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IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

PAYCARGO FINANCE LP,

Plaintiff,

v. 

ASPEN AMERICAN INSURANCE 

COMPANY, 

Defendant, 

BAY MARITIMES INC., 

Nominal Defendant.

_____________________________________/

Case No. 1:22-cv-22707

DEFENDANT’S OBJECTIONS TO THE REPORT AND 

RECOMMENDATION ON DEFENDANT’S MOTION TO DISMISS

Defendant, ASPEN AMERICAN INSURANCE COMPANY (“Aspen”), pursuant to 28 

U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72, and Local Magistrate Rule 4(b), hereby 

files its Objections to the Report and Recommendation on Defendant’s Motion to Dismiss [ECF 

No. 43] (“Recommendation”), and states: 

BACKGROUND

1. On August 25, 2022, Plaintiff, PayCargo Finance LP (“PCF”), filed a one-count 

Complaint [ECF No. 1] seeking relief against Aspen in connection with a Federal Maritime 

Commission bond (“FMC Bond”) that PCF alleges Aspen issued on behalf of Bay Maritimes, 

Inc. (“Bay Maritimes”). See generally Complaint. 

2. On October 4, 2022, Aspen filed a Motion to Dismiss and Incorporated 

Memorandum of Law [ECF No. 15] (“Motion”) on the grounds that the Complaint should be 

dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) because the 

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alleged FMC Bond does not cover PCF’s alleged claim for damages resulting from Bay 

Maritimes’ alleged failure to repay sums due under a separate Credit Agreement between PCF 

and Bay Maritimes. 

3. On October 18, 2022, PCF filed its Response in opposition to the Motion [ECF 

No. 18], and on October 25, 2022, Aspen filed its Reply in support of the Motion [ECF No. 19]. 

4. On August 5, 2023, Magistrate Judge Eduardo I. Sanchez issued his 

Recommendation that the Court deny the Motion. 

FINDINGS AND OBJECTIONS

5. The Recommendation is premised upon two primary findings: (i) the Fourth 

Circuit’s holding in AEL Asia Express (H.K.), Ltd. v. American Bankers Ins. Co., 5 Fed. App’x 

106 (4th Cir. 2001) (“AEL”) does not support Aspen’s argument that the Complaint should be 

dismissed for failure to state a claim including because “AEL determined that the relevant 

transaction in which a bond’s principal must be acting as an NVOCC is the shipment from which 

the claims against the bond arise,” Recommendation at 6 (emphasis in original); and, (ii) the 

Complaint contains sufficient allegations that Bay Maritimes, the Bond principal, was acting as 

a Non-Vessel Operating Common Carrier (“NVOCC”) “[in] the freight shipments that give rise 

to PCF’s claims against the [B]ond” to survive a motion to dismiss, Recommendation at 4-7. 

6. Aspen respectfully objects to both findings and asks the Court to grant the Motion 

and dismiss the Complaint. 

BASIS AND SUPPORT FOR OBJECTIONS

I. The Complaint should be Dismissed in Accordance with the Reasoning of 

the AEL Court. 

7. The Recommendation finds that AEL does not support Aspen’s argument that the 

Complaint should be dismissed. Recommendation at 6-7. In reaching this determination, the 

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Recommendation interprets AEL to require that an FMC Bond principal, in this case, Bay 

Maritimes, be acting as an NVOCC in the “shipment from which the claims against the bond 

arose” for the FMC Bond to cover the alleged claim. Recommendation at 6. The 

Recommendation frames the pertinent inquiry in this action under AEL as whether Bay Maritimes 

was acting as an NVOCC in the alleged shipments that are referenced in the Complaint. 

Recommendation at 6-7. Because the Recommendation found that the Complaint’s allegations,

and inferences in favor of PCF, sufficiently state that Bay Maritimes was acting as an NVOCC 

in those alleged shipments, the Recommendation continues to find that AEL does not preclude 

PCF’s alleged claim. Recommendation at 7.1

8. Aspen respectfully objects that the Recommendation’s interpretation of AEL is 

incorrect for two reasons: (1) it reads AEL too narrowly; and, (2) it does not fully address AEL’s

bond coverage analysis, which focused on whether the principal was providing NVOCC services 

to the bond claimant. 

9. First, AEL held that “the [principal] must serve as the NVOCC in the relevant 

transaction for the bond to apply.” 5 Fed. App’x at 110 (emphasis added). AEL does not narrow

the definition of “relevant transaction” to include only shipments. Had it meant that the “relevant 

transaction” could only be a shipment, the AEL court could have held the requirement to be acting 

as an NVOCC in the “relevant shipment” as opposed to the “relevant transaction.” As AEL used 

1 The Recommendation also notes that in AEL, the claimant, and not the principal, was acting 

as an NVOCC in the transaction that gave rise to the bond claim, and suggests that AEL is factually 

distinguishable from the present matter. Recommendation at 6. Aspen disputes that AEL is 

factually distinguishable from this matter in any material respect. Both AEL and this matter involve 

a determination of coverage for an FMC Bond and a dispute as to whether the principal was 

providing NVOCC services to the claimant in the transaction that gave rise to the alleged FMC 

Bond claim. See AEL, 5 Fed. App’x at 109-110. That the claimant was also an NVOCC in AEL

does not change AEL’s holding that the principal must have been acting as an NVOCC in the 

“relevant transaction” for an FMC Bond to provide coverage. See id. 

