Waldsmith

—Robert Waldsmith, Sr., his son, and Coast Federal Savings and Loan Association, the holder of the first trust deed and mortgage on Waldsmith’s building, appeal an adverse judgment, denying coverage under Waldsmith’s all-risk policy with State Farm Fire & Casualty Company.

I

In December 1983, Waldsmith purchased rental dwelling insurance from State Farm for his San Clemente property. While the policy was in effect, the building was destroyed by a landslide. State Farm denied coverage.

Waldsmith filed suit for, inter alia, breach of contract and unfair insurance practices. At trial, the parties stipulated the court would try the coverage issue, pursuant to State Farm’s motion for judgment on the pleadings. The amended judgment provides: “In addition the parties stipulated that for the sole purpose of deciding the coverage issue raised by defendant’s motion, the Court would accept plaintiffs’ offer of proof that a city water main in one of the streets adjacent to plaintiffs’ property was negligently maintained, broke, saturated the soil causing a landslide which destroyed plaintiffs’ house. For purposes of the motion it was stipulated that the breakage of the water main…