[Feature Request] Resolve hooks from nearest .claude/settings.json relative to edited file

Problem

When Claude Code is launched from a parent repository that contains git submodules, only the root project's .claude/settings.json hooks are applied. Hooks defined in submodule .claude/settings.json files are ignored, even when editing files within those submodules.

Example

parent-repo/                    # Claude Code launched here
├── .claude/settings.json       # ← Hooks from here are applied
└── packages/
    └── my-app/                 # Git submodule with its own project config
        └── .claude/
            └── settings.json   # ← PostToolUse hooks defined here are ignored

If packages/my-app/.claude/settings.json defines a PostToolUse hook (e.g., running a formatter after file edits), it does not execute when Claude Code edits files under packages/my-app/.

Why this matters

• A parent repository may aggregate shared context (CLAUDE.md, project metadata) that benefits all subprojects
• Launching Claude Code from each submodule directory works for hooks but loses this shared context
• Workarounds like duplicating hooks in the parent or adding path-matching logic in shell commands are fragile and don't scale

Proposed solution

When a hook event fires for a specific file (e.g., PostToolUse after Edit/Write), resolve hooks by walking up from the edited file's directory to find the nearest .claude/settings.json, and apply its hooks in addition to the root project's hooks.

This would be consistent with how CLAUDE.md files are already resolved from nested directories.

Environment

• Claude Code version: 2.1.47
• Platform: macOS Darwin 24.5.0