That is correct as far as I'm aware.
Not sure if I am correct but this law might have been put in place when near all motorcycles had the power/acceleration to advance in front of the cars? Just that I see people on those low powered scooters doing this and they impede other traffic as they just don't have the power to do this safely.
In your situation it sounds like the Liberty driver was trying to race you, and that is irresponsible on that drivers part.
Not sure where the give way aspect applies in this situation, but common sense should prevail....pity many drivers lack common sense.