The opinion of the court was delivered by: Sweet, District Judge.
Plaintiffs Music Deli & Groceries, Inc. ("Music Deli") and
Mahmoud Shams ("Shams"; collectively the "Plaintiffs") have
moved pursuant to Rule 60(b) of the Federal Rules of Civil
Procedure for an order vacating the prior judgment in this
action and pursuant to Rule 15 for leave to file an amended and
supplemental complaint. For the reasons set forth below, the
motions are granted and the Plaintiffs' First Amended and
Supplemental Complaint ("Amended Complaint") deemed filed. The
Amended Complaint, however, is dismissed in part pursuant to
Rule 12(b)(6) for failure to state a claim upon which relief
may be granted, with leave to replead.
Music Deli is a corporation organized under the laws of New
York State with its principal place of business on Eighth
Avenue in Manhattan. The corporation was formed to run a
delicatessen/grocery business (the "Deli") that is no longer in
Shams is a citizen and resident of New Jersey.
The Internal Revenue Service (the "Service") is an agency of
the federal government. The Service allegedly seized and sold
the contents of the Deli to satisfy a tax assessment.
Facts*fn1 and Prior Proceedings
Shams is a refugee from Afghanistan who fled to the United
States in 1981 after the Soviet Union's invasion. He became a
citizen of the United States in 1988.
In 1984, Shams and two others decided to invest in the Deli.
They each paid $20,000 in cash, with the balance of the
$131,000 purchase price secured through a three-year promissory
note. Shams bought out his two partners in 1986 for $12,000
each. Thereafter, Shams operated the Deli by himself. He worked
from six in the morning till eleven at night, seven days a
week, eking out a living.
The present dispute has its roots in 1987. That year, the
Service notified Shams that he had not filed and paid Employer
Quarterly Tax Returns and Employer Annual Federal Unemployment
Tax Returns for 1985, 1986, and 1987 in a timely manner. Shams
apparently contacted the Service and explained that he had paid
sales taxes and that, because the Deli had no other employees,
he did not believe he was required to pay employer taxes.
The Service informed Shams that he was required to declare
himself an employee, pay taxes, and file the two forms if he
took wages from the Deli. In 1988, the Service seized the Deli
and its contents, only to release it upon the condition that
Shams appear at the Service, file the forms, and make the
payments. Shams did as requested, filing forms for 1985 through
The filing was deemed incomplete by the Service and an
assessment of $6,591.05 entered. Shams then filed amended
returns in 1989 at the Service's behest. His liability was
actually less than the original assessment, so the Service
agreed to a number of downward adjustments. With penalties, the
total tax liability allegedly is over $23,000. Shams claims to
have paid more than $5,000 toward settling the account.
On May 25, 1990, the Service obtained an ex parte order
permitting it to seize the contents of the Deli. The order was
carried out on May 29, with Shams being barred from the
premises and the locks changed. Shams contends that he never
received notice of the Service's intention to seize and levy
Shams brought an order to show cause, pro se, on June 20,
1990, seeking to enjoin the Service from seizing and selling
the Deli and its contents. This Court dismissed the complaint
on July 2, 1990, on two grounds. First, because Music Deli was
a corporation, the complaint was dismissed for lack of
corporate representation. Second, the Anti-Injunction Act,
26 U.S.C. § 7421, barred this Court from ...