TUTTLE v. NEWREZ, LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GREGORY TUTTLE, on behalf of 	)
himself and all others 	)
similarly situated, and SARAH )
TUTTLE, 	)
)
Plaintiffs, 	)
)
v. 	) 	1:25CV223
)
NEWREZ, LLC d/b/a SHELLPOINT 	)
MORTGAGE SERVICING, and 	)
TERWIN MORTGAGE TRUST 	)
2005-3SL, by U.S. Bank 	)
National Association as 	)
Trustee, 	)
)
Defendants. 	)
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
This 	is 	an 	action 	involving 	a 	second 	mortgage 	on 	a 	home.
Before the court is the motion (Doc. 17) by Defendants Newrez LLC1
d/b/a 	Shellpoint 	(“Shellpoint”) 	and 	Terwin 	Mortgage 	Trust 	2005-
3SL, 	by 	U.S. 	Bank 	National 	Association 	as 	Trustee 	(the 	“Trust”),
to dismiss Plaintiffs Gregory and Sarah Tuttle’s amended complaint
(Doc. 	14) 	(the 	“complaint”) 	pursuant 	to 	Federal 	Rule 	of 	Civil
Procedure 	12(b)(6). 	The 	motion 	is 	fully 	briefed 	and 	ready 	for
decision. 	(Docs. 17-1, 19, 20.) 	For the reasons set forth below,
the motion will be granted and the complaint dismissed.
1 The amended complaint and case caption refer to “Newrez, LLC.”
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I. 	BACKGROUND
The well-pleaded allegations in the complaint, viewed in the
light 	most 	favorable 	to 	the 	Tuttles 	as 	the 	non-moving 	parties,
show the following:
Plaintiffs 	Gregory 	and 	Sarah 	Tuttle 	built 	their 	home 	in
Yadkinville, 	North 	Carolina, 	in 	1999. 	(Doc. 	14 	¶ 	45.) 	In 	2005,
they 	refinanced 	it 	with 	an 	80/20 	mortgage 	structure, 	where 	a
primary mortgage covered approximately 80% of the home’s value and
a 	secondary 	mortgage 	covered 	the 	remaining 	20%. 	(Id. 	¶¶ 	46-47.)
Mr. 	Tuttle 	was 	the 	sole 	signatory 	to 	the 	note 	for 	the 	second
mortgage. (Id. ¶ 49.)
The 	second 	mortgage 	was 	secured 	by 	a 	Deed 	of 	Trust 	dated
January 	21, 	2005 	(Doc. 	17-1 	at 	30), 	which 	both 	Tuttles 	signed 	as
borrowers. 	(Doc. 	14 	¶50.) 	It 	was 	serviced 	by 	Specialized 	Loan
Servicing, 	LLC 	(“SLS”) 	from 	at 	least 	2005 	until 	July 	2024, 	when
Shellpoint merged with SLS and assumed the servicing obligations.
(Id. ¶ 52.)
The Tuttles filed for Chapter 7 bankruptcy in September 2006.
(Id. 	¶ 	53.) 	Mr. 	Tuttle 	stopped 	receiving 	monthly 	statements 	for
the second mortgage that same month. 	(Id. ¶ 54.) 	In bankruptcy,
Mr. 	Tuttle 	filed 	a 	“Statement 	of 	Intention” 	that 	he 	would 	retain
his interest in his home and continue to pay the first and second
mortgages under agreed-upon terms. 	(Id. ¶ 55.)
Mr. 	Tuttle’s 	personal 	obligation 	under 	the 	second 	loan 	was
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discharged in January 2007. 	(Id. ¶ 56.) 	Mr. Tuttle modified the
terms 	of 	both 	mortgages 	in 	December 	2007, 	reaffirming 	the 	debt.
