Homeowners Sue Insurance Firm : Agoura Hills: State Farm is accused of defrauding couple whose home was condemned after winter mudslide.

An Agoura Hills couple whose home was condemned after a mudslide last winter has filed a lawsuit against State Farm Fire & Casualty Co., alleging the firm failed to make good on an “all-risk” policy and deliberately misled them about the scope of its coverage.

Three more lawsuits filed this week on behalf of homeowners in Pacific Palisades and Malibu claim that State Farm changed its policies in 1983 without explanation to end its obligation to pay for damages caused by third parties.

The lawsuits, all filed by lawyer Richard D. Norton, allege State Farm defrauded its customers and seek a court order to force the insurance giant to pay other California homeowners who have made similar claims.

A spokeswoman for State Farm, regional Public Affairs Manager Mabel Yosifi, said Thursday that company officials could not comment since they had not yet received copies of the lawsuits.

“This case involves one piece of what is probably the largest property insurance fraud scheme in the history of California,” lawyer Richard D. Norton said in the suit for Agoura Hills homeowners Irene and William Ferber, filed this week in Los Angeles Superior Court.

William Ferber said that his daily life and finances have been in disarray since a Feb. 15 landslide pushed a wall of earth against the back of his home on Via Amistosa, blocking exits and creating at least one floor-to-ceiling stress crack.

The collapsed slope was built by the developers of the El Camino Real Estates tract, where home prices have ranged from $300,000 to $400,000, and had supported a city street above Ferber’s property called Calle Montecillo.

City officials declared the Ferbers’ house and a neighbor’s unsafe for habitation and won’t let them return until they submit plans to stabilize their portions of the hill.

In the meantime, State Farm has refused to pay the Ferbers’ claims for damage to their home--which Ferber estimated was more than $200,000--because their “All-Risk Policy” excludes losses from “earth movement,” according to the lawsuit.

State Farm has agreed to cover $10,000 in land damages and about $3,000 for temporary living expenses, the lawsuit says.

The lawsuit claims State Farm should cover the house damage, too, because the underlying or “predominant” cause of the landslide was a poorly constructed, man-made slope. And when the Ferbers were first issued their homeowners’ policy in 1977, they were insured for “loss predominantly caused by third-party negligence,” such as the work on the slope, according to the lawsuit.

The suit alleges that State Farm changed the wording of its All-Risk policies in 1983 to greatly narrow coverage--including eliminating losses “predominantly caused by third-party negligence”--without explaining the changes clearly to policyholders.

The Ferber case seeks a court order forcing State Farm to contact its clients and tell them that if they had such a claim since 1983 they’re entitled to coverage, Norton said.

Ferber said his situation is even more frustrating because the city has taken only temporary steps to stabilize Calle Montecillo--making it pointless for Ferber to repair his piece of the hill when surrounding private and public property still needs to be fixed.

Ferber has been renting a townhouse for $1,550 a month.