### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 11-41203

UNITED STATES OF AMERICA, Plaintiff – Appellee

v. OSCAR RENDA, Defendant – Appellant

Appeal from the United States District Court for the Eastern District of Texas

Before DEMOSS, SOUTHWICK, and HIGGINSON, Circuit Judges. HIGGINSON, Circuit Judge. This case, which arose o ut o f a g overnment dredging contract, requires u s to del imit the scope of a corporate officer’s personal liability under 31 U.S.C. §
3 7 1 3 ( t h e “ P r i o r i t y S t a t u t e ” )

. S p e c i f i c a l l y , w e a r e c a l l e d u p o n t o d e c i d e ( 1 ) w h e t h e r the decision of a contracting officer rendered pursuant to the Contract Disputes Act of 1978, as amended, 41 U.S.C. § 7 1 0 1 et s eq. (the “CDA”), constitutes a “c l aim” within the meaning of t he Priority Statute, and, if so, (2) whether a debtor’s representative has “notice” of that claim, necessary to trigger personal liability un d e r the Priority Statute, if he has actual knowledge of its existence but relies on the e r roneous advice of counsel a s to its validity. Answering both questions affirmatively, we AFFIRM. U n i t e d S t a te s C o u r t o f A p p e al s F i f t h C i rc u i t 

### F I L E D February 20, 2013 Ly l e W . Cay ce Clerk Case: 11-41203 Document: 00512148430 Page: 1 Date Filed: 02/20/2013No. 11-41203
FACTS AND PROCEEDINGS In 1998, the U nited S t a t e s A r m y C orps of Engineers (the “Corps”) awarded Contract No. DACW-99-C-0001 (the “Dredging Contract”) t o Renda Marine, Inc. (“Renda Marine”), in the estimated a mount o f $12,526,100, to dredge a portion

o f the H ouston-Galveston navigation channel. As a contract made by an executive agency for the procurement of ser v i c e s , the D r edging C ontract was governed by the CDA, which requires, i nter a l ia , that cl a i m s by either party “relating to” a g overnment contract b e submitted to the co n t r a c t i n g o fficer (“CO”) for a written decision. 41 U.S.C. § 7103(a)(1), (d). Between January a nd O c t ober 2001, Renda Marine submitted eight claims, including seven “ d iffering site condition” claims a nd one “constructive
contract modification” c laim, to Contracting Officer Thomas Benero (“CO Benero”), Chief of the Contracting D ivision f or the Corps in Galveston, Texas. In
response, the Corps issued M odification No. P00023, which provided for a $3,083,8 3 3 e quitable adjustment in contract price f or a dditional dredge work completed by Renda Marine in the “ flare” area of t h e c h a n nel. CO Benero did
not timely issue a f

inal decision on Renda Marine’s remaining claims and, as a result, they were considered denied. See R enda Marine, I nc. v. United States , 71 Fed. C l. 782, 784 & n.2 (2006) (refere n c i n g a p revious version of 41 U.S.C. § 7103(f)(5), which read: “Any f ailure by the contracting o fficer to issue a decision

on a contract c laim w ithin the period required will b e deemed to b e a decision by the contracting officer denying the claim and will authorize the commencement of t he appeal.”). On April 11, 2002, Renda Marine timely appealed the denial of its claims to the Court of Federal Claims. 1 Id.

1 To tim ely ap pe a l a C O ’ s d e cis ion, a contractor has the op tion of ( 1) f iling an ap p eal

w ith the Arm ed Servic e s B o a r d o f Contract Ap p eals ( “ASBCA”) w ithin ninety d ays f rom receip t of the d ecis ion, 41 U. S. C. § 7104( a) , or ( 2) bringing an action in the Court of Fed eral Claim s
w ithin one year f

rom receip t of the d ecis ion, § 7104( b)

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On November 26, 2002, while Renda Marine’s case was p ending before the Court of Federal C laims, CO Benero issued a final decision (the “Final Decision”)

on six counterclaims submitted by t h e government against R enda Marine for incomplete a nd deficient work. A fter setting forth the “items determined to be deficient or incomplete o r not in accordance with the contract specifications,” the Final Decision “determine[d] that Renda Marine is indebted to the G overnment in the amount of $11,860,000,” plus interest, for the e stimated completion costs, directed the company to submit payment by certified che c k , a n d notified the
company of the statutory avenues of appeal. The F inal D e cision w as addressed
t o O s c ar Renda (“Renda”), t he president and m ajority shareholder of Renda Marine at the time, who later acknowledged receiving and reading it. After reviewing the Final Decision, Renda called Brian E rikson, an attorney with Quilling, Selander, Lownds, Winsle t t & Moser, P.C. (“Quilling Selander”), the firm that was representing Renda Marine i n the matter pending before t h e Court of Federal Claims, to s eek l egal advice on how Renda Marine should proceed. According to Renda, Er i k son advised him t hat the Final Decision “did not require action by Renda M arine” because “any claim the Government made should be a d d r e s sed in the pending [litigation] before the Court of F e d e r al Claims, so that Benero’s f indings a nd decision were void.” Consistent with Erikson’s advice, Renda Marine did not timely appeal the Final Decision to the ASBCA or Court of Federal Claims. On July 31, 2 003, Renda caused R enda Marine to transfer all of its assets, totaling $8,563,066, to its unsecur e d c r e d itors i n t he following amounts: $ 5 , 9 32,900 to Oscar R enda Contracting, Inc.; $484,500 to Renda E nvironmental, Inc.; $ 325,000 to Oscar Renda; and $325,000 to Rudolph Renda (the “July 2003 transfer”). On the date of the transfer, R enda Marine’s debts, not including the $11.86 million debt asserted in the Final D e c i s i o n , exceeded the v alue of its assets by $7,988,798.

