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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 ASPEN AMERICAN INSURANCE COMPANY’S REPLY

MEMORANDUM IN SUPPORT OF ITS MOTION TO DISMISS

COMES NOW, Defendant, Aspen American Insurance Company (“Aspen”), by and 

through its undersigned counsel and pursuant to Local Rule 7.1(c)(1), submits the following Reply 

Memorandum in Support of its Motion to Dismiss (“Motion”), and states: 

In its Response in Opposition to Aspen’s Motion (ECF No. 18) (“Response”), Plaintiff, 

PayCargo Finance LP (“PayCargo Finance”) alleges that the Motion should be denied because (1) 

Bay Maritimes Inc. (“Bay Maritimes”) does not have to act as a non-vessel operating common 

carrier (“NVOCC”) in its transactions with PayCargo Finance for Bay Maritimes’ alleged bond 

(“Bond”) to apply, and (2) determining whether Bay Maritimes was acting as an NVOCC is a 

factual question that cannot be decided on a motion to dismiss. Response at 2-9. As will be 

demonstrated below, these arguments are without merit and should be rejected. 

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I. Bay Maritimes had to be acting as an NVOCC in its transactions with PayCargo 

Finance for the alleged Bond to apply. 

AEL, not Trans Ocean, is persuasive here. 

PayCargo Finance argues that Bay Maritimes did not have to be acting as an NVOCC in 

its transactions with PayCargo Finance for the alleged Bond to apply. Response at 3-7. This

argument is based largely1 on a 1996 ruling from the Northern District of California, Trans Ocean 

Container Corp. v. Intercargo Insurance Co., No. C 95-2187 FMS, 1996 U.S. Dist. LEXIS 9550, 

at *9-15 (N.D. Cal. July 3, 1996), decided five years before the Fourth Circuit’s holding in AEL 

Asia Express (H.K.), Ltd. v. American Bankers Insurance Co., 5 Fed. App’x 106 (4th Cir. 2001). 

Response at 3-4. 

Trans Ocean is unpersuasive, particularly when compared to AEL. First, the Trans Ocean

court did not have the benefit of AEL and did not have the opportunity to review the AEL court’s

lengthy discussion of the legislative history of 46 U.S.C. § 1721 as well as the Federal Maritime 

Commission’s (“FMC”) interpretation of that section. AEL, 5 Fed. App’x at 109-110. In contrast

to Trans Ocean’s limited treatment of the legislative history, the AEL court thoroughly reviewed 

and cited the legislative history and the FMC’s comments in support of (1) its holding that claims 

such as PayCargo Finance’s are not within the coverage of maritime bonds, (2) its application of 

§ 1721, and (3) its discussion of the claims that are covered by maritime bonds. Id. 

Second, Trans Ocean omitted key language from the FMC that AEL found persuasive. In 

AEL, the court cited the FMC’s comment that, “To the extent that someone who operates as an 

1

 PayCargo Finance also cites a case from the Southern District of New York, P&O 

Containers Ltd. American Motorists Insurance Co., No. 96 Civ. 8244 (JFK), 1998 U.S. Dist. 

LEXIS 3655, at *1 (S.D.N.Y. March 25, 1998), as supportive of its argument on this point. 

Response at 4-5. P&O, however, does not support PayCargo Finance’s argument, as there is no 

discussion in that case as to whether a principal must have been acting as an NVOCC in the 

relevant transaction for a maritime bond to apply. See generally, id.

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NVOCC also provides non-NVOCC services, those services would not be covered by the bond.” 

5 Fed. App’x at 109. The AEL court highlighted this language in support of its holding as to the 

meaning of § 1721. 5 Fed. App’x at 109. But Trans Ocean omitted this language altogether, and 

actually suggested that there was uncertainty as to whether the FMC treats maritime bonds as 

applying only to transactions where the principal was acting as an NVOCC. 1996 U.S. Dist. LEXIS 

9550, at *13. Because it ignores this key language from the FMC, Trans Ocean’s conclusion as to 

how the FMC treats maritime bonds is contrary to the FMC’s guidance and is not persuasive. 

Based on the FMC’s language as cited by AEL, the FMC clearly treats maritime bonds as applying

only to NVOCC transactions. 

Therefore, rather than relying on Trans Ocean as PayCargo Finance suggests, this Court 

should instead look to the analysis in AEL, which supports Aspen’s position that Bay Maritimes 

had to be acting as an NVOCC in its transactions with PayCargo for the alleged Bond to apply. 

