Spanish Peaks Hazardous-Land Report Prompts Two Lawsuits

The Spanish Peaks lawsuits provide invaluable information.

Terrence O’Reilly: Plaintiff

The individual who brought suit, a former employee and property owner of The Club at Spanish Peaks, alleged that the developer had withheld unfavorable geology reports. The case was filed in Gallatin County, Montana in 2007 and confidentially settled in 2009.

New West Bozeman investigative reporters, Elizabeth Diehl and Megan McLean, offer a look at the documents submitted in the O’Reilly Complaint in their August 10, 2009 article “Spanish Peaks Lawsuit Alleges Deception on Landslide Risk.”

The Club at Spanish Peaks Hazardous-Land Report

Court records show that as part of Spanish Peaks approval process subdivision home sites were evaluated for hazardous-land conditions. In March 2000 NTL Engineering and Geoscience, Inc. provided the developer, James Dolan, with a “geotechnical reconnaissance report.“ Each lot was color-coded to reflect the risk of landslides and unstable soils. Spanish Peaks lot sales were initiated in 2004.

Behind the Scenes

Emails procured during the discovery process reveal the company's unwillingness to share the NTL report with prospective clients.

In a February 2004 email exchange between company executives the question is posed: “Soil tests and stability seem to be coming up pretty regularly with potential buyers. Any suggestions on how to handle this based on your past experiences?”

The reply: “With regard to geotechnical stability, this seems to be one of those areas where we should baffle them with BS rather than provide the actual report.”

Sales continued for the next two years with the developer remaining silent about the subdivision’s hazardous-land report. In another email the NTL report is discussed again:

Any interim report would open the lodge and settlement to scrutiny. The more information in the public eye today may only cause additional and unnecessary concern in the public that will leak its way into the real estate community and the approval process.”

Harbaugh Lawsuit

The evidential NTL report is the issue in another lawsuit filed against the Spanish Peaks developer. According to allegations in the August 2009 Gallatin County District Court Complaint, the developer failed to disclose that lots were sold on an “active landslide.”

If there is a moving landslide inside the subdivision, property owners face incalculable costs: absence of landslide insurance, repair of roads, loss of equity and inability to refinance.

Interstate Land Sales Full Disclosure Act

Although not referenced in the New West Bozeman article, Spanish Peaks property owners have protection under federal law. The Interstate Land Sales Full Disclosure Act, administered through the U. S. Department of Housing and Urban Development, seeks to protect purchasers from fraudulent actions by requiring developers to disclose all material facts affecting the value of land in their subdivisions. Relevant information is conveyed to purchasers via a legal document called the Property Report.

Hazardous-land assessments are material to purchasers and the failure to disclose them would be a violation of the Act.

Strike Two—Ocoee Gorge Rockslide Closes U. S. Highway 64

For those who missed the national news, here is the real-time video of the November 10, 2009 Tennessee Ocoee Gorge rockslide.

Since late October, rockslides have closed two primary connectors between western North Carolina and eastern Tennessee. The Pigeon River Gorge I-40 rockslide severed the route between Asheville, North Carolina and Knoxville, Tennessee. The Ocoee Gorge U. S. 64 rockslide blocks access into Cherokee, North Carolina.

Sections of the Blue Ridge Parkway in North Carolina have also been affected by unstable slope conditions.

This season's rockslides have so far only hit public roads. Because memories fade, the news media has not linked current events to those of September 2004. Five years ago rain set off landslides in 15 western North Carolina counties which resulted in two federal disaster declarations. Those wide-spread slope failures claimed lives and cost homeowners millions of dollars in property losses. Caveat: Homeowners nationwide have to self-insure for landslide damage: policies do not cover this peril.

For the usual profit-driven reasons, North Carolina legislators are adverse to publicizing the fact that steep slope home sites and subdivision private streets are threatened by the same conditions that brought down two mountainsides. By intent, conveyance documents such as sales contracts and Subdivision Street Disclosure Statements fail to reveal the high costs of western North Carolina mountain real estate.

I-40 Pigeon River Gorge Rockslides: Past, Present and Forecast

As reported by Vicki Hyatt, editor of The Mountaineer, the Pigeon River Gorge section of I-40 has and will continue to be a rockslide-hazardous corridor. The following is a reprint of her November 3, 2009 article “I-40: A troubled history.”