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In July 2004, Renda Marine moved for l eave to amend its complaint in the Court of Federal Claims to challenge the Final Decision. Renda Marine, Inc. v. United S tates , 65 Fed

. C l

. 152, 156 (2005). After hearing oral argument, the Court of Federal Claims denied the m o t i on o n the ground that the period for timely a ppeal of the Final Decision had expired seven month s earlier and, accord i n g l y , t h e court lacked jurisdiction under the CDA to consider it. Id. at 156–63. Renda Marine attempted, without success, to relitigate the issue twice during pretrial p roceedings, twice during trial, and twice after trial. Id. at 153–57; Renda Marine, I n c. v
. Un i t e d States , 71 Fed. Cl. 782 (2006). After a nineteen-day trial, the Court of Federal Claims ruled on t he merits of Renda Marine’s claims against the government, concluding that R enda Marine “failed
to prove by a preponderance of the credible evidence that it is e ntitled to recover

on i t s claims.” Renda Marine, Inc. v. United States , 66 Fed. Cl. 639, 721 (2005). The c ourt denied Renda Marine’s m otion for reconsideration and entered final judgment i n favor o f t h e g o vernment. Renda Marine, Inc. v
. United States , 71 F e d

. Cl. 782 (2006). The j udgment was affirmed on appeal to th e F e d e r a l Circuit. Renda Marine, Inc. v. United States , 509 F.3d 1372 (Fed. Cir. 2007). In 2005, Renda Marine asserted a mal p r a ctice claim against Quilling Selande r f

o r f a i l i n g t o t i m e l y c hallenge the Final Decision, a nd ultimately settled the claim f

or $2 million. Several days after receiving t he $ 2 million settlement, Renda caused Renda Marine to transfer the settlement money to Oscar Renda Contr a c t i n g , Inc. t o repay advances it allegedly had made for Renda Marine’s legal expenses (the “December 2005 transfer”). On the date of the t ransfer, Renda Marine’s debts exceeded the value of its assets. In 2008, the government sued Renda Marine in the United S tates District Court f or the Eastern District o f T e xas t o r ecoup the $3,083,833 equitable adjustment and t o enforce the $11,860,016 claim asserted in the Final Decision. United States v. Renda M arine, Inc. , 7 5 0 F

. Supp. 2d 755, 7 58–59 (E.D. T ex.

4 Case: 11-41203 Document: 00512148430 Page: 4 Date Filed: 02/20/2013No. 11-41203

2010). The district court granted t he government’s motion for judgment on the pleading s , id. at 760–67, and e ntered judgment f or the government in the
amount of $2 2 , 0 6 0,392.78, including interest and p enalties. On appeal, we affirmed the judgment. United States v. Renda Marine, Inc. , 667 F.3d 651 (5th Cir. 2012). In 2009, the g o v e rnment c ommenced this action, seeking to h old Renda personally liable under the P riority Statute for the amount of the July 2003 and December 2005 transfers he made on behalf of Renda Marine. Renda raised a number of affirmative defenses a ttacking t he m erits of the Final Decision, and, through a counterclaim, sought rev i ew of the Final D e cision under the Administrative Procedure Act (“APA”). T he g o vernment moved to dismiss Renda’s counterclaim and to strike his affirmative defenses for lack of subjectmatter jurisdiction. A do pting the report and recommendation of Magistrate Judge Bush, t h e dis t rict court granted the motion. The p arties later filed cross-motions for summary judgment, and Renda moved for reconsideration of
t h e d i s t rict court’s dismissal of his counterclaim and a ffirmative d efenses. Aga i n adopting the report and r ecommendation of Magistrate Judge Bush, the district
court granted the government’s motion for summary judgment and denied Renda’s motions for summary judgment and reconsideration. On September 30, 2011, the district court entered final judgment in favor of the government in the
amount of $12,4 6 8 , 5 8 8

. 94, the combined value of the two transfers, plus i nterest. Renda timely appealed. STANDARDS OF REVIEW We review a district court’s sum m a r y j u d g m e n t d e n o v o , applying the same standard a s the district court

. Moss v. BMC S o f t w a r e , Inc. , 610 F.3d 917, 922 (5th Cir. 2010). Summary j udgment i s warranted if, viewing all evidence in the light most favorable to the non-moving part y , t h e r e c o r d demonstrates that there is no genui n e i ssue of material fact and t hat the moving party is entitled to

5 Case: 11-41203 Document: 00512148430 Page: 5 Date Filed: 02/20/2013No. 11-41203

judgment as a matter of l aw. Id. (citing Fed. R. Civ. P. 56(a)). A fact is material if it “might affect t h e outcome of the suit under the governing law,” and a dispute is genuine if “the evidence is such that a reasonable jury could r eturn a verdict f o r t h e n o n m o v i n g p a r t y
. ” A n d e r s o n v
. L i b e r t y L o b b y , I n c
. , 4 7 7 U

. S

. 2 4 2 , 2 4 8 ( 1 9 8 6 )

. W e r e v i e w a d i s t r i c t c o u r t ’ s o r d e r d e n y i n g a p a r t y ’ s m o t i o n f o r

r e c o n s i d e r a t i o n , m a d e p u r s u a n t t o F e d e r a l R u l e o f C i v i l P r o c e d u r e 5 4 ( b ) , f o r a b u s e

o f d i s c r e t i o n
. S e e S w o

p e v
. C o l u m b i a n C

h e m
. C o
. , 2 8 1 F

. 3 d 1 8 5 , 1 9 3 ( 5 t h C i r
. 2 0 0 2 )

. R u l e 5 4 ( b ) a u t h o r i z e s a d i s t r i c t c o u r t t o r e c o n s i d e r a n d r e v e r s e i t s p r i o r r u l i n g s o n

a n y i n t e r l o c u t o r y o r d e r “ f o r a n y r e a s o n i t d e e m s s u f f i c i e n t

. ” S a q u i v
. P

r i d e C e n t

. A m
. , L L C , 5 9 5 F

. 3 d 2 0 6 , 2 1 0

– 1 1 ( 5 t h C i r
. 2 0 1 0 )

. W e r e v i e w a d i s t r i c t c o u r t ’ s o r d e r s t r i k i n g a f f i r m a t i v e d e f

e n s e s f o r a b u s e o f d i s c r e t i o n
. C

a m b r i d g e T o x i c o l o g y G r p
. , I n c
. v
. E x n i c i o s , 4 9 5 F

. 3 d 1 6 9 , 1 7 8 ( 5 t h C i r
. 2 0 0 7 )

. S t r i k i n g a n a f

f i r m a t i v e d e f

e n s e i s w a r r a n t e d i f i t c a n n o t , a s a m a t t e r o f l a w ,
s u c c e e d u n d e r a n y c i r c u m s t a n c e
. S e e i d

. ( c i t i n g F e d

. R

. C i v
. P

. 1 2 ( f ) )

. DISCUSSION T h e P r i o r i t y S tatute “is a l m o s t a s o l d a s t h e C o n s t i t u t i o n , a n d i t s r o o t s

r e a c h b a c k e v e n f

u r t h e r i n t o t h e E n g l i s h c o m m o n l a w
. ” 2 U n i t e d S t a t e s v
. M

o o r e , 4 2 3 U

. S

. 7 7 , 8 0 ( 1 9 7 5 )

