1 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

PAYCARGO FINANCE LP,

CASE NO.: 1:22-cv-22707-KMW

Plaintiff,

vs. 

ASPEN AMERICAN INSURANCE 

COMPANY,

Defendant,

and 

BAY MARITIMES INC.,

Nominal Defendant. 

 / 

RESPONSE IN OPPOSITION TO DEFENDANT ASPEN AMERICAN INSURANCE 

COMPANY’S MOTION TO DISMISS

Plaintiff PayCargo Finance LP (“Plaintiff”) hereby responds in opposition to Defendant 

Aspen American Insurance Company’s Motion to Dismiss (D.E. 15): 

I. INTRODUCTION

Plaintiff provides a line of credit for use in connection with PayCargo, a payment platform

specifically for freight payments being made to a network of vendors within the transportation and 

logistics industry. (D.E. 1 at pg. 2). Paying in this manner allows cargo to be released faster due to 

the expedient clearance of funds and the guaranty of payment. (D.E. 1 at pg. 2). Bay Maritimes, 

Inc. was an NVOCC1 which used Plaintiff’s credit to make freight payments through the PayCargo 

system. (D.E. 1 at pg. 2). Plaintiff obtained a judgment against Bay Maritimes in state court when 

1 An “NVOCC” or “Non-Vessel Operating Common Carrier” performs the services of an ocean 

carrier except without operating the vessels themselves by buying services from ocean carriers. 

(D.E. 1 at pg. 3). 

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Bay Maritimes failed to repay Plaintiff for the funds Plaintiff advanced to pay for those freight 

transactions. (D.E. 1 at pg. 3).

As an NVOCC licensed with the Federal Maritime Commission (“FMC”), Bay Maritimes 

was required to obtain a surety bond to pay “any claim” and “any judgment” “arising from its 

transportation-related activities....” 46 U.S.C. § 40902. Bay Maritimes obtained such a bond 

through Aspen American Insurance Company (“Aspen”). (D.E. 1 at pg. 4). This action seeks to 

recover on this surety bond. Aspen seeks dismissal based on its assertion that “Bay Maritimes was 

not acting as an NVOCC in its transactions with [Plaintiff]” but was instead “acting only as a 

debtor that received financing from a creditor...” (D.E. 15 at pg. 3). But this argument fails both 

legally and factually.

Legally, as will be explained in Part II, Aspen misstates the governing standard. There is 

no requirement that Bay Maritimes be “acting as an NVOCC” for a claim to be valid. Indeed, the 

FMC has expressly rejected that position. All that is required is that the defendant be an NVOCC 

(which Bay Maritimes undisputedly was)2 and that the claim arises from the NVOCC’s 

“transportation-related activities.” By financing specific freight transactions of an NVOCC, 

Plaintiff’s claim easily falls within the scope of Bay Maritimes’ “transportation-related activities.” 

Factually, as will be explained in Part III, Aspen’s factual assertion is improper on a motion 

to dismiss regardless because “acting as an NVOCC” is not mutually exclusive with “acting as a 

debtor.” Even if it were the relevant standard, the factual issue of disproving that Bay Maritimes 

was “acting as” and NVOCC cannot be resolved on a motion to dismiss. See Woodley v. Royal 

Caribbean Cruises, Ltd., 472 F. Supp. 3d 1194, 1207 (S.D. Fla. 2020) (“Because the question of 

2 The Complaint alleges Bay Maritimes was an NVOCC. (D.E. 1 at pg. 3 ¶13). This is assumed to 

be true for the purposes of a motion to dismiss.

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whether an agency relationship exists is a question of fact, whether a plaintiff reasonably believes 

that an agency relationship exists is also a question of fact ‘which cannot be decided on a motion 

to dismiss.’”).3

II. THE SHIPPING ACT DOES NOT REQUIRE BAY MARITIMES TO BE 

“ACTING AS” AN NVOCC WHEN IT WAS IN FACT LICENSED AS AN 

NVOCC

Pursuant to the Shipping Act, NVOCCs must obtain a surety bond to pay, among other 

things, “any claim against an ocean transportation intermediary4 arising from its transportationrelated activities” and “any judgment for damages against an ocean transportation intermediary 

arising from its transportation-related activities...” 46 U.S.C. § 40902. The language of the bond 

itself mirrors this language. (D.E. 1-3).

