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NATIONWIDE MUTUAL FIRE
November 5, 1999
Record No. 990052
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
MINOO F. REZAINIK
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA
Philip L. Russo, Judge
Present: All the Justices
OPINION BY JUSTICE ELIZABETH B. LACY
Minoo F. Rezainik filed a motion for judgment
against Nationwide Mutual Fire Insurance Company (Nationwide),
her homeowners’ insurance carrier, when it denied her claim for
losses she sustained when her luggage and its contents were
damaged or lost during her return trip from Iran to the United
States. A jury returned a verdict in favor of Rezainik and the
trial court entered judgment confirming the verdict. Because we
conclude that the trial court did not err in determining that the
damaged or lost goods qualified for an exemption from federal law
prohibiting importation of goods of Iranian origin, we will
affirm the judgment of the trial court.
Rezainik and her brother traveled to Iran in
July 1995 to bring their parents, Iranian citizens, back to the
United States, so that they could become permanent residents and
obtain medical treatment. Rezainik took $20,000 in United States
currency to Iran to cover expenses which she might incur on the
trip. While in Iran, Rezainik bought a number of Iranian goods
such as rugs, cologne, frames, jewelry, leather goods, and other
personal property. The goods were purchased with the money she
took to Iran and approximately $60,000 she had sent to her mother
in Iran over the preceding 25 years. Rezainik asserted that the
goods she purchased had a combined value of approximately
$80,000. Prior to leaving Iran, Rezainik packed the purchased
items in nine suitcases, each secured with a lock and wrapped
with ropes. The suitcases were checked with the airline carrier
for transport to Washington, D.C.
When Rezainik and her family arrived in
Washington, D.C., only three of the nine suitcases were
recovered. All three suitcases were torn and their contents were
damaged or missing. The remaining six suitcases, recovered by the
airline a few days later, were also torn and their contents
damaged or missing. Rezainik filed damage report forms with the
Rezainik notified Nationwide of her loss. A
Nationwide adjuster inspected the suitcases. Rezainik filled out
Nationwide’s Contents Loss Inventory form based on the copies of
the receipts she had received from the merchants in Iran from
whom she purchased the goods. Nationwide denied Rezainik’s claim
for a number of reasons including alleged lack of timely filing
of the claim, misrepresentation of material facts, and inclusion
of items not covered under the policy.
Rezainik filed an action against Nationwide
seeking a determination that her claim was covered under the
policy. She sought recovery of $56,000 plus attorneys’ fees and
costs. Nationwide filed grounds of defense asserting, inter
alia, that "requiring coverage under this purported
contract of insurance would violate the strong public policy of
the Commonwealth of Virginia because the activity underlying the
alleged loss was in violation of the laws of the United
States" prohibiting the importation of Iranian-origin goods
into the United States.
Prior to trial, the trial court sustained
Rezainik’s motion in limine precluding Nationwide
from referring to or relying on the federal ban on importation of
Iranian-origin goods. The trial court held that, as a matter of
law, the goods Rezainik purchased in Iran and brought into the
United States were exempt from the prohibition against
importation of Iranian-origin goods under an exception for
"transactions ordinarily incident to travel to or from any
country, including importation of accompanied baggage for
personal use." 31 C.F.R. ? 560.210(d).
Following Rezainik’s testimony at trial,
Nationwide again asserted that the goods at issue did not qualify
for the exemption, but the trial court declined to alter its
prior ruling. The jury returned a verdict in favor of Rezainik in
the amount of $17,305 and the trial court entered judgment on
that verdict. Nationwide appealed, assigning error to the trial
court’s holding that the goods at issue were personal goods
incident to travel and therefore exempt from the prohibition
against the importation of Iranian-origin goods.*
Executive Order 12959, effective May 6, 1995,
prohibits "the importation into the United States
. . . of any goods or services of Iranian origin, other
than . . . publications." Exec. Order No. 12959,
60 Fed. Reg. 24757 (1995). Regulations promulgated pursuant to
this Order include 31 C.F.R. ? 560.210 that identifies
certain transactions which are exempt from the prohibition.
