Unreported / Non-Citable
Background
Victor Orlando Rivera and Maria Louise Rivera obtained several loans and refinancings secured by their home. In February 2007, they borrowed $875,000 from Option One Mortgage Corporation, and Option One recorded a deed of trust securing that loan on March 6, 2007. On March 15, 2007, EMC recorded a full reconveyance referring to a different deed of trust recorded on August 1, 2006. The Riveras defaulted on the Option One loan in June 2007, alleging that they believed the EMC reconveyance and accompanying statement that its loan had been paid meant no further mortgage payments were required.
The operative first amended complaint also described Ocwen's 2018 issuance of a Form 1099-C for the 2017 tax year reporting $892,691.27 in discharged debt, alongside an asserted total debt of $1,601,266.57 and a loan modification with a $700,496 modified principal balance. The Riveras later signed an August 10, 2023 modification acknowledging a new principal balance of $777,699.48. Their complaint asserted 12 causes of action, including quiet title. The superior court denied the Riveras' ex parte applications, sustained the defendants' demurrer without leave to amend, and entered a judgment of dismissal in June 2025. On appeal, the Riveras challenged only the rulings concerning quiet title and leave to amend.
The Court’s Holding
The Court of Appeal affirmed. It first denied the Riveras' motion under California Rules of Court, rule 8.155, to add a 2008 substitution of trustee to the appellate record. The Riveras did not allege that the document had been filed or lodged in the superior court, and augmentation could not be used to introduce material that was not before the trial court. The court nevertheless considered that document as part of the Riveras' attempt to demonstrate their ability to amend their quiet-title claim.
On the demurrer, the court rejected the argument that the trial court had overlooked the corrective corporate assignment and Form 1099-C. Even assuming the 2019 corrective assignment was invalid, the Riveras did not explain how that would invalidate the 2008 assignment to Wells Fargo or the 2023 modification, or establish title free of encumbrances. Their own allegations also showed that the Form 1099-C did not cancel the entire debt: they acknowledged a larger total obligation and a remaining modified principal balance. The court therefore concluded that the earlier reconveyance concerned the 2006 loan, not the 2007 loan at issue, and that the pleaded facts and judicially noticed documents did not support ownership free and clear of encumbrances.
The court likewise found no abuse in denying leave to amend. Neither the 2008 assignment nor the 2008 substitution of trustee explained how the 2007 deed of trust had been eliminated. Even if the later corrective assignment were invalid, that would not demonstrate that the Riveras owned the home free of the 2007 encumbrance. The judgment was affirmed, and respondents were awarded their costs on appeal.
Key Takeaways
- A reconveyance must be connected to the deed of trust at issue; the EMC reconveyance identified the 2006 instrument rather than the 2007 Option One deed of trust.
- The Riveras' allegations about a partial debt discharge and subsequent loan modifications undermined their claim that the entire secured obligation had been eliminated.
- An asserted defect in a later corrective assignment did not, without a further explanation, invalidate the earlier assignment or remove the underlying encumbrance.
- Rule 8.155 augmentation could not add a document that had not been filed or lodged in the superior court, although the appellate court considered it in assessing possible amendment.
- The appeal addressed only quiet title and leave to amend because the Riveras accepted the demurrer ruling as to their other causes of action.
Why It Matters
The decision illustrates how a quiet-title theory based on loan repayment or debt cancellation can fail when the borrower's own allegations and judicially noticed records identify a different loan or show a remaining balance. It also separates the validity of an assignment from the existence of the underlying deed of trust: attacking a corrective assignment alone did not establish unencumbered ownership.
The unpublished opinion additionally distinguishes record augmentation from consideration of proposed amendment material. The appellate court enforced the requirement that augmented documents have been before the superior court while still examining the proffered trustee substitution to determine whether the Riveras had shown a viable basis to amend.