At the end of the day.. suing is like going to war.. no one wins. So I would avoid it like the plague. You should have received a home inspection.. start by reviewing that... you should have a termite clearance certificate, which usually has a 2 year warranty in California.. you can call the termite company and have them come back and take care of it...
Best of luck, be patient and be strategic about your decision making and about your dialog.
If you still have termites you may want to contact you realtor and as him/her to contact termite company for explanation .
Hopefully termite company will be able to visit your house and remove/exterminate all pests/termites .
I suggest you discuss with a real estate attorney and see what you can do
If you did do your homework and you did not discover this, then it is hard to understand how it could be this bad and you did not notice.
If you can prove that the Seller did know about all these problems and did not tell you, then you may have some recourse. However, again, if the problems were obvious to anyone doing even minimal due diligence investigation, you likely have no case.
Everyone is so quick to jump into lawsuits but the truth is, buyers and sellers have disclosures that were signed by both so if I were you I would refer back to the Purchase Agreement and the Contingency Removal part of your contract. Escrow would not have closed if you didn't sign off on your documents.
Did you have a buyers agent working with you? Did you have an inspection?
I'm sorry you ended up with such a money pit.
Whomever you have help you should try to be specific and factual to get to the fastest resolution. What is infested and what is damaged. What needs to be repaired and what will it cost.
It is really important to have a professional represent you when you purchase a home to avoid problems which are much harder to fix after the fact.