The Northern District of California held that “[t]he plain words of the Shipping Act indicate 

that the statute protects any party that obtains a judgment against an NVOCC from its 

‘transportation-related’ activities” and further found “no proof of legislative intent to limit a

Surety’s liability to particular parties.” Trans Ocean Container Corp. v. Intercargo Ins. Co., C 95-

2187 FMS, 1996 WL 390323, at *5 (N.D. Cal. July 3, 1996). In Trans Ocean, the plaintiff rented 

ocean cargo containers to Jeuro, Inc., an NVOCC, and made a claim on Jeuro’s NVOCC bond 

when Jeuro failed to return those containers. Id. at *1. 

In considering cross motions for summary judgment, the court rejected the same argument 

Aspen makes now: whether “the Shipping Act require plaintiff to establish that Jeuro Inc. used the 

3

 The Motion also includes a one sentence request for costs and reasonable attorney’s fees (D.E. 

15 at pg. 4), but fails to cite any basis for such an award. Such relief should be sought by a 

separate motion if, and only if, Aspen prevails in this action. Until Aspen elaborates on its basis 

for fee shifting, a proper response to the argument is impossible. 

4 An NVOCC is one of two types of “ocean transportation intermediar[ies]” recognized by the 

Shipping Act. See 46 U.S.C. § 40102(20) (“The term ‘ocean transportation intermediary’ means 

an ocean freight forwarder or a non-vessel-operating common carrier.”).

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ocean cargo containers while acting as an NVOCC.” Id. at *2. In rejecting the proposition that 

Jeuro needed to be “acting as” an NVOCC, the court explained that “[t]he face of the bond plainly 

establishes that Jeuro Inc. ‘operates as an NVOCC.’” Id. at *3. The court further explained that

“the very fact that Jeuro Inc. purchased an NVOCC bond indicates that it acts as an NVOCC.” Id.

The court held that “[t]he plain words of the Shipping Act indicate that the only limitation 

on a surety's liability under an NVOCC bond is that the judgment against an NVOCC arise from 

an NVOCC's ‘transportation-related activities.’” Id. at *4. “According to the rules of statutory 

construction, the statutory command is unambiguous: a bond purchased pursuant to the Shipping 

Act is available to pay any judgment against an NVOCC as long as it arises from the NVOCC's 

transportation-related activities.” Id. “Defendant's contention that a surety's liability is also 

contingent upon the NVOCC having acted as an NVOCC when it engaged in the transportationrelated activities fails.” Id. The court rejected applying certain “acting as”5 language used by the 

FMC to limit narrow the scope of the surety bond against this unambiguous statutory mandate: 

“While FMC does claim that ‘[t]he bond covers the transportation-related activities of an NVOCC 

while acting as an NVOCC,’ it simultaneously states that it perceives no ‘sound basis or reason 

for otherwise narrowing the scope of the bond’ beyond the ‘transportation-related activities’

language.” Id.

Likewise, the Southern District of New York explained that “everything about the 

legislative history supports a broad, expansive interpretation of [the Shipping Act]...” P & O

Containers Ltd. v. Am. Motorists Ins. Co., 96 CIV. 8244 (JFK), 1998 WL 146229, at *3 (S.D.N.Y. 

Mar. 25, 1998). In that case, which is yet another summary judgment case, the court was 

5 As will be explained later in this Response, the FMC has since removed the “acting as” language.

However, it was originally included to expand obligations to those who “acted as” NVOCCs even 

if they were not licensed as an NVOCC; not to restrict the scope of claims.

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considering whether enforcement of the liquidated damages provision in a contract between an 

NVOCC and an ocean carrier arose from the NVOCC’s “transportation related activities.” Id. at 

*2. It ultimately determined that reading this language prohibit the recovery of liquidated damages 

would be at odds with the Shipping Act. Id. at *3.

The court elaborated on the legislative history of the Shipping Act:

[I]n response to growing dissatisfaction with the business conduct of NVOCCs, 

Congress enacted § 17216 of the Shipping Act. The offending NVOCC practices 

included: failure to deliver cargo, failure to honor loss and damage claims, and 

abandonment of cargo.... Congress also recognized that the problems posed by 

NVOCCs were exacerbated by the fact that many NVOCCs lack tangible assets, 

and, as a result, many parties injured by NVOCC actions were unable to recoup 

their losses.... To remedy the problems presented by NVOCCs, Congress ...

required NVOCCs to post a bond with the FMC of not less than $50,000.

