerk to remand the case to the Supreme Court of New York, New York County.