. E n a c t e d i n t h e s h a d o w o f t h e R e v o l u t i o n a r y W a r , a t a t i m e

w h e n “ m a n y p e r s o n s h a d n e c e s s a r i l y b e c o m e i n d e b t e d t o t h e U n i t e d S t a t e s , ” U n i t e d S t a t e s v
. F

i s h e r , 6 U

. S

. ( 2 C r a n c h ) 3 5 8 , 3 9 2 ( 1 8 0 5 ) , t h e P r i o r i t y S t a t u t e w a s
p a r t o f t h e “ e a r l y e f

f o r t s o f t h e f

o u n d i n g f

a t h e r s t o m a k e t h i s c o u n t r y a u n i o n a n d

n o t a c o n f

e d e r a t i o n o f s t a t e s
. ” U n i t e d S t a t e s v
. L u t z , 2 9 5 F

. 2 d 7 3 6 , 7 4 2 ( 5 t h C i r
. 1 9 6 1 )

. I n i t s c u r r e n t i t e r a t i o n , t h e P r i o r i t y S t a t u t e r e a d s , i n p e r t i n e n t p a r t :

2 F o r a h i s tory of the Priority Statute, includ ing a s um m ary of every Sup rem e Cour t
cas e in which it has been interp reted , s ee R ichard H

. W. M aloy, The “Pri ori ty Sta tute” – The U ni ted Sta tes’ “A ce i n the H ol e” , 39 J. M A R SH A L L L. R E V

. 1205 ( 2006)

.

6 Case: 11-41203 Document: 00512148430 Page: 6 Date Filed: 02/20/2013No. 11-41203

( a ) ( 1 ) A c l a i m [ 3 ] o f t h e U n i t e d S t a t e s G o v e r n m e n t [ 4 ] s h a l l b e p a i d f i r s t
w h e n
- - ( A ) a p e r s o n [ 5 ] i n d e b t e d t o t h e G o v e r n m e n t i s i n s o l v e n t [ 6 ] a n d

- - ( I ) t h e d e b t o r w i t h o u t e n o u g h p r o p e r t y t o p a y a l l d e b t s m a k e s a v o l u n t a r y a s s i g n m e n t o f p r o p e r t y ;
. . . . ( b ) A r e p r e s e n t a t i v e [ 7 ] o f a p e r s o n o r a n e s t a t e ( e x c e p t a t r u s t e e a c t i n g u n d e r t i t l e 1 1 ) p a y i n g a n y p a r t o f a d e b t o f t h e p e r s o n o r e s t a t e b e f o r e p a y i n g a c l a im o f the G o v e r n m e n t i s l i a b l e t o t h e e x t e n t o f t h e p a y m e n t f

o r u n p a i d c l a i m s o f t h e G o v e r n m e n t

. 3 1 U

. S

. C

. § 3 7 1 3

.

3 “Claim ” is def

ined by s tatute as “any am oun t of f und s or p rop erty that has been d eterm ined by an ap p rop riate of f icial of the F ed eral G overn m ent to be ow ed to the U nited States by a p ers on, organization, or entity other than anot her F ed eral agency. ” 31 U

. S. C

. § 3701( b) ( 1)

. The term inclu d es , w ithout lim itation, “any f ines or penalties as s es sed by an agency” and “other am o u n t s o f m oney or p rop erty ow ed to the G overnm ent. ” § 3701( b) ( 1) ( F) –( G )

. The term s “claim ” and “d ebt” are us ed interchangeably in s ubchap ter II. See § 3701( b) ( 1)

.

4 A “claim of the U nited States Governm ent” includ es claim s m ad e by executive agencies , s uch as the Arm y Corp s of Engineers , see Moore , 423 U

. S. at 78, as w ell as claim s
m ad e by authorized of f icers o f e x e c u t i v e agencies , U

. S. D ep ’t of A

gri c. , Em erg. C rop & Feed Loa ns v
. Rem und , 330 U

. S. 537, 541–43 ( 1947) ( “Whether the claim is f iled in the nam e of the U nited States or in the nam e of an of f icer or agency is im material; in the latter ins tance, the claim is neces s arily f

iled on behalf of the U nited States and the legal ef fect is the s am e as if it had been filed in that nam e. ”)

.

5 The term “p ers on, ” as us ed in th e P r i o r i t y Statute, encom p as s es corp orations

. Bea ston
v
. Fa rm ers’ Ba nk of D el

. , 37 U

. S. 102, 134 ( 1838) ; see a l so M oore , 423 U

. S. at 78–86 ( ap p lying the Priority Statute to d ebt ow ed by corp oration)

.

6 A n e n t ity is “ins olvent, ” w ithin the m eaning of the Priority Statute, if its liabilit i e s exceed its as s ets

. See Bra m w el l v
. Uni ted Sta tes , 269 U

. S. 483, 487 ( 1926) ; see a lso La keshore A p ts. , Inc. v
. U

ni ted Sta tes , 351 F. 2d 349, 353 ( 9th C ir. 1965) ( f ind ing corp oration ins olvent,

w ithin the m eaning of the Priority Statute, becaus e “its liabilities exceed ed its as s ets ”) ; U ni ted Sta tes v
. G ol den A c r e s, Inc. , 684 F. Sup p
. 96, 101 (D

. D el. 1988) , a f f ’d 879 F. 2d 857 ( 3d Cir. 1989) ( “U nd er the Fed eral Priority Statute, a debtor is ins olvent w hen its liabilities exceed its
as s ets

. ”)

.

7 The term “rep res entative” has been cons trued to enco m p as s corp orate of f icers

. See L u t z , 2 9 5 F

. 2 d a t 7 4 2 ( e x p l a i n i n g t h a t t h e r e p r e se n t a t i v e l i a b i l i t y p r o v i si o n “ i mp o se s t h e d a n g e r o f p e r so n a l l i a b i l i t y o n [ ] c o r p o r a t e o f f i cers ”) ; see a lso G ol den A cres , 684 F

. Sup p
. at 102–03 ( f ind ing corp orate of

f icers pers onally liable und er § 3713( b) ).