Id. The court explained that “[a]lthough Congress never directly discussed the scope of the term 

‘transportation-related activities,’ the legislative history demonstrates that the bond in question in 

the instant case would cover the liquidated damages owed to P & O.” Id. at *3. “Indeed, everything 

about the legislative history supports a broad, expansive interpretation of § 1721.” Id. “Clearly, 

Congress intended § 1721 to be a broad, prophylactic protection for all entities that dealt with 

NVOCCs.” Id.

The P & O court further explained how the FMC expressly rejected an attempt to limit 

these claims to those “directly involving cargo moving on the Bill of Lading of the involved 

NVOCC” after “arising out of transportation-related activities.” Id. at *4. In rejecting that 

limitation, the FMC affirmed that “[t]here does not appear to be any sound basis or reason for

otherwise narrowing the scope of the bond.” Id.

The Motion cites to a single case to support its argument that Bay Maritimes needed to be 

“acting as an NVOCC” in connection with Plaintiff’s claim against Bay Maritimes for the bond to 

6 § 1721 has since been renumbered. See (D.E. 15 at pg. 6).

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apply. (D.E. 15 at pg. 1, 5-6), discussing AEL Asia Express (H.K.), Ltd. v. Am. Bankers Ins. Co., 5 

Fed App’x 106 (4th Cir. 2001). However, the problems with this argument are twofold. 

First, Aspen reads this case backwards. In AEL Asia Express (H.K.), Ltd., the court affirmed 

the grant of summary judgment in favor of the insurance company on an NVOCC bond claim 

based on the holding that Worldwide Transport U.S.A., Inc. (the bond principal) “did not act as an 

NVOCC regarding the shipments in question.” Id. at 107. The claimant there, AEL, was “a Hong 

Kong freight forwarder that on occasion serves as an NVOCC.” Id. Again, AEL (the claimant in 

that case) “on occasion serves as an NVOCC.” 

To decide who was functioning as the NVOCC in the transaction, the court explained how 

“an NVOCC is a middleman and ‘a common carrier that does not operate the vessels by which the 

ocean transportation is provided, and is a shipper in its relationship with an ocean common 

carrier.’” Id. at 110. In connection with the transactions, AEL was listed as the “shipper” on the 

documents and admitted that it “arranged for ocean carriage from Hong Kong to various ports in 

the United States.” Id. In contrast, Worldwide’s role was “(1) to collect the ocean freight from the 

ultimate consignee, (2) to pay the carrier, (3) to deduct its commission, and (4) to remit the 

remainder to AEL.” Id. 

According to the Fourth Circuit, “[t]hese facts unequivocally indicate that AEL, not 

Worldwide, was the ‘shipper in its relationship with an ocean common carrier,’ ... and thus AEL 

was the NVOCC regarding the shipments of pottery.” Id. Unlike AEL, in this case, Aspen has not 

proffered an alternative NVOCC for the underlying freight shipments to establish Bay Maritimes 

was not acting as an NVOCC as matter of law here. But even more fundamentally, Aspen reads 

the case backwards. In AEL, the principal Worldwide’s only role in the transaction was the 

collection and payment of money for freight transactions arranged by the claimant AEL. The court 

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determined that Worldwide was not “acting as” an NVOCC because AEL was “unequivocally” 

the NVOCC in these transactions.

Aspen has failed to offer an “unequivocal” alternative NVOCC to Bay Maritimes to 

warrant dismissal. If anything, Plaintiff’s role in these transactions sounds more similar to 

Worldwide’s while Bay Maritimes’ role was similar to AEL’s. Where the Fourth Circuit found 

that those facts “unequivocally indicate[d]” that AEL was the NVOCC in those transactions, it is 

equally clear here that Bay Maritimes was “acting as” an NVOCC here.

Second, Aspen’s interpretation of AEL is predicated on outdated law. Until two years ago, 

FMC regulations stated: “The bond, insurance or other surety covers the transportation-related 

activities of an ocean transportation intermediary only when acting as an ocean transportation 

intermediary.” 46 CFR 515.21(a) (emphasis added) (December 9, 2015 to February 19, 2020). 

However, effective February 20, 2020, this same regulation was amended to remove the 

emphasized language: “The bond, insurance, or other surety covers the transportation-related

activities of an ocean transportation intermediary.” 46 CFR 515.21(a) (effective February 20, 

2020). The removal of this language – language which underpinned the AEL court’s analysis7 --

supports the idea that the FMC does not perceive an additional requirement for bond claims against 

licensed NVOCCs that they must also “act as an NVOCC” in connection with the transactions. 