Rock slides that halt travel between Haywood and Newport, Tenn., have plagued Interstate 40 since it first opened in October 1968. Just four months after the dedication of the route, known early on as the Pigeon River Road, occurred in February 1969, when a slide blocked traffic on all four lanes of the route.

The area near the access road to Waterville Dam was grouted, rock was drilled, dynamited and then filled with liquid cement to halt the earth movement. It was the first of many actions that would be taken through the years to stabilize an area engineers had long warned would pose problems in the future.

In 1974, the pavement again started showing signs of movement, according to an article in The Mountaineer, and it wasn’t unusual for smaller slides to cause periodic delays.

The interstate was closed for two weeks in March 1977 after about 40,000 tons of rock slid onto I-40 about two miles inside the Tennessee state line. At the time, a state geologist noted the area was the site of a major fault with mostly coarse rock which could easily fracture and slide. News reports said geologists were striving to determine if there was one big slide or two separate ones in the area.

In May 1978, a major slide that led to a wreck in which seven people were inured closed the eastbound lanes of I-40 near the Fines Creek exit. The $1 million repair job included work on the cut to prevent future slides and halt slippage of a rock bank near the exit. Two-way traffic was maintained in the westbound lanes during the work, and three people were killed in a head-on collision when slide repairs were underway.

A February 1981 rock slide, about half a mile east of the Tennessee line, covered both the east and westbound lanes of I-40 with boulders, dirt and trees.

The frequent slides made it apparent a longer-term solution was called for, and the state transportation department announced plans to reconstruct four miles of interstate through Haywood County near the Tennessee line to reduce the danger of rock slides. The first phase of the project would shift two lanes of traffic away from the mountainside and toward the Pigeon River, a May 20, 1981 article in The Mountaineer stated. The second phase would remove loose rocks from slopes and take other measures to install wire mesh to catch the rocks before they hit the highway.

Since the roadway opened, two people had been killed as a direct result of falling rocks and another three died in a collision at a landslide detour near the Fines Creek exit, the article noted. At the time, the state’s assistant transportation director said experts believed the possibility of rock slides was of such a magnitude that it could close the road.

In the fall of 1981, a N.C. Department of Transportation report projected $10.3 million — three times the $1.5 million per mile cost to build the roadway — would be needed to reduce the danger of rock slides on I-40 near the Tennessee line. This amount would be enough to correct problems at five potential slide areas, a news article reported. Even with the stabilization work, state officials noted there was no way to stabilize cut slopes entirely.

Before a contract was finalized for the work, a March 1982 slide buried the westbound lanes near the Tennessee line. The project continued into 1984. It included shifting three miles away from the rock slopes and toward the Pigeon River, as well as bolting rocks too large to remove in the five problem areas identified as most susceptible to slides. The project included a chain-link fence to prevent smaller boulders from falling onto the driving lanes.

In March 1985, a massive slide blocked both tunnel entrances. The repair cost about $6 million and nearly a year to clean up.

In July 1997, a massive slide again closed the roadway, taking six months and $2.5 million to clean up.

Road a political victory

Haywood County leaders won a hard-fought battle more than 60 years ago when the county became the last in the state to have a 1921 road law implemented. The law promised a paved roadway linking every county seat and linking every county adjoining another state to that state’s county seat. The long-identified route between Haywood and Newport, Tenn. was a water-level route following the Pigeon River. The route received state funding and was begun five years before it was necessary to designate an interstate route between Knoxville, Asheville and Spartanburg, S.C. The interstate designation, which held the promise of vastly increased commerce — and economic prosperity — was coveted by both Haywood leaders and those in Madison and Buncombe counties, which pushed for a four-lane highway along the French Broad River.

Haywood leaders were able to garner support from the Tennessee Highway Commission, as well as counties to the west. That support, along with free right-of-way along the Pigeon route and a head start on construction, won the prize.

See more pictures of rock slides throughout I-40’s history at www.themountaineer.com.

