Fu-Kong Tzung Jean Tzung v. State Farm Fire and Casualty Company, and Does 1 Through 100, Inclusive

Appellants Fu-Kong Tzung and Jean Tzung appeal from a summary judgment granted in favor of Appellee State Farm Fire and Casualty Company (“State Farm”). The Tzungs contend that there are material issues of fact regarding their right to receive benefits under an “all risk” insurance policy and therefore the district court erred in ruling that State Farm was entitled to judgment as a matter of law. We believe otherwise, and therefore we affirm.

I BACKGROUND

In July 1983 the Tzungs purchased a nine-unit apartment building located in San Diego, California. At the same time the Tzungs obtained through State Farm an “Apartment Special Form” insurance policy, which insured the apartment building “against all risks of direct physical loss” that were not otherwise specifically excluded. By April 1984 the Tzungs noticed a series of cracks in the drywall, driveway, and slab of the building, and by October 1985 the damage had become so serious that they filed a claim with State Farm. State Farm denied the claim, citing exclusions in the insurance policy for losses caused by, inter alia, earth movement; surface and sub-surface water; settling, shrinking, cracking, bulging, or expansion of…