(Id. 	¶ 	57.) 	Mr. 	Tuttle 	subsequently 	defaulted 	on 	the 	second
mortgage, 	and 	SLS 	confirmed 	that 	it 	had 	charged 	off 	the 	second
mortgage in April 2009. 	(Id.)
In 	April 	2018, 	the 	Consumer 	Financial 	Protection 	Board
updated 	the 	regulations 	for 	the 	Truth 	in 	Lending 	Act, 	15 	U.S.C.
1601 et seq. (“TILA”), by amending “Regulation Z” to require loan
servicers 	to 	provide 	post-bankruptcy 	consumers 	with 	monthly
statements 	absent 	a 	specified 	exemption. 	(Doc. 	14 	¶ 	36; 	see 	12
C.F.R. § 1026.41(e)(5)(i).) 	That same month, SLS sent Mr. Tuttle
a letter informing him that he qualified under the new regulation
to 	“begin 	receiving 	a 	new 	monthly 	statement 	beginning 	in 	April
2018.” 	(Doc. 14 ¶¶ 59-61.) 	At some unspecified point thereafter,
Mr. 	Tuttle 	began 	receiving 	statements 	on 	the 	second 	mortgage.2
(Id. 	¶ 	64.) 	The 	statements 	indicated 	that 	he 	owed 	retroactive
interest 	and 	fees 	on 	his 	mortgage, 	which 	added 	approximately
$20,000 to the $54,000 outstanding principal balance of the loan.
(Id. ¶¶ 48, 56, 64.) 	Mr. Tuttle alleges that retroactive fees and
interest 	were 	assessed 	“for 	periods 	in 	which 	he 	had 	not 	received
statements,” but does not specify whether the periods in question
2 	Mr. Tuttle alleges that he “continued to receive no monthly statements
from 	SLS 	regarding 	his 	second 	mortgage, 	including 	after 	April 	2018.”
(Id. ¶ 62.) 	However, he does not indicate how long this occurred.
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were before or after the April 2018 regulation change. 	(Id. ¶ 65.)
In 	May 	2023, 	SLS 	sent 	a 	notice 	of 	default 	addressed 	to 	Mr.
Tuttle 	(but 	not 	Ms. 	Tuttle) 	at 	their 	residence, 	threatening
foreclosure 	if 	he 	failed 	to 	pay 	the 	full 	statement 	balance,
including 	the 	retroactively 	assessed 	fees 	and 	interest. 	(Id.
¶¶ 66, 	69.) 	In 	late 	2023, 	the 	Trust, 	as 	owner 	of 	the 	mortgage
debt, commenced foreclosure proceedings and sent correspondence to
Mr. 	Tuttle 	informing 	him 	of 	the 	foreclosure. 	(Id. 	¶ 70.) 	As 	a
result 	of 	the 	foregoing, 	Plaintiffs 	allege 	they 	have 	suffered
damages 	including 	“lost 	equity 	of 	approximately 	$20,000 	[] 	which
Shellpoint 	retroactively 	assessed 	as 	interest, 	as 	well 	as 	the
significant emotional distress of facing the loss of their family
home if they do not pay[.]” 	(Id. ¶ 72.)
The 	Tuttles 	commenced 	the 	present 	action 	asserting 	claims
under the North Carolina Debt Collection Act, N.C. Gen. Stat. § 75-
50 et seq. (“NCDCA”) (Counts 1 through 4 and 7), a claim under the
North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.
Stat. 	§ 	75-1.1 	et 	seq. 	(“UDTPA”) 	(Count 	8), 	a 	claim 	for 	a
declaratory judgment under 28 U.S.C. § 2201 (Count 5), and a state
law breach of contract claim (Count 6).