I-40 Rockslide Reveals Western North Carolina Hazardous-Land Conditions

Western North Carolina: I-40 Pigeon River Gorge Rockslides— July 1997 /October 2009 —NCGS & Asheville Citizen-Times

The Pigeon River Gorge I-40 rock slide has shut down a major corridor from Asheville, North Carolina to Knoxville, Tennessee. This mountain side collapse preceded a similar I-40 rock slide in 1997. Professionals estimate remediation will take months and cost millions.

A major landslide also threatens the Blue Ridge Parkway as noted in the following October 16, 2009 Blue Ridge Parkway Update:

With growing fears of a major landslide onto the Blue Ridge Parkway, officials have indefinitely closed a 1.5-mile section of the Parkway near Mt. Pisgah - south of Asheville. Barricades are at the Bad Fork Valley Overlook at milepost 399.7 and the Wash Creek Valley Overlook at milepost 401.1. The closure is a result of widening 300-foot-long fissures on a slope 200 feet above the road. If the 50-foot-deep cracks cause a landslide, an estimated 1,000 tons of rock and soil could end up on the Parkway. The cracks are 5-7 feet wide and a bulge has developed under the down-slope roadbed. Federal Highway Administration geotechnical engineers determined that an inordinate amount of rainfall, the likelihood of additional precipitation and the tenuous condition of the slope create a high risk of failure. The slope failed in 2002 and has been closely monitored since being repaired.

In April 2009 a landslide damaged a section of the Parkway near Boone (milepost 270) necessitating closure of a two mile stretch. Officials hope to have repairs completed in December 2009.


Blue Ridge Parkway Landslide/Rockslide 2004-2006 —NCGS


Western North Carolina Mountain Real Estate

Those reading the Interstate and Parkway landslide articles would not know that these destructive forces target all Western North Carolina mountain real estate.

According to the Federal Emergency Management Agency all steep slope building sites in the 25-county region known as Western North Carolina are at considerable risk of landslides. ( Contrary to local planning boards’ definition, steep slope is defined as land above a 15% grade.)

In an effort to control and mitigate hazardous-land development practices, FEMA is requiring disaster-susceptible counties to provide risk/loss assessments. For example all real property in Buncombe County, North Carolina has been evaluated for probable disaster events. The North Carolina Geological Survey's Buncombe County landslide hazards maps were published in August 2009 but the FEMA address-specific hazardous-land data maps (April 2009) have not been released to the public.

Presently there are no federal rules governing hazardous-land disclosure so states are left to their own discretion. In North Carolina, real estate documents such as sales contracts and Subdivision Street Disclosure Statements fail to provide fair warning that mountain home sites and roads are landslide-hazardous.

Since 2003 Western North Carolina landslides have caused six deaths and millions of dollars in real property damage.



Before and after photographs- Donin Landslide
Haywood County, NC—2009 —Asheville Citizen-Times


Horseshoe Cove Subdivision Landslides- Haywood County, NC
2003 —Pam Williams, Property Owner



Mountain Air Landslides-Yancey County, NC 2003-2004






Airport Landslides -Jackson County, NC
1977-2005 —NCGS



White Laurel Subdivision
Landslide -Watauga County, NC
2004—NCGS



Jonas Ridge Debris Flow
Burke County, NC 2004—NCGS



Jones's Landslide Fatality
Haywood County 2003—NCGS



Peeks Creek Landslide
5 Fatalities/15 homes destroyed
Macon County, NC 2004— NCGS



Moody Landslide
Haywood County, NC 2009
Asheville Citizen-Times



Starnes Cove Landslide
Buncombe County, NC 2004 —NCGS

Landslide-hazardous real estate is an ill-advised investment because property owners have no access to insurance protection. Insurers have weighed the risk and they will not cover landslide losses. As a result, earth movement damage is excluded in all homeowners policies nationwide. Specialty landslide insurance is not available in Western North Carolina.

The question then arises why would the mortgage industry provide financing for homes that have no critical insurance protection? The answer is securitization. Hazardous-land mortgages, like subprime loans, were bundled and sold to other investors.

Hazardous-Land Subdivisions

In addition to personal loss, Western North Carolina steep slope property owners are faced with the responsibility for maintaining their private subdivision roads.

