Background
A long-running landslide dispute became part of Homesite Holdings’ bankruptcy. Neighboring entities SMDL and T2 asserted nuisance claims tied to land movement that began in 2005. Homesite and an individual appellant sought summary judgment, contending that limitations had expired and that Homesite could not be liable as a successor owner.
The bankruptcy court denied summary judgment, later approved a joint settlement and real-property sale, and denied reconsideration. The Bankruptcy Appellate Panel affirmed. Homesite then asked the Ninth Circuit to overturn those rulings, relying in part on a supposedly newly discovered California Coastal Commission application.
The Court’s Holding
The Ninth Circuit affirmed in a nonprecedential memorandum. Conflicting expert evidence created triable questions about whether the landslide was a continuing nuisance—one capable of reasonable abatement and causing new damage within California’s three-year limitations period. Resolving those questions on summary judgment would have required weighing evidence.
Fact disputes also remained over successor liability. A successor landowner may face common-law liability after learning of a dangerous artificial condition and failing to make it safe, and California Civil Code section 3483 can impose responsibility for failing to abate a continuing nuisance. The record did not permit those theories to be rejected as a matter of law.
The bankruptcy court acted within its discretion in approving the compromise and sale after considering litigation success, collection difficulty, expense, complexity, and creditor interests. Reconsideration was properly denied because the Coastal Commission application was not material and Homesite had not acted diligently in obtaining it. The panel did not need to reach equitable mootness.
Key Takeaways
- A decades-old physical condition can still support timely claims if it is an abatable continuing nuisance causing recent injury.
- Successor owners may inherit practical exposure after notice of a dangerous artificial condition or continuing nuisance.
- Conflicting experts on abatement and recent damage generally prevent summary judgment.
- Bankruptcy compromises receive deferential review when the court makes record-supported findings on the established settlement factors.
- Evidence is not grounds for reconsideration when it is immaterial or could have been obtained earlier with reasonable diligence.
Why It Matters
California property purchasers should investigate unstable slopes, retaining structures, drainage, and prior neighbor complaints before closing. Title changes do not necessarily eliminate exposure where a current owner knows of a dangerous or continuing condition and can take corrective action.
In bankruptcy, real-estate merits and creditor economics intersect. Parties opposing a settlement or sale need timely, material evidence and a concrete showing that continued litigation offers creditors a better outcome.
Read the full opinion (PDF) · Court docket