II. 	ANALYSIS
A. 	Legal Standard
Federal 	Rule 	of 	Civil 	Procedure 	8(a)(2) 	provides 	that 	a
pleading 	must contain “a 	short 	and 	plain 	statement 	of 	the 	claim
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showing that the pleader is entitled to relief.” 	A Rule 12(b)(6)
motion 	to 	dismiss 	is 	meant 	to 	“test[] 	the 	sufficiency 	of 	a
complaint” and not to “resolve contests surrounding the facts, the
merits of a claim, or the applicability of defenses.” 	Republican
Party 	of 	N.C. 	v. 	Martin, 	980 	F.2d 	943, 	952 	(4th 	Cir. 	1992). 	To
survive 	such 	a 	motion, 	“a 	complaint 	must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” 	Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) 	(quoting Bell 	Atl. 	Corp. 	v. 	Twombly, 	550 	U.S. 	544, 	570
(2007)).
In 	considering 	a 	Rule 	12(b)(6) 	motion, 	a 	court 	“must 	accept
as 	true 	all 	of 	the 	factual 	allegations 	contained 	in 	the
complaint,” Erickson 	v. 	Pardus, 	551 	U.S. 	89, 	94 	(2007) 	(per
curiam), 	and 	all 	reasonable 	inferences 	must 	be 	drawn 	in 	the 	non-
moving 	party’s 	favor, Ibarra 	v. 	United 	States, 	120 	F.3d 	472, 	474
(4th 	Cir. 	1997). 	However, 	the 	court 	“need 	not 	accept 	as 	true
unwarranted 	inferences, 	unreasonable 	conclusions, 	or
arguments.” 	E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P’ship, 213
F.3d 	175, 	180 	(4th 	Cir. 	2000). 	Rule 12(b)(6) 	protects 	against
meritless 	litigation 	by 	requiring 	sufficient 	factual 	allegations
“to raise a right to relief above the speculative level” so as to
“nudge[] the[] 	claims 	across 	the 	line 	from 	conceivable 	to
plausible.” 	Twombly, 	550 	U.S. 	at 	555, 	570; see 	also Iqbal, 	556
U.S. at 678. 	Thus, mere legal conclusions should not be accepted
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as true, and “[t]hreadbare recitals of the elements of a cause of
action, 	supported 	by 	mere 	conclusory 	statements, 	do 	not
suffice.” 	Iqbal, 556 U.S. at 678.
B. 	NCDCA Claims (Counts 1 through 4 and 7)
Defendants 	argue 	that 	the 	NCDCA 	claims 	should 	be 	dismissed
because they are based solely on Defendants’ assessment of interest
on 	the 	second 	mortgage 	loan 	at 	times 	when 	no 	periodic 	statements
were 	being 	sent. 	(Doc. 	17-1 	at 	15.) 	As 	Defendants 	note, 	the
obligation to issue periodic statements to consumers in bankruptcy
arises under the TILA and its enacting regulations. 	(Id.; see 15
U.S.C. 	§ 	1638(f); 	12 	C.F.R. 	§ 1026.41(e)(5).) 	However, 	the 	TILA
extends liability only to “creditors” and explicitly exempts loan
servicers 	(like 	Shellpoint/SLS) 	and 	assignees 	of 	creditors 	(like
the Trust) from liability in most cases. 	See 15 U.S.C. § 1641(e)
(requiring the assignment to be voluntary and the violation to be
“apparent 	on 	the 	face 	of 	the 	disclosure 	statement”) 	and 	(f)
(exempting 	servicers 	unless 	they 	are 	also 	an 	owner 	of 	the
obligation).3 	Thus, 	Defendants 	contend 	that 	the 	Tuttles’ 	NCDCA
3 Plaintiffs represent that “TILA requires mortgage lenders and servicers
to send consumers a statement once per billing cycle.” (Doc. 19 at 9.)