PayCargo Finance’s attempt to reinterpret AEL should be rejected. 

Implicitly recognizing that AEL undermines its position, PayCargo Finance attempts to 

reinterpret AEL to minimize its central holding and distinguish it from the present case. Response 

at 5-7. According to PayCargo Finance, Aspen is reading AEL “backwards” and AEL requires 

Aspen to present an “alternative NVOCC” to Bay Maritimes. Response at 6-7. 

This attempt to reinterpret AEL is meritless. The central holding of AEL is that for a valid 

claim to be brought, the bond principal must have been acting as an NVOCC in the transaction 

with the claimant. 5 Fed. App’x at 110-11. PayCargo Finance offers nothing to refute this holding 

except a suggestion that because the claimant in AEL was an NVOCC and not the principal, AEL

is inapplicable to the present case. Response at 6-7. The language of AEL hardly permits such a 

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strained reading. AEL does not say that the claimant has to be an NVOCC, as opposed to the 

principal, for AEL’s holding to apply. 5 Fed. App’x at 107-110. 

Accordingly, PayCargo Finance’s assertion that AEL requires Aspen to present an 

“alternative NVOCC” to Bay Maritimes is meritless. AEL does not contain such a requirement. 

See id. Instead, the relevant inquiry is whether the principal on the bond, in this case Bay 

Maritimes, was acting as an NVOCC, and to evaluate whether the principal was acting as such, a 

court should look to whether the principal was providing NVOCC services to the claimant. AEL, 

5 Fed. App’x at 107-11. In AEL, the court conducted this inquiry by analyzing whether the services 

provided by the principal fell within the statutory definition of an NVOCC. Id. at 110-11. Because 

the services being provided did not fall within the statutory definition, the principal was not acting 

as an NVOCC, and therefore, the bond did not apply. Id. 

Thus, despite PayCargo Finance’s efforts to reinterpret AEL, the standard articulated 

therein is clear and does not include a requirement to show an “alternative NVOCC.” In this case, 

Bay Maritimes, as alleged by PayCargo Finance, was not acting as an NVOCC but an entity that 

obtained “short term financing in the form of credit” from PayCargo Finance. See Complaint (ECF 

No. 1) at ¶ 6. 

AEL is not based on outdated law. 

As a final attempt to discredit AEL, PayCargo Finance suggests that AEL is based on 

“outdated law.” Response at 7. The basis of this assertion is the FMC’s recent decision to remove 

the language “only when acting as an ocean transportation intermediary” from 46 C.F.R. 

515.21(a). Response at 7. PayCargo Finance suggests that this language “underpinned” the 

analysis in AEL and that its removal “supports the idea that the FMC does not perceive an 

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additional requirement for bond claims against licensed NVOCCs that they must also ‘act as an 

NVOCC’ in connection with the transactions.” Response at 7. 

PayCargo Finance’s assertion fails. First, this language was not central to the holding in 

AEL, which was based on the court’s interpretation of § 1721 through a review of the legislative 

history of that section and the FMC’s stated guidance. 5 Fed. App’x at 109-110. When discussing 

the FMC’s interpretation of § 1721, the court did not even cite 46 C.F.R. 515.21(a). 5 Fed. App’x 

at 109-110. Accordingly, PayCargo Finance’s claim that this language “underpinned” AEL is not 

supportable. 

Second, the FMC did not remove the language in question from 46 C.F.R. 515.21(a) as 

part of some effort to reverse the holding of AEL. As explained by the FMC, the purpose of 

removing this language was to include entities that “advertise or hold themselves out as 

[NVOCCs]” within the scope of the licensing and financial responsibility requirements of the 

Shipping Act. 85 Fed. Reg. 9676, 9678 (2020). Effectively, the purpose of removing the language

was to allow the FMC to enforce the Shipping Act against unlicensed NVOCCs. See id. The FMC’s 

decision to hold unlicensed NVOCCs to the same requirements as licensed NVOCCs does not in 

any way alter or affect the holding of AEL.

Accordingly, the Court, as the AEL court did, should hold that for PayCargo Finance’s

claim to be covered by the Bond alleged in this action, Bay Maritimes must have been acting as 

an NVOCC in its transactions with PayCargo Finance. As detailed in the Motion, Bay Maritimes 

was not acting in that capacity and was instead merely borrowing funds from PayCargo Finance; 

therefore, the Court should find that PayCargo Finance’s claim is not covered by the alleged Bond 

and dismiss this action. 