7 Case: 11-41203 Document: 00512148430 Page: 7 Date Filed: 02/20/2013No. 11-41203

T h e r e p r e s e n t a t i v e l i a b i l i t y provisi o n , t h e p r o v i s i o n a t i s s u e i n t h i s c a s e , g i v e s the P r i o r i t y S t a t u t e “ t e e t h ” b y m a k i n g a r e p r e s e n t a t i v e w h o p a y s a

n o n
- f e d e r a l d e b t o n b e h a l f o f a c orporati o n b e f o r e p a y i n g a f

e d e r a l c l a i m
p e r s o n a l l y l i a b l e f

o r t h e a m o u n t p a i d

. M o o r e , 4 2 3 U

. S

. a t 8 0 ; s e e a l s o W i l l i a m T

. P l u m b , J r
. , F

e d e r a l L i e n s a n d P

r i o r i t i e s

—

A g e n d a f or the Nex t D e c a d e , 7 7 Y A L E L

. J

. 2 2 8 , 2 5 5 ( 196 8 ) ( “ [ T ] h e p r o p e r i n t e n d e d f u n c t i o n o f t h e [ r e p r e s e n t a t i v e l i a b i l i t y p r o v i s i o n ] i s t o s e r v e a s ‘ p o l i c e m a n ’ f o r [ t h e p r i o r i t y p r o v i s i o n ] , b y
p e r m i t t i n g t h e G o v e r n m e n t t o r e c o u p f r o m t h e f i d u c i a r i e s a d m i n i s t e r i n g i n s o l v e n t

e s t a t e s w h e n t h e y i n

j u r e t h e G o v e r n m e n t b y d i s r e g a r d i n g i t s p r i o r i t y
. ” )

. R e a d l i t e r a l l y , . . . [ s u b s e c t i o n ( b ) ] w o u l d

. . . r e q u i r e t h e m a n a g e m e n t
o f a s o l v e n t b u s i n e s s
. . . t o a c t a t i t s p e r i l i n p a y i n g o t h e r d e b t s w h i l e f e d e r a l c l a i m s a r e o w i n g , f o r i f t h e b u s i n e s s s h o u l d l a t e r b e c o m e u n a b l e t o p a y t h e f

e d e r a l c l a i m s t h e m a n a g e m ent could b e l i a b l e ; f u r t h e r , t h e p r o v i s i o n w o u l d i m p o s e p e r s o n a l l i a b i l i t y e v e n o n o n e w h o p a y s o t h e r d e b t s i n n o c e n t l y a n d w i t h n o r e a s o n t o s u p p o r t t h a t t h e r e m a y b e o b l i g a t i o n s o w i n g t o t h e U n i t e d S t a t e s
. S e e W i l l i a m T. P l u m b , J r
. , T h e F e d e r a l P r i o r i t y i n I n s o l v e n c y : P r o p o s a l s f o r R e f o r m , 7 0 M IC H

. L

. R E V

. 1, 8 7 ( 1 9 7 1 )

. T o a v o i d s u c h a r e s u l t , t h e f e w c o u r t s t o h a v e i n t e r p r e t e d § 3 7 1 3 ( b ) 8 hav e r e a d i n t o t h e p r o v i s i o n t h e a d d i t i o n a l

r e q u i r e m e n t s t h a t t h e r e p r e s e n t a t i v e h a v e “ k n o w l e d g e o f t h e debt o we d b y t h e

e s t a t e t o t h e U n i t e d S t a t e s o r n o t i c e o f f a c t s t h a t w o u l d l e a d a r e a s o n a b l y p r u d e n t
p e r s o n t o i n q u i r e a s t o [ i t s ] e x i s t e n c e , ” 9 a n d “ t h e c o r p o r a t i o n [ b e ] i n s o l v e n t w h e n

8 M aloy, sup ra note 3, at 1280 ( noting the “s c a r c i t y o f l a w p ertaining to 31 U

. S. C. § 3713( b) ”)

.

9 U ni ted Sta t es v
. C

o p p o l a , 8 5 F

. 3 d 1 0 1 5 , 1 0 2 0 ( 2 d C i r
. 1 9 9 6 ) ; see al so Li ttl e v
. C

. I. R. , 113 T. C. 474, 480 (1999) ( “This section ap p ears to im p os e s trict liability on a f id uciary w ho m ak es a d is burs em ent w hich leaves the es tate w ith ins uf f icient f und s w ith w hich to p ay a d ebt ow ed to the United States

. H ow ever, courts have long d ep arted f rom s uch a rigid interp retation. It has long been held that a f id uciary is liable only if it h a d n otice of the claim of the U nited States bef

ore m ak ing the d is tri b u t i o n
. Whether the f id uciary had notice is determ ined by

w h ether the executor k new or w as chargeable w ith k now led g e of the d ebt. ”) ( interna l quotation m ark s and citations om itted ) ; William T. Plum b, Jr. , Federa l Li ens a nd Pri ori t i es—

A genda for t he N

ext D eca de , 77 Y

A L E L. J. 228, 259 (1968) (“[ T ] he p revailing view
8 Case: 11-41203 Document: 00512148430 Page: 8 Date Filed: 02/20/2013No. 11-41203

t h e d e f e n d a n t p a i d t h e o t h e r d e b t s
. ” 1 0 A c c o r d i n g l y, a corpo r a t e o f f i c e r i s
p e r s o n a l l y l i a b l e i f

, o n b e h a l f o f t h e c o r p o r a t i o n , h e ( 1 ) p a y s a n o n
- f e d e r a l d e b t ( 2 ) b e f o r e p a y i n g a c l a i m o f t h e U n i t e d S t a t e s ( 3 ) a t a t i m e w h e n t h e c o r p o r a t i o n w a s i n s o l v e n t , (4) if h e h a d k n o w l e d g e o r n o t i c e o f t h e c l a i m
. S e e U n i t e d S t a t e s v
. C o p p o l a , 8 5 F

. 3 d 1 0 1 5 , 1 0 2 0 ( 2 d C i r
. 1 9 9 6 )

. I n t h e i n s t a n t c a s e , R e n d a d o e s n o t d i s p u t e t h a t t h e f i r s t a n d t h i r d e l e m e n t s

a r e s a t i s f

i e d

. T h a t i s , i t i s u n d i s p u t e d t h a t R e n d a , a c t i n g a s R e n d a M arine’s

r e p r e s e n t a t i v e , c a u s e d R e n d a M a r i n e t o m a k e t h e J u l y 2 0 0 3 a n d D e c e m b e r 2 0 0 5
t r a n s f e r s a n d t h a t , a t t h e t i m e of tho s e t r a n s f e r s , R e n d a M a r i n e w a s i n s o l v e n t