At time of lot sales, developers require their clients to sign a document titled the Subdivision Street Disclosure Statement. By signing this standardized conveyance document, property owners agree that they own and are responsible for the subdivision’s private roads.

For information concerning property owners' legal obligations please visit the North Carolina Real Estate Commission Web site

The Cliffs at High Carolina Tiger Woods Golf Course and Landslides

—The Buncombe County Soil Hazards Map has not been released—



Location of the Cliffs at High Carolina
Subdivision on Buncombe County
Hazardous-Land Map— NCGS.



Slope Movements and Slope
Movement Deposits Map—NCGS


Stability Index Map—NCGS


Map of Known and Potential Debris g
Flow Pathways—NCGS

No one has asked Jim Anthony, developer of The Cliffs at High Carolina, or Tiger Woods his partner whether they have considered the consequences of building a golf course on landslide-hazardous ground.

Mr. Anthony cannot avoid the fact that his subdivision has geologic conditions which predispose the development site to landslide events. In addition to the North Carolina Geological Survey Buncombe County landslide hazard maps, the US Army Corps of Engineers issued a Public Notice on July 3, 2008 identifying the predominant soils found throughout The Cliffs at High Carolina subdivision. Western North Carolina Soil Surveys state that these soil compositions are highly erodible and are not suitable for residential development.

So the question is, does Mr. Anthony know what impact the golf course and its irrigation system might have on the mountain’s defined unstable base?

Mr. Anthony may not know the answer but geologists do.

Golf course construction alters the landscape. These expansively remodeled sites are cleared of native vegetation and are replaced with turf grass which requires irrigation. When golf courses are built in stable environments their location and maintenance requirements are not an issue, but when they are placed in geologically hazardous locations they are a matter of concern as demonstrated in the following histories.

Landslides Linked to Golf Course Construction and Irrigation





View of Ocean Trails
Golf Course Landslide—
Ninyo & Moore


Ocean Trails Golf Course Landslide—Rancho Palos Verdes, CA— 1999 (Trump National Golf Club)

Ninyo & Moore, a geotechnical and environment sciences firm, was hired to provide a forensic evaluation for the Ocean Trails Golf Course Landslide. A summary of its findings:

On June 2, 1999, an approximately 16-acre ancient landslide on the coastal bluff was reactivated, sliding approximately 50 feet toward the ocean. The ancient landslide destroyed much of the 18th fairway and green along with adjacent improvements, including an active County sewer line. The geologic setting included gently to moderately tilted beds of the Monterey Formation. The Monterey Formation at this locality included interbedded sequences of fine silty sandstone, siltstones, shales, dolomitic shales, siliceous zones, and bentonitic ash beds. The basal rupture surface was formed along a relatively continuous bentonite layer at a depth of approximately 90 feet. The geologic evaluation included detailed geologic mapping, 26 large-diameter borings, two rotary wash continuous core borings, 12 inclinometers, and the excavation and evaluation of buried sewer lines and artificial lakes. The analysis included preparation of multiple geologic cross sections, slope stability analysis, and evaluation of potential reactivation causes including seismic activity, precipitation, wave erosion, irrigation, construction activities, lake leakage, and sewer line leakage.

Donald Trump purchased the bankrupt Ocean Trails Golf Course in 2002 and he has spent $55 million to restore and stabilize the property.

In addition to the presently contained landslide located underneath the Trump National Golf Club Course, three others are located on the peninsula according to the Rancho Palos Verdes Chamber of Commerce. The largest, the Portuguese Bend landslide, was reactivated in 1956 and moves about a foot a year, depending on rainfall. This underground landslide tract covers 260 acres and has an average depth of 135 feet. Geologists attribute the onset of movement to irrigation, installation of pools and septic tanks that increased ground water levels.

South Golf Course Landslide—Colorado Springs, C0— 1993

Engineers investigating the site determined that irrigation was the cause of the reactivation of the ancient landslide underneath the South Golf Course. Their findings:

The construction of the golf course modified the site hydrology by adding irrigation water inflows and by changing the vegetation from native grass and scrub oak to turf grass over 55 percent of the total area. An analysis of the irrigation and precipitation rates and the turf grass water consumption rates showed a relatively high infiltration rate in the turf grass areas compared to the unirrigated native areas.