II. The allegations of the Complaint establish that Bay Maritimes was not acting as 

an NVOCC. 

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Surmising that acting as a borrower is not mutually exclusive with acting as an NVOCC, 

PayCargo Finance suggests that granting the Motion would be improper because whether Bay 

Maritimes was acting as an NVOCC is a factual question that cannot be determined on a motion 

to dismiss. Response at 7-9. 

PayCargo Finance is mistaken. Section 40102 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.” From the allegations of the Complaint, it is clear that the services Bay Maritimes was 

supposed to provide to PayCargo Finance were not those of “a shipper in its relationship with an 

ocean common carrier.” Complaint at ¶¶ 6-9. Nowhere in the Complaint does it state that Bay 

Maritimes was shipping goods to or for PayCargo Finance or performing any similar activity. 

Rather, the Complaint alleges that Bay Maritimes was supposed to repay funds borrowed from 

PayCargo Finance. Id. at ¶¶ 6-9. Pursuant to the plain language of the Complaint and 46 U.S.C. §

40102, in its relationship with PayCargo Finance, Bay Maritimes was a borrower and nothing 

more, which does not fit within the statutory definition of an NVOCC.2

PayCargo Finance’s observation that acting as a borrower is not mutually exclusive with 

acting as an NVOCC misses the point. The issue is not whether a borrower can also act as an

NVOCC, but whether acting as a borrower, and nothing more, meets the statutory definition of an 

2 It is also worth noting that although the Complaint alleges that Bay Maritimes was licensed 

as an NVOCC, nowhere in the Complaint does it state that Bay Maritimes was providing NVOCC 

services to PayCargo Finance. As observed by the Fourth Circuit in AEL, and the FMC, a principal

can be licensed as an NVOCC and provide non-NVOCC services that are not covered by a 

maritime bond. 5 Fed. App’x at 109-111. Therefore, PayCargo Finance’s allegation that Bay 

Maritimes was licensed as an NVOCC does not show that the alleged Bond applied to the specific 

transaction(s) at issue in this action. 

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NVOCC. Here, because Bay Maritimes only acted as a borrower to PayCargo Finance in their 

transactions, Bay Maritimes was not acting as an NVOCC in those transactions. 

PayCargo Finance further implies that because its loans to Bay Maritimes were 

transportation-related, Bay Maritimes was providing NVOCC services to PayCargo Finance. 

Response at 8-9. Again, this argument misses the mark. Whether a claim or judgment arises from 

the principal’s “transportation-related activities” is a separate question entirely from whether the 

principal was acting as an NVOCC in the relevant transaction. See AEL, 5 Fed. App’x at 108 

(distinguishing analysis of whether principal acted as NVOCC from analysis of whether principal 

engaged in transportation-related activities). 

WHEREFORE, for the foregoing reasons, and those set forth in its Motion to Dismiss, 

Aspen American Insurance Company respectfully requests that the Court enter judgment in its 

favor dismissing the Complaint with prejudice, order that Plaintiff, PayCargo Finance LP, take 

nothing in this action, award Aspen American Insurance Company its costs, and grant any such 

further relief as the Court deems just and proper. 

Dated: October 25, 2022. 

Respectfully submitted,

GURLEY & ASSOCIATES 

/s/ David E. Gurley 

David E. Gurley (Fla. Bar No.: 0402214) 

dgurley@gurleyassociates.com

Michael A. Fant (Fla Bar No.: 0100713) 

mfant@gurleyassociates.com

601 South Osprey Avenue 

Sarasota, FL 34236 

Telephone: (941) 365-4501 

Facsimile: (941) 365-2916 

eservice@gurleyassociates.com

Counsel for Defendant, Aspen American Insurance 

Company 

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CERTIFICATE OF SERVICE

I hereby certify that on October 25, 2022, 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 & ASSOCIATES 

/s/ David E. Gurley 

David E. Gurley (Fla. Bar No.: 0402214) 

dgurley@gurleyassociates.com

Michael A. Fant (Fla Bar No.: 0100713) 

mfant@gurleyassociates.com

601 South Osprey Avenue 

Sarasota, FL 34236 

Telephone: (941) 365-4501 

Facsimile: (941) 365-2916 

eservice@gurleyassociates.com

Counsel for Defendant, Aspen American Insurance 

Company

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