. R e n d a ’ s p e r s o n a l l i a b i l i t y f o r t h e a m o u n t o f t h e t r a n s f e r r e d a s s e t s t h e r e f

o r e h i n g e s

o n w h e t h e r , a t t h e t i m e o f t h e t r a n s f e r s , ( 1 ) t h e g o v e r n m e n t h a d a “ c l a i m ” a g a i n s t R e n d a M a r i n e , a n d , i f s o , ( 2 ) R e n d a h a d “ k n o w l e d g e ” o r “ n o t i c e ” o f t h a t c l a i m
. A. The Government Had a Claim Against Renda Marine The first issue on appeal, w h i c h t h e parties agree is a matter of first impression, is w hether a C O’s determination that a government c o n t r a c t or is indebted to the government, rendered p ursuant to the authority g ranted by the C D A , c o n stitutes a “claim” within the meaning of the Priority Statute. Our starting point is the s tatute’s plai n m e aning, ascertained by reference to “the particular statutory language at issue, as well as the language and design of the
statute as a whole.” See F rame v. City of Arlington , 657 F.3d 2 15, 2 24 (5th Cir. 2011). On its face, the statutory definition of “claim”—“any amount of funds or property that has been determined by a n a ppropriate official of the Federal

is that the liability is not to be im pos ed unles s the f id uciary has actual k now led ge of the claim , o r a t l e a s t p o s s e s s e s s u c h i n f o r m a t i o n ‘ a s w o u l d p u t a r e a s o n a b l y p r u d e n t m a n u p o n i n q u i r y
. ’ ” ) ( collecting cas es ).

1 0 L u t z , 2 9 5 F

. 2 d a t 7 4 2 ; see a l so H a tch v
. M

orosco H ol di ng Co. , 61 F. 2d 944, 945–46 ( 2d Cir. 1932) ; Ba rtl ett , 186 F

. Sup p
. 2d at 885.
9 Case: 11-41203 Document: 00512148430 Page: 9 Date Filed: 02/20/2013No. 11-41203

Government to be owed to the United States by a person, organization, o r entity other than another Federal agency”—captures w ithin its scope a CO’s decision

on a claim relating to a government contract. 31 U.S.C. § 3701(b)(1). The langua g e of the Final Decision tracks the definition of claim: it includes a determination —“I hereby determine”—that a person, organization, or entity —“Renda Marine, Inc.”—owes an amount of funds to the U nited States—“is indebted to the Government in t he amount of $ 1 1 , 860,000.000.” A nd, as the official statutorily designated to make decisions w ith respect to c l aims relating
to government contracts, 41 U.S.C. § 7 1 03, a CO surely qualifies as “an appropriate official of the Federal Government.” 1 1 The purpose and design of the Priority Statute l ikewise prompt the conclusion that the Final Decision i s a “ c laim.” The Priority Statute was enacted “to secure an adequate r eve n ue t o sustain the p ublic burthens [sic] and discharge the public debts.” M oore , 423 U.S. at 81 ( quoting United States v. State Bank of N.C. , 31 U.S. (6 Pet.) 29, 35 (1832)). To ensure its purpose is fulfilled,
t h e Supreme Court has instructed lower courts to give the P riority Statut e “ a liberal interpretation,” S t a t e Bank of N.C. , 3 1 U.S. at 39, counseling that “All debtors to the United States, whatever their character, and by whatever mode boun d , may be fairly included” within its reach, Bramwell , 269 U.S. at 487 (quoting Beaston , 37 U .S. at 1 34 )

. Consistent with this teaching, “courts have applied the priority statute to Government c laims of all types.” M oore , 4 23 U.S.
at 8 2 ( h o l d ing that obligations t o the government, even if unliquidated, are enti t l e d to priority); United States v
. Moriarty , 8 F.3d 329, 3 34 ( 6th Cir. 1993) (holding that the government had a “ claim” within t he meaning of the Priority Statute even though its c ause of a ction for recovery w as barred by the statute of

1 1 Ad d itionally, w e note that a CO ’s d ecis ion f its w ithin the s tatute’s catch- all def inition of “claim .” See 3 1 U

. S

. C

. § 3701( b) ( 1) ( p rovid ing that “A claim includ es , w ithout lim itation

.

. . other am ounts of

m oney or p rop erty ow ed to the G overnm ent”)

.

10 Case: 11-41203 Document: 00512148430 Page: 10 Date Filed: 02/20/2013No. 11-41203

limitations); Viles v. C.I.R. , 233 F.2d 376, 380 (6th Cir. 1956) (holding that appellant’s tax l iabilities were subject t o priority even though they were contested and had not been formally assessed). By reco g n i z i ng that “claim” has been interpreted expansively, we do not

mean to suggest that the term i s boundless in scope. As the Supreme Court noted, “it i s a t least d oubtful on the statute’s wordin g t h a t obligations wholly contingent for u ltimate maturity and obligation upon the happening of events after insolvency” are within the statute’s ambit. Massachusetts v. United States,
333 U .S. 611, 6 27–28 (1948). T h a t is, government c l aims not currently in existence but which may arise in the f uture are not e ntitled to prior i ty. E.g. , United States v. Culburt (In re Metzger) , 709 F.2d 32, 34 (9th C ir. 1983) (holding that criminal defendant’s transfer of his boat prior to s entencing did n ot violate the P riority Statute because, at the time o f the transfer, any g o vernment claim

was contingent on w hether the s entencing judge w o u l d e xercise his discretion to impose a fine as part of the sentence). Seizing on that limitation, Renda argues on a ppeal t hat the Final Decision

was not a “claim” because it was not tr u ly final at the time of the July 2003 transfer. He references two provisions of t he CDA to support his position. First, he draws a nega t i v e i n f e r ence from § 7103(g) of the CDA, which states: “The contracting officer’s decision on a claim is final and conclusive and is n ot subject
to review by any for u m , tribunal, or Federal Government agency, unless an appeal or a ction is timely commenced as authorized by this chapter .” 41 U.S.C. § 7103(g) (emphasis added). It follows fr o m t h e italicized language, Renda

reasons, that unti l the period to timely commence a n appeal or action has passed, a claim is n either final nor conclusive. Second, he calls to our attention the de n ovo review prov i s i on in § 7104(b)(4), which the Federal C ircuit has interpreted as providing that “once a n action i s brought following a contracting officer’s decision, the parties start in court or before t he board w ith a clean