Subsection (d) of that section states:
Travel. The prohibitions
contained in this part do not apply to transactions
ordinarily incident to travel to or from any country,
including importation of accompanied baggage for personal
use . . . .
31 C.F.R. ? 560.210(d) (1998). The trial
court concluded that the Iranian-origin goods Rezainik brought
into the United States qualified for exemption from the
importation prohibition under this provision.
Nationwide asserts that this exemption is not
applicable because it is "absurd on its face" to claim
that bringing $80,000 worth of goods could be incident to travel
and that the "sheer volume" of goods shows that all the
claimed goods could not have been for personal use. Nationwide
also asserts that Rezainik’s testimony shows that the goods were
not brought into the United States for Rezainik’s personal use.
Rezainik stated that she purchased the goods for gifts and for
"education – you know, my kids’ education money in the
future, they don’t like to keep it, they need money, they can
sell it." This testimony, Nationwide urges, shows that
Rezainik did not purchase the goods for her personal use and they
were not "incident to travel;" rather, according to
Nationwide, Rezainik purchased the goods for others and she
intended that at least some of the goods would be sold. We
disagree with both of Nationwide’s contentions.
Nothing in Executive Order 12959 or the
regulations sets a limit on the number or value of items which
are entitled to the exemption. The exemption applies to a class
of property rather than an amount or value of imported property.
A review of the regulations implementing Executive Order 12959
indicates that the prohibition is not directed at that class of
Iranian-origin goods intended for personal use; rather the
prohibition is directed at preventing transactions which
introduce such goods and services into the stream of trade and
commerce. See United States v. Ehsan, 163 F.3d 855,
858 (4th Cir. 1998)(explaining that term
"export" in Executive Order 12959 relates to shipment
of goods to a country to "join those goods with the commerce
of that country"). Thus, a determination that goods brought
into this country in baggage accompanying a traveler were for
personal use is not dependent on the number or value of such
Rezainik’s testimony that the goods were gifts
or were for her children’s education and might eventually be sold
does not transform them into goods which would be introduced into
the stream of commerce. Nor do we construe the phrase
"personal use" so narrowly as to exclude uses intended
to benefit members of Rezainik’s family. Considering Rezainik’s
testimony in light of our reading of the regulations, we conclude
that the trial court did not err in holding that Rezainik’s
testimony did not require it to alter its previous determination
that the exemption set out in 31 C.F.R. ? 560.210 applied
to the goods at issue.
Finally, Nationwide asserts that 31 C.F.R.
?? 560.506 and 560.507 of the regulations implementing the
Executive Order require a different result. Again we disagree.
The first regulation, 31 C.F.R. ? 560.506, limits the value
of imported Iranian-origin goods to $100 when such goods are sent
as gifts to persons in the United States. The next regulation, 31
C.F.R. ? 560.507, defines "accompanied baggage"
as that "necessary for personal use incident to travel, not
intended for any other person or for sale." Both sections
appear in Subpart E of the regulations which addresses
"Licenses, Authorizations and Statements of Licensing
Policy." These sections do not address
"exemptions" from the prohibition pursuant to 31 C.F.R.
? 560.210 and are not definitions of terms used in that
section. These sections address circumstances under which persons
are specifically authorized to "import" Iranian-origin
goods into the United States. These sections are consistent with
the conclusion that the prohibition is directed to the
importation of goods intended for introduction into the stream of
commerce, and is not applicable to goods intended for personal
use. Furthermore, the limitation of 31 C.F.R. ? 560.506
does not apply to this case because no goods were sent as gifts.
Therefore, the trial court’s determination that the goods at
issue were brought into this country for personal use is not
inconsistent with these sections.
In summary, the record in this case supports
the conclusion that the Iranian-origin goods Rezainik brought to
the United States were for personal use, and the trial court did
not err in holding that they were exempt from the prohibition of
importation of Iranian-origin goods into the United States under
31 C.F.R. ? 560.210. Accordingly, we will affirm the
judgment of the trial court.
* Nationwide also argued on brief
that the trial court should have submitted the issue to the jury.
However, as Nationwide agreed at oral argument, the trial court
was never asked to submit the issue to the jury and, therefore,
we will not consider this argument raised for the first time on
appeal. Rule 5:25.