Instead, as explained above, the plain language of the Shipping Act as well as the language of the 

bond itself only requires that a claim or judgment arise from an NVOCC’s “transportation-related 

activities.”

III. ACTING AS A DEBTOR IS NOT MUTUALLY EXCLUSIVE WITH ACTING 

AS AN NVOCC

Unlike AEL, where the court found on summary judgment that there was an alternative 

7 See AEL Asia Express (H.K.), Ltd., 5 Fed App’x at 109. 

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NVOCC in connection with the relevant transaction, Aspen does not offer an alternative NVOCC 

to Bay Maritimes to justify dismissal. Instead, Aspen seeks to prove that Bay Maritimes was not 

functioning as an NVOCC as a matter of law by highlighting that it served as a “debtor.” But being 

a “debtor” is not mutually exclusive with being an NVOCC.

As explained, “everything about the legislative history supports a broad, expansive 

interpretation of [the Shipping Act.]” P & O Containers Ltd., 1998 WL 146229, at *3. According 

to a New York State Bar Journal article, “[o]bviously, claims based on bills of lading that evidence 

shipments between a foreign port and a U.S. port are considered ‘transportation related.’” Michael 

P. O'Connor, Collecting on NVOCC Bonds, 69–Oct N.Y. St. B.J. 38, 39 (1997). 

The Complaint here alleges how Plaintiff “advanced substantial funds to Bay Maritimes’ 

vendors on behalf of Bay Maritimes in connection with specific freight shipments.” (D.E. 1 at pg. 

2-3, ¶9). It further alleges how “[w]ith each advancement of funds, Bay Maritimes would provide 

bill of lading information to ensure that the funds advanced by PCF were specifically for Bay 

Maritimes freight shipment related activities.” (D.E. 1 at pg. 2-3, ¶9). The fact that these payments 

were tied to specific freight payments and bills of lading confirms that these funds were in fact 

advanced in connection with Bay Maritimes’ “transportation-related activities.” 

The purpose of these funds is further confirmed by the agreement between Plaintiff and 

Bay Maritimes which (1) obligated Bay Maritimes to provide the “Shipment Documentation for 

each Approved Transaction,” (2) acknowledged that Bay Maritimes “performs transportation 

and/or logistics services” with request to goods contained in shipment documentation, and (3) 

required funds advanced “to be used for business purposes only” a (D.E. 1-1 at pg. 2, 3, 4-5). That 

agreement also acknowledges lien rights with respect to cargo processed through these transactions 

that is being held by carriers. (D.E. 1-1 at pg. 6). 

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Aspen appears to be arguing that a “creditor/debtor relationship” falls outside the scope of 

the bond. However, the bond requirement arises from the “financial responsibility” requirements 

of the Shipping Act. See 46 U.S.C. § 40902 (statute entitled “financial responsibility”). Claims 

involving “financial responsibility” are almost always going to arise from some form of 

“creditor/debtor relationship.” Moreover, this was not some general purpose loan, as implied by 

Aspen, but was instead a line of credit specifically for making freight payments to ocean carriers. 

Thus, Aspen’s fear that Plaintiff’s claim would convert this bond into a “general insurance 

policy” lacks foundation. What is clear that Congress has mandated surety bonds be available to 

protect those harmed by an NVOCC’s transportation-related activities, and that Plaintiff’s 

facilitating an NVOCC’s ocean freight transactions is precisely the sort of claim which was 

intended to be covered by Congress’s broad mandate.

XANDER LAW GROUP, P.A.

One N.E. 2nd Avenue, Suite 200 

Miami, Florida 33132 

Tel: (305) 767-2001 

Fax: (855) 926-3370 

wayne@xanderlaw.com

marcus@xanderlaw.com

service@xanderlaw.com

By: /s/Wayne R. Atkins 

WAYNE R. ATKINS

 Fla. Bar No. 84000 

MARCUS TAN

 Fla. Bar No. 38616 

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that, on October 18, 2022, a copy of this Response to Motion to 

Dismiss was served via the Court’s CM/ECF portal upon: 

David E. Gurley 

Michael A. Fant

Gurley & Associates

eservice@gurleyassociates.com 

 /s/Wayne R. Atkins 

 WAYNE R. ATKINS

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