11 Case: 11-41203 Document: 00512148430 Page: 11 Date Filed: 02/20/2013No. 11-41203

slate.” Wilner v. U

nited States , 24 F.3d 1397, 1403 (Fed. Cir. 1994); see also id.
at 1 403 n.8 (noting that, prior to the CDA’s enactment, filing an appeal “vacated”

a C O’s decision, and c oncluding that “ ther e is n o reason to b elieve that, in enacting the [CDA], Congress intended to change this e stablished rule”). If the finality of a C O’s decision depends on whether it is appealed and the filing of a suit before the C o urt o f Federal Claims has the effect of vacating it, Renda contends, t he underlying claim cannot be considered final before the s tatutory period for appeal has passed. Were finality a requirement of the Priority Statute, Renda would have a stronger case. But the word “final” is conspicuously a bsent from the s tatutory definition o f “claim.” See 31 U .S.C. § 3701(b)(1) (defining “ c laim” as “any amount of funds or property that has been determined by an appropriate official of the Federal Government t o be owed to the United S tates by a p erson, organization,

or entity o ther t han another Federal agency” ) ; § 3 7 01(b)(1) (clarifying that “claim” includes, w ithout limitation, seven categories of de b t s , including the catch-all, “ other amounts o f money or property owed to t he Government”). Congress knows how to distinguish “decisions” from “final decisions,” see 28 U.S.C. § 1291 (cab i n i n g f ederal appellate jurisdiction t o “final d e cisions” of district courts), and “determinations” from “final determinations,” see 5 U.S.C. § 8 503 (providing for judici a l r e v i e w o f f e d e r a l e m p l oyee compensation eligibility, but only in the case of a “final determination”). The Supreme Court’s decision in Moore illustrates that a claim arising out of a g overnment contract need not be final to b e accorded pr i o r i t y
. That case, like this one, involved a contractor’s breach of a government contract. 423 U.S.
at 78. After the government notified t he contractor o f i t s intent t o terminate the
contract but before it filed suit, the contractor, an insolvent company, a ssigned all of its assets to a third party. Id. at 78

– 7 9

. T h e g overnment sued, alleging that the assignment of assets v i o l a ted an earlier but m aterially

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indistinguishable version of the Priority S tatute. 1 2 Id. at 7 9. N otably, at t he time the government sued, no government official or court had made a n o f ficial determination of indebtedness. Yet t h e C o urt ruled that the government’s unliquidated claim w as nonetheless entitled to priority, reasoning that “nothing

on the face of the statute, and no potential difficulty in administering it, require that a distinction be drawn for this purpose b etween l i q u i d a t e d a n d unliquidated debts.” Id. at 83. The Court rejected the argument that the term “ debts due,” which has since b een re v i s e d t o r e ad “ claim,” 1 3 should “be r ead to mean only those obligations that w ould on the date of the assignment have given rise to a common-law action for debt.” Id. at 8 3. In response to the argument t h at the government’s claim w a s t o o indefinite to b e e n t itled to priority, the Court responded that the claim “was fixed and independent of events after i nsolvency,”

even though it was not certain in amount or reduced to j udgment, b ecause “only the precise amount o f that obligation awaited future events.” Id. at 85 (internal quotation marks omitted). It follows that the government’s claim against Renda Marine, which was ce r t a i n i n amount a nd determined b y an appropriate government official, likewise is entitled to priority.

1 2 See U ni ted Sta tes v. E

sta t e o f Rom a ni , 523 U

. S. 517, 524 ( 1998) ( “The text of the p riority s tatute

. . . is virtually unchanged since its enactm ent in 1797. ”) ; see a l so M aloy, sup ra note 3, at 1205 ( “The m od ern Priority Statute has been in ef f ect s ince 1797 without m aterial change. ”)

.

1 3 A p revious vers ion of the rep res entative liability p rovis ion, f orm e r l y c o d if

ied at 31 U

. S. C. § 192, im p os ed p ers onal liability on “[ e] very
. . . pers on, w ho p ays , in w hole or in p art, any d ebt d ue by the p ers on
. . . f or w hom or f

or w hich he acts bef

ore he s atis f

ies and p ays the d ebts d u e t o the United States

. ” In 1982, the term “claim ” was s ubs tituted for the p hras e “d ebts d ue” to m aintain internal cons is tency w ithin the s ection. See 31 U

. S. C. § 3713, his t. n. ( “In the s ection, the w or d ‘ c l a i m ’ i s s ubs tituted f or ‘d ebts ’ f

or cons is tency. The w ord ‘d ue’ is
om itted as unneces s ary. ”)

. Beca u s e “nothing in the statutory s chem e ind icates that this
s ubs titution w as m eant to change the law s ubs tantively, ” courts interp reting the term “claim ” und er the current vers ion of the Priority Statute of ten look f

or guid ance to p as t d ecis ions in

w hich courts interp reted the term “d ebts d ue. ” See M ori a rty , 8 F. 3d at 334.
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Not only is Renda’s proposed i nterpreta t i o n contrary to Supreme Court

p r e c e d e nt, i t would also undermine the purpose of the Priority S tatute. Th e Priority Statute was designed to induce a d ebtor and i ts representatives to pay the debts of the government first or, at a minimum, to preserve a d e btor’s assets pending resolution of any d ispute regardin g t h e government’s claim. See Massachusetts, 333 U.S. at 636. If, a s Renda posits, a debt determination made by a CO is not entitled to priority during the time i n which it can b e contested,

a debtor might atte mpt to circumvent t h e Priority S tatute by appealing the determination t o the ASBCA o r the Court of Federal Claims and, in the interim, transferring all of its assets to inside creditors. The Priority Statute “is not to be defeated by unnecessarily restricting the application o f t h e word ‘[claim]’ 1 4 within a narrow or technical meaning,” Moore , 423 U.S. at 81 (quoting Price v. United States , 269 U.S. 492, 500 (1926)), and to give “claim” a m eaning more restrictive than Congress gave it i n t he statute and
courts have given it in its 2 00-year history would do just that. We conclude that the term “cla i m ” encompasses a CO’s determination that a government contractor is indebted to the government. B. Renda Had Notice of the Claim The s e c o n d issue on a ppeal is w hether a c orporate o fficer has notice of a federal claim if he knows of its existence b ut, i n r e l i a n ce on the advice of the corporation’s a ttorney, believes it to be invalid. According t o Re n d a , E r i k son advised him that “any c laim the Government made should be addressed in the pending claim before the Court of Federal Claims,” and, therefore, the Final Decision was “ void” and “did n ot require any action by Renda Marine.” Because he was u nder a mistaken impression that the claim was invalid, Renda argues, he cannot be charged with notice of it.

