claims for refund. R & R at 7. Plaintiffs initially asserted, in their administrative claim for refund and in their original complaint, that Mr. Stern was an independent contractor rather than an employee of Allstate Insurance Company. Through their amended complaint, plaintiffs alter their theory and suggest that Mr. Stern was operating under a dual status of employee and independent contractor during the years in question. The Magistrate Judge found that the Internal Revenue Service (IRS) had not had an adequate opportunity to evaluate the claim as asserted in the amended complaint.
Where the fact that plaintiffs have materially changed position is so obvious on its face, their objection that they should be allowed an opportunity to show that defendant was not surprised or prejudiced by the assertions in the amended complaint is completely without merit. Indeed, courts have noted that the propriety of refusing an amendment does not depend on a showing of prejudice to the government. Sappington v. United States, 408 F.2d 817, 820 (4th Cir.), cert. denied, 396 U.S. 876, 24 L. Ed. 2d 133, 90 S. Ct. 150 (1969) (citing United States v. Hancock Bank, 400 F.2d 975, 981 (5th Cir. 1968)). The Magistrate Judge properly concluded that the IRS had not had an adequate opportunity to evaluate the claim as presented by plaintiffs through their amended complaint.
Plaintiffs also object to the Report and Recommendation as a matter of equity. Plaintiffs assert that the Court should permit them to file a motion reinstating the original complaint and allowing the trier of fact to rule on the actual status of plaintiff; "either as an independent contractor, employee or dual status." The Court grants plaintiffs leave to move to reinstate the original complaint to the extent that it raises the same claim that was before the Secretary of the IRS; namely, claimant's status as an independent contractor. Plaintiffs cannot, however, assert their theory of dual status under the original complaint for the same reasons that Magistrate Judge Levy found that they could not assert it through their amended complaint.
The Report and Recommendation of Magistrate Judge Levy is thus adopted in its entirety and the amended complaint is dismissed. Plaintiffs have ten days from the date of this Order to move to reinstate the original complaint.
Dated: Brooklyn, New York
December 11, 1996
Carol Bagley Amon
United State District Judge
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