The sidewalk was covered with fallen leaves.

Literal

Sidewalk [topic-は] fallen-leaves [with-で] was-covered.

覆われていた is the past continuous passive of 覆う ('cover') — 覆う → 覆われる → 覆われている → 覆われていた. で marks the means or material of covering. 落ち葉 ('fallen leaves') is a verb-noun compound: 落ちる + 葉. Classic autumn imagery.