1 4 S ee , sup ra , n. 13.
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We follow the majori t y of other courts in holding that a representative’s actual knowledge of a federa l c l a i m is sufficient, notwithstanding that representative’s r eliance on the erroneous advice of counsel as to how to address the claim. 1 5 See King v. U nited States , 379 U.S. 329, 339–40 (1964) (holding

c o r p o r ate officer personally liable for distribution where he was aware o f t h e existence o f a government claim, but relied on the erroneous advice o f corporate counsel that the c orporation h ad sufficient assets to pay it); C oppola , 8 5 F.3d at 1020–21 (holding executor personally liable for unpaid estate taxes, even though

a formal deficiency notice h ad not yet issued at the time of the transfer, because his informal discussions wit h t h e I RS put him on notice of the tax liability); B a r t lett , 186 F. Supp. 2d at 886–87 (holding executrix personally liable f o r distribution, even though she relied on her tax attorne y t o handle the tax liabilities o f the estate, b ecause s he had a c t u al knowledge of the tax liability); Golden Acres , 684 F. S u pp. at 97, 101–03 (holding corporate o fficers p e rsonally liable for distributions, even though they h ad been advised by t h e i r a t torneys that t hey had a right to repayment , b e c a use they were on n otice of the outstanding mortgage held by the government). A recent c ase in our circuit is illustrative. See United States v. MacIntyre , No. H- 1 0

- 2 812, 2 012 WL 2403491 (S.D. Tex. Jun. 25, 2012). There, as here,

a p p e l l a n t s argued that they w ere not personally l iable under the Prio r i t y S t a t u t e because they d id not believe t he government’s claim was valid, after receiving legal advice to that effect. Id. at *4. The court disagreed, emphasizing that

1 5 Rend a relies on a d ecis ion of the U nited States Tax Court f or the p rop os ition that reliance on the ad vice of an attorney relieves a d ebtor’s rep res entative f rom liability und er the Priority Statute. See Li t tl e v
. C

. I

. R. , 113 T. C. 474 (1999)

. N otably, the Tax C ourt reiterated that “[ t] he k now led ge requirem ent of [ the rep res entative liability p rovis ion] m ay be s atis f ied by either actual k now led ge of the liability or n o t i c e o f s uch f acts as w ould p ut a reas onably p rud ent p ers on on inquiry as to the exis tence of the unp aid claim of the U nited States

. ” Id. at 480. To the extent that the analys is in Li t tl e that f ollow ed is incons is tent w ith the w eight of authority on this is s ue, w e d ecline to f ollow it.
15 Case: 11-41203 Document: 00512148430 Page: 15 Date Filed: 02/20/2013No. 11-41203

b e l i e f in the validity of the government’s claim is not the test. [Appellants] had sufficient notice of the claim to put a reasonably prudent person on notice

. It is regrettable that they received incorrect advice o n that point, but p oor legal advice is not a defense. D e s p i t e their belief t hat the government’s claim was not valid, [ a p p e l lants] were required by § 3713 to preserve the funds to p a y the g overnment’s claim—should it b e proved v a l i d

. Accordingly, [appellants] both meet the test for individual liability under § 3713 and are therefore p ersonally liable for distributions made from [the decedent’s] Estate and Trust. Id. As that and other courts have held, and we now reiterate, the reach of the Priority S tatute “is not cabined by the poor advice of attorneys.” 1 6 Golden Acres , 684 F. Supp. at 103. Undergirding our conclusion are t wo considerations, one springing from the statute’s text and t he other from its p urpose. F irst, t h e s t atute d oes not provide for an attorney-reliance exception. Over the y ears, courts have read into
t he Priority S t atute the “knowledge” and “insolvency” requirements to p r o t e c t innocent representatives. We decline to announce a further exception. Second,

a contrary interpretation would create an exception to the Priority Statute that might swallow the rule. As long as a debtor’s representative w ere to receive advice from c ounsel that the debtor had some basis to c ontest the government’s claim, the representative could distri b u t e the debtor’s assets to n on-federal creditors. Such an i nterpretation would defeat the pur p o s e o f § 3713(b) to

ensure that debts of the United States are repaid f irst. See Moor e , 4 2 3 U

. S

. at 81 (explaining that the personal liability provision i s what “g[ives] t he priority teeth”); King , 379 U.S. at 337 (noting that the purpose of the personal liability provision “ i s t o m ake those into whose hands c ontrol and possession of the

1 6 We highlight that our decis ion d oes not leave rep res entatives w ho receive p oor ad vice f rom couns el w ithout recours e
. T h e y m ay, as Rend a M arine d id here, sue couns el f or
m alp ractice.
16 Case: 11-41203 Document: 00512148430 Page: 16 Date Filed: 02/20/2013No. 11-41203

debtor’s a ssets are placed, responsible for seeing t h at the G overnment’s priority is paid”). COLLATERAL ISSUES In addition to the two principal i ssues, d iscussed a bove, bearing directly

upon his liability un d e r the Priority Statute, Renda raises on appeal several collateral issues, including whether (1) the district court a bused its discretion in strikin g h is counterclaim and affirmative d efenses, (2) the district court erred by using preclusively against him the Final D ecision and the r e s u lts of prior litigation involving Renda Marine, and (3) the government is j udicially estopped from arguing on appeal that its right to payment was “fixed” at the t i me of the July 2003 and December 2005 transfers. The g overnment argues, a nd w e agree, that s uch issues are n ot p ertinent to Renda’s l iability under the Priority Statute. B e c a u s e they are interrelated and do not m erit extended consideration, w e address them together in summary fashion. First, the d istrict court did not a buse its d i s c r e t i on in striking Renda’s counterclaim and affirmative defenses attacking the m erits of t he Fi n a l Decision because the v alidity of the government’s claim a gainst Renda Marine h ad been resolved with finality before t he government brought a representative liability claim against Renda. Renda Marine, Inc. v. United States , 509 F.3d 1372 (Fed. Cir. 2007). Renda’s main p o i n t o f c o ntention is t hat he, p ersonally, was never given t he opportunity to challenge the merits of the F inal D e cision. But Renda’s personal liability u nder § 3713(b) is n ot derivative of t he F i n a l Decision itself; it rather stems f

rom his o wn a ctions in transferring assets i n knowing disregard of t h e government’s claim. See Moriarty , 8 F.3d at 333 (“[T]he U nited States’

cause of action against [ appellant representatives] is a who l l y i n d e p e n d e n t c a u se of action f

r o m the U nited States’ c a use o f a ction against the debtor for the

a m ount owed due t o the breach of contract.”). We do not r ead the Prio r i t y