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“transaction” instead of “shipment”, Aspen respectfully objects that the Recommendation’s

reading of AEL is too narrow. While the “relevant transaction” could be a shipment (and would 

be a shipment if a claim was brought by a covered claimant (e.g. an NVOCC’s customer shipping 

goods, or a common carrier transporting goods for an NVOCC)); the “relevant transaction” must

be a transaction between a principal and a claimant. To hold otherwise would expand the 

coverage of FMC Bonds beyond their intended scope and “transform the bond into a general 

insurance policy.” Id. at 110. 

10. According to the Complaint, Bay Maritimes did not ship any goods to, from, on 

behalf of, or with PCF, and PCF is not alleging that it was damaged from errant shipping services 

such as misdelivery of cargo. See generally Complaint. Instead, PCF is alleging that Bay 

Maritimes failed to repay funds it borrowed from PCF under a Credit Agreement. See Complaint 

at ¶¶ 6-11 (alleging that, pursuant to a Credit Agreement, PCF advanced funds on behalf of Bay 

Maritimes, Bay Maritimes defaulted under the Credit Agreement by failing to repay PCF, and 

that Bay Maritimes’ default under the Credit Agreement led to PCF bringing its claim against the 

Bond). Under these alleged facts, the “relevant transaction” was the alleged breach of an 

obligation to repay lent funds, not the shipment of goods. 

11. Second, the crux of AEL’s holding, which is consistent with both Congressional 

intent and the Federal Maritime Commission’s interpretation of the scope of an FMC Bond, is 

that for an FMC Bond to apply to a claim, the principal must have been providing NVOCC

services to the claimant. See AEL, 5 Fed. App’x at 109 (“[T]he bond covers the transportationrelated activities of an NVOCC when acting as an NVOCC . . . . To the extent that someone who 

operates as an NVOCC also provides non-NVOCC services, those services would not be 

covered by the bond.”) (citation omitted) (emphasis added); cf. Drayage Express, LLC v. Int'l 

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First Serv. USA, 3-15-CV-3597-FLW-LHG, 2016 WL 6828572, at *3 (D.N.J. Nov. 18, 2016)

(implicitly recognizing that one of a surety’s available defenses to a claim against an FMC Bond 

is that the principal was not acting as an NVOCC with respect to the claimant: “Specifically, this 

Court is making no finding whether (i) one of the bonds is no longer available; (ii) Global Wine

[bond principal] was acting as an ocean freight forwarder or a non-vessel-operating common 

carrier with respect to Plaintiff, or (iii) Global Wine was engaged in ‘transportation related 

activities’ with respect to Plaintiff.”) (emphasis added); see also AEL, 5 Fed. App’x at 109 (citing 

H.R. Rep. No. 101-785 (1990) (recognizing that the purpose of an FMC Bond is to provide 

coverage for damages that arise from the provision of NVOCC services to the claimant: “The 

FMC has reported receiving an increasing number of complaints concerning the activities of 

NVOCCs . . . . These offending NVOCC practices include: failure to deliver cargo, failure to 

honor loss and damage claims, and abandonment of cargo at ports throughout the world . . . 

[M]any persons injured by [these] NVOCC actions are not able to recover their losses. The 

bonding requirement . . . should resolve most of these problems.) (emphasis added)). 

12. In AEL, the claimant hired the principal to provide freight collection services to 

the claimant. 5 Fed. App’x at 106, 110-111. The Fourth Circuit analyzed the services the principal 

was providing to the claimant and concluded that those services were not “NVOCC services” 

and that, instead, the principal was merely acting as the claimant’s “collection agency.” Id at 110.

13. Under AEL, the proper focus of the “relevant transaction” analysis is the 

relationship between the principal and the claimant and, in particular, the nature of the services 

that the principal was providing to the claimant. See id. (analyzing whether principal was 

providing NVOCC services to claimant). If the principal was providing NVOCC services to the 

claimant, a claim arising from the provision of those services would potentially be covered by 

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the bond.

2 See id. at 109-10 (recognizing that bond would apply to provision of NVOCC services 

by principal to claimant). If, however, the principal was not providing NVOCC services to the 

claimant, there would be no bond coverage. See id. at 110 (concluding that bond did not apply to 

claim because principal was not providing NVOCC services to the claimant). 

14. Therefore, in ruling on Aspen’s Motion, the crucial question is whether the 

allegations of the Complaint show that Bay Maritimes provided NVOCC services to PCF. As 

discussed below, Bay Maritimes did not provide NVOCC services to PCF and, accordingly, 

PCF’s alleged claim is not covered by the FMC Bond and should be dismissed. 