Proposals for Slowing the Landslide:

(1) ground water dewatering systems, (2) surface water control systems, (3) collection of flow from horizontal drains, and (4) control of irrigation.

Reference: “CASE HISTORY OF A REACTIVATION OF A LANDSLIDE DUE T0 IRRIGATION ON UNSATURATED SOIL” — Kuo-Chieh Chao 1, Daniel D. Overton 1 & John D. Nelson 1,2
1) Tetra Tech, Inc., USA
2) Colorado State University, USA

Arcadia Bluffs Golf Club Landslide—Manistee, Michigan— 1998

Massive landslides damaged this golf course during a September storm event. Improperly designed drainage inlets were the cause.

Reference: “Arcadia Bluffs sage continues”— Andrew Overbeck Golf Course News—November 2001.

Western North Carolina Landslides—Waiting in the Wings

Western North Carolina's steep slope topography and unstable soil composition are similar to that of the state of Washington. Landslides come with the terrain.

Washington State Road 410—Naches Landslide— October 2009

On October 11, 2009 a massive landslide buried a quarter-mile section of Washington State Road 410. Geologists are calling the Naches slope failure a deep rotational landslide: the immediate cause— mining or long-ago rain— is yet to be determined. Photos of the Naches landslide are compliments of The Seattle Times and the Washington State Department of Transportation.











Western North Carolina/I-40 Pigeon River Gorge Rock Slide— July 1997—NCGS



Blue Ridge Parkway Rock Slide— 2006—NCGS



Western North Carolina Real Estate—Landslide Advisory

All Western North Carolina mountain real estate is classified
landslide-hazardous. This designation includes privately-owned roads in subdivisions and planned communities. For an example of the costs related to repair and stabilization of damaged roads please see Horseshoe Cove Landslide Report.

The photographs below offer a small sampling of the harm caused by Western North Carolina landslides.



Airport Landslides -Jackson County, NC
1977-2005 —NCGS



White Laurel Subdivision
Landslide -Watauga County, NC
2004—NCGS



Jones Ridge Debris Flow
Burke County, NC 2004—NCGS



Jones's Landslide Fatality
Haywood County 2003—NCGS



Peeks Creek Landslide
5 Fatalities/15 homes destroyed
Macon County, NC 2004— NCGS



Moody Landslide
Haywood County, NC 2009
Asheville Citizen-Times



Starnes Cove Landslide
Buncombe County, NC 2004 —NCGS

Federal Emergency Management Agency—Western North Carolina Hazardous-Land Maps

The Federal Emergency Management Agency has long established that homeowners in all mountain counties, whatever the state, have been carelessly exposed to landslide hazards. In North Carolina the risks are exacerbated by the absence of regulation and hazardous-land real estate disclosure.

In an effort to spotlight planning board practices, FEMA is requiring
disaster-prone counties to identify by address all geologically-hazardous public and private property. Highly-detailed real estate hazard maps were completed for Buncombe County in April 2009 but this information has not been released to the public.

The parties involved in Western North Carolina mountain development and sales influence legislative actions, so critical land conditions have not been disclosed. Real estate documents such as sales contracts and Subdivision Street Disclosure Statements are compromised by the concealment of hazardous-land conditions and the financial risks involved.

Prompted by a near-fatal landslide event the Asheville Citizen-Times initiated its "Dangerous Ground" public-awareness campaign on March 1, 2009. By happenstance, this investigative report was followed by The New York Times article, "Increased frequency of landslides remains largely ignored despite risks."

Since there are no federal regulations governing hazardous-land development the public should consider these pertinent facts concerning ownership of landslide-affected real estate: insurance protection is not obtainable and homeowners associations must bear the costs of maintaining highly unstable roads.

The Cliffs at High Carolina— Road Schedule October 21, 2008

The Cliffs at High Carolina, LLC sales practices are governed by federal law under the Interstate Land Sales Full Disclosure Act (ILSFDA). All purchasers of land in ILSDFA-defined subdivisions must receive a highly formatted full disclosure document titled The Property Report. The following two pages were copied from The Cliffs at High Carolina Property Report. This is the ROADS section of the Report.