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Statute to absolve a representative from p ersonal liability if he do es not participate in the resolution of the validity of the underlying claim. Second, the factual findings o f t h e Final Decision were not used preclusively against R enda in violation of § 7104(e) of th e CDA, which states that if a CO’s decision includes findings of fact, such findings “are not binding in any subsequent proceeding,” 41 U.S.C. § 7103(e), because the government did
not rely on the F inal Decision for its factual findings. To the contrary, the Final Decision was adduced for the purpose of establishing an essential element of the government’s case: that the government h ad a claim, within the meaning of the Priority Statute, against Renda Marine at the time of the transfers. T he cases Renda marshals in support of his CDA

- p r e c l u sion theory are inapposite: they stand f or the settled proposition t h a t, in a n action brought by a government

c ontractor in the C ourt of Federal Claims pursuant to § 7104(b), the factual findings of a CO a re not a ccorded p resumptive weight and a contractor i s free to challenge both them and t he legal conclusions they compel. See Roxco, Ltd. v. United States , 60 Fed. Cl. 39, 45–46 (2004); Russell Corp. v. United States , 15 Cl. Ct. 760, 763 (1988). Nor was t he Final Decision used preclusively against Renda in violation of t h e D u e Process C lause, U.S. C O N S T

. amend. V, or the federal common law doctrine of collateral estoppel, which “bars relitigation of an issue actually and necessarily decided in a prior action,” Wolfson v. B aker , 623 F.2d 1074, 1077 (5th C i r
. 1980). R enda points to no case holding t h at the government’ s u s e o f evidence of its underlying claim agains t a d e b t or to prove elements of its § 3713(b) cause of action against the debtor’s representative is improper or raises constitutional concerns. 1 7 Indeed, a contrary rule r equiring t h e g overnment to

1 7 In the cas e on w h i c h R e n d a relies , U ni ted Sta t es v
. G otthei ner , 703 F. 2d 1136 ( 9th Cir. 1983) , the governm ent introd uced a jud gm ent rend ered agains t an ins olvent com p any to p rove its § 3713( b) claim agains t the corp orate of f icer of tha t c o m p any. In this cas e, the
18 Case: 11-41203 Document: 00512148430 Page: 18 Date Filed: 02/20/2013No. 11-41203

prove the m erits o f its underlying claim against the debtor using i ndependent evidence of the debt (e.g., evidence that Renda Marine did not live u p to its obligations u nder the D redging Contract) would not only be unnecessary and impractical, but also is n ot required b y the plain language of the Priority Statute or the case law interpreting it. Thi r d, the government is not judicially estopped f rom arguing that its right to pay m e n t w a s “fixed” at the time of the July 2003 and December 2005 transfers and not co ntingent upon future l i tigation. The federal common law doctrine of judicial estoppel “prevents a party from a sserting a position in a legal proceeding that is contrary to a position [it has] previously taken in the same or

some earlier proceeding.” Ha l l v
. G E Plastic P ac. PTE Ltd. , 327 F.3d 391, 398 (5th Cir. 2003). In its prior action against Renda M arine in the Eastern District of T exas, the government took the position that it was not required to b ring suit to enforce the Final Decision, under the applicable statute of limitations, until December 2007, when Renda Marine’s legal challenge to t he Fin a l Decision in the Court o f Federal Claims a nd Federal Circuit h ad run its course. 1 8 A ccording
to Renda, that position is inconsistent with a position t he government has taken in t his litigat ion: namely, that the Final Decision was “ final and conclusive”

u p o n t h e p assing o f t he statutory deadline to appeal in N ovember 2003. He

governm ent d id not introd uce the und erlying j ud g m ents agains t Rend a M arine, but ins tead of f ered d irect evid ence of its und erlyi n g c l aim agains t Rend a M arine: the Final D ecis ion. Although the governm ent us ed d if f erent m ethod s of p roof , in both cas es the und erlying claim agains t the com p any had been res olved w ith f inality and w as not s ubject to collateral attack

.

1 8 S ee Uni ted Sta tes v
. Renda M a ri ne, Inc. , 750 F. Sup p
. 2d 755, 7 6 4–66 ( E. D

. Tex. 2010)

. The s tatute of lim itations f or governm ent contract actions requires the governm ent to bring s uit either “w ithi n s i x y e a r s af ter the right of action accrues or w ithin one y ear af ter f inal d ecis ions have been rend ered in ap plicable ad m inis trative p roceed ings required by contract or by law .” 28 U

. S. C. § 2415( a)

. T he governm ent argued , and the dis trict court held , that the one- year savings claus e tolled the s tatute of lim itations d uring the p end ency of Rend a M arine’s challenges in the Court of Fed eral Claim s and Fed eral Circuit, and , accord ingly, the action initiated by the governm ent to enf orce the F inal D ecis ion w as not tim e barred

. Renda M a ri ne , 750 F. Sup p
. 2d at 764–66.
19 Case: 11-41203 Document: 00512148430 Page: 19 Date Filed: 02/20/2013No. 11-41203

contends that the government is therefore judi c i a l l y estopped from claiming that its r ight to payment was “fixed” at t he time of the transfers a nd n ot contingent

upon future litigation. We disag r e e
. I t is not inconsistent for the government
to assert that (1) a contractor’s challenge to the decision of a CO is untimely and barred b y the CDA, and (2) because t h e contracto r was permitted to bring its untimely challenge, the government was not required to bring s u it to enforce the decision until the untimely challenge had run its course. CONCLUSION For the foregoing reasons, we hold as a matter of l aw that (1) the decision of a CO is a “claim” within the meaning of the Priority Statute, a nd (2) a debtor’s representative h a s “notice” o f that claim, necessary to trigger personal liability under the Priority Statute, when he has actual kno w l e d g e of its existence, whether or n ot he consults counsel as to its val i d i t y
. W e conclude that no genuine issues of material fact remain, and t h e g o v e r nment is e ntitled to judgment as a m atter of law. Further, the district court did not abuse its discretion i n striking the affirmative defenses and denying the m otion for reconsideration. AFFIRMED.

20 Case: 11-41203 Document: 00512148430 Page: 20 Date Filed: 02/20/2013