II. The Allegations of the Complaint Show that Bay Maritimes Did Not Provide 

NVOCC Services to PCF; therefore, the Complaint Should Be Dismissed.

15. The Recommendation finds that the Complaint sufficiently alleges that Bay 

Maritimes was acting as an NVOCC in its “freight shipment activities” and therefore, dismissal 

would not be appropriate. Recommendation at 4. The Recommendation notes, “[t]he Complaint 

alleges that Bay Maritimes was at all relevant times a licensed NVOCC and that Bay Maritimes 

was involved in freight shipment activities,” and so construing these allegations in the light most 

favorable to PCF and drawing all reasonable inferences in PCF’s favor, PCF sufficiently alleged 

that Bay Maritimes was acting as an NVOCC. Recommendation at 4-5. The Recommendation

also notes that according to the Complaint, PCF was “much more than a general creditor that 

loaned funds to Bay Maritimes” and discusses various services that PCF allegedly provided to 

Bay Maritimes in connection with its shipping activities, such as making payments directly to 

2 In addition to the requirement that the principal provide NVOCC services to the claimant, 

a claim must also satisfy additional requirements to be covered under an FMC Bond including, but 

not limited to, the requirement that the claim arise from the transportation-related activities of the 

principal as defined by federal law. 46 U.S.C. § 40902(2), (3).

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Bay Maritimes’ vendors for specific freight shipments, that “facilitate[d] specific shipments of 

freight by Bay Maritimes as an NVOCC.” Recommendation at 5-7. 

16. Whether the principal was acting as an NVOCC in the “relevant transaction” does 

not depend on the services that the claimant was allegedly providing to the principal; instead, as 

noted in the preceding section, the proper inquiry is to determine whether the principal was 

providing NVOCC services to the claimant in the transaction between them that allegedly gave 

rise to the claimant’s claim. AEL, 5 Fed. App’x at 109-110. Accordingly, the conclusion that the 

Complaint sufficiently alleges Bay Maritimes was acting as an NVOCC is in error because it 

focuses on PCF’s alleged services to Bay Maritimes, and does not consider that Bay Maritimes 

never provided NVOCC services to PCF. 

17. Section 40102(17) of Chapter 46 of the United States Code defines an NVOCC as 

“a common carrier that . . . (A) does not operate the vessels by which the ocean transportation is 

provided; and, (B) is a shipper in its relationship with an ocean common carrier.”

18. The allegations of the Complaint show that Bay Maritimes did not provide

NVOCC services to PCF. The Complaint does not allege that Bay Maritimes was providing PCF 

with the services of a common carrier that is a shipper in its relationship with an ocean common 

carrier. Nowhere in the Complaint does it allege that Bay Maritimes was shipping goods to, from,

on behalf of, or with PCF. See generally Complaint. Rather, according to the Complaint, the only 

service Bay Maritimes was supposed to provide to PCF was that of a borrower toward a lender 

(i.e., repayment of borrowed funds). See Complaint at ¶ 7-8, 10 (alleging that Bay Maritimes was 

obligated to repay PCF for funds advanced under the Credit Agreement solely between Bay 

Maritimes and PCF).

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19. The obligation to repay borrowed funds to a lender does not qualify as an NVOCC 

service under 46 U.S.C. § 40102(17). PCF’s alleged claim is premised entirely upon the provision 

of non-NVOCC services, and therefore, under AEL, 46 U.S.C. § 40902, and 46 U.S.C. § 

40102(17), PCF is not a proper claimant under the bond and its Complaint should be dismissed 

with prejudice. 

WHEREFORE, Defendant, ASPEN AMERICAN INSURANCE COMPANY, 

respectfully requests that this Court decline to adopt the Report and Recommendation on the 

Motion, enter an order granting the Motion, and award any such further relief as the Court deems 

just and proper. 

Dated: August 18, 2023. 

 Respectfully submitted,

GURLEY FANT

/s/ Christopher C. Fiore 

David E. Gurley 

(Fla. Bar No.: 0402214) 

dgurley@gurleyfant.com

Michael A. Fant

(Fla. Bar No.: 0100713) 

mfant@gurleyfant.com

Christopher C. Fiore 

(Fla. Bar No.: 1015669) 

cfiore@gurleyfant.com

601 South Osprey Avenue 

Sarasota, FL 34236 

Telephone: (941) 365-4501 

Facsimile: (941) 365-2916 

eservice@gurleyassociates.com

Attorneys for Defendant 

Aspen American Insurance Company

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CERTIFICATE OF SERVICE

I hereby certify that on August 18, 2023, a copy of the foregoing was electronically filed 

with the Clerk of the Court via the Court’s CM/ECF system, which will send a notice of electronic 

filing to all counsel of record. 

GURLEY FANT

/s/ Christopher C. Fiore 

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