Court Opinion

ID: 8598110
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:05:34.808039+00
Date Added: 2024-06-11T16:55:03.593079
License: Public Domain

FRIEDMAN, Chief Judge,
concurring:
In one respect the court’s analysis produces a paradoxical result. The court recognizes that if the government had title to Bond’s property and if the plaintiffs lien on that property attached before the government’s title vested, the invalidation of the plaintiffs lien by the government’s title would constitute a compensable taking by the United States of the plaintiffs security interest. The court holds, however, that although the government purported to "acquire title” to the property, in fact it acquired only a lien to secure the progress payments it made. The court then holds that, as a matter of federal law, the government’s security interest prevails over the plaintiffs state-created lien without regard to whether that lien antedated the government’s. The result is that the lesser security interest the government has in Bond’s property as a result of the court’s holding (a lien on, rather than title to, the property), gives the government greater rights in that property (priority for its lien over the plaintiffs possibly prior lien) than it would have had if it had title.
The reason for this result, however, is convincing. The government obtains a lien only to secure its progress payments. Those payments necessarily increase the value of Bond’s assets. Accordingly, it is fair and appropriate that the government should be given priority with respect to the additional value its own monetary advances created. That is all the court’s decision does.
As a matter of federal procurement law and policy, there is no convincing reason why the plaintiffs floating lien should prevail over the government with respect to property values the government created. By definition the plaintiff could not have looked to those subsequently created values to protect its claim at the time its security interest arose. No unfairness results from protecting the federal interest by thus limiting the reach of the plaintiffs lien.