Present:    All the Justices

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY

v.   Record No. 990052      OPINION BY JUSTICE ELIZABETH B. LACY
                                       November 5, 1999
MINOO F. REZAINIK

      FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
                     Philip L. Russo, Judge

         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 airline.

    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


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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


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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




     *
       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.

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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


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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 goods.

     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


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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


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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.

                                                        Affirmed.




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