Plaintiffs 	cite 	15 	U.S.C. 	§ 	1637(b) 	and 	12 	C.F.R. 	§ 	1026.5(b)(2),
provisions 	that 	apply 	to 	open 	ended 	consumer 	credit 	plans, 	not 	home
mortgages. 	However, 	a 	different 	subsection 	of 	TILA 	and 	Regulation 	Z
both require servicers of home mortgages to provide a statement once per
billing 	cycle. 	15 	U.S.C. 	§ 	1638(f)(1) 	(“The 	creditor, 	assignee, 	or
servicer 	with 	respect 	to 	any 	residential 	mortgage 	loan 	shall 	transmit
to the obligor, for each billing cycle, a statement . . .”); 12 C.F.R.
§ 	1026.41(a)(2) 	(“A 	servicer 	of 	a 	transaction 	subject 	to 	this 	section
shall provide the consumer, for each billing cycle, a periodic statement
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claims 	are 	an 	indirect 	attempt 	to 	enforce 	a 	non-existent 	TILA
claim. 	(Doc. 17-1 at 16-17.)
The 	Tuttles, 	in 	apparent 	recognition 	of 	the 	servicer’s
exemption from liability here, contend that their NCDCA claims are
not 	predicated 	on 	Defendants’ 	failure 	to 	provide 	periodic
statements in violation of the TILA, but rather on their attempts
to 	collect 	interest 	and 	fees 	to 	which 	they 	were 	not 	entitled.
(Doc. 	19 	at 	10-11.) 	The 	Tuttles 	cite 	cases 	for 	the 	proposition
that periodic billing statements can be actionable under the NCDCA
as an attempt to collect a debt. 	(Id. at 9-10 (citing Daniels v.
Select 	Portfolio 	Servicing, 	Inc., 	34 	F.4th 	1260, 	1271 	(11th 	Cir.
2022); Lipford v. Specialized Loan Servicing, LLC, 2024 WL 3760752,
at 	*4 	(E.D. 	Va. 	Aug. 	12, 	2024); 	and 	Lamirand 	v. 	Fay 	Servicing,
LLC, 38 F.4th 976, 980 (11th Cir. 2022).) 	Additionally, they argue
that Mr. Tuttle’s individual NCDCA claim (Count 7) relates to other
debt collection attempts, including the mailing of pre-foreclosure
notices. 	(Id. at 12.)
Defendants reply that the interest and fees that underly all
of the Tuttles’ NCDCA claims are only alleged to be unlawful under
the TILA. 	(Doc. 20 at 7-8.) 	Thus, they contend that the Tuttles’
NCDCA 	claims, 	including 	the 	individual 	claim 	in 	Count 	7, 	are 	all
. . .”). 	So, while Section 1638 and Regulation Z impose this requirement
on 	servicers, 	the 	sections 	creating 	liability, 	15 	U.S.C. 	§§ 	1640 	and
1641, generally restrict it to creditors and explicitly exempt servicers
from liability unless they also own the loan as an assignee.
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dependent 	on 	nonactionable 	TILA 	violations 	and 	therefore 	subject
to dismissal. 	(Id. at 10.) 	Further, they correctly note that all
of 	the 	Tuttles’ 	cases 	are 	inapposite, 	because 	the 	question 	of
whether 	periodic 	billing 	statements 	can 	be 	attempts 	to 	collect 	a
debt under the NCDCA is not at issue here. 	(Id. at 9.)
When construing a state statute, a federal court looks to the
decisions 	of 	the highest court of 	the 	state. 	See Twin 	City 	Fire
Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365,
369 (4th Cir. 2005). 	If there are no governing opinions from the
Supreme Court of North Carolina, the court “must anticipate how it
would 	rule.” 	See 	Parkway 	1046, 	LLC 	v. 	U.S. 	Home 	Corp., 	961 	F.3d
301, 	306 	(4th 	Cir. 	2020) 	(internal 	quotation 	marks 	and 	citation
omitted). 	To that end, the federal court may consider the opinions
of 	the 	North 	Carolina 	Court 	of 	Appeals, 	treatises, 	and 	“the
practices of other states.” 	Twin City Fire Ins. Co., 433 F.3d at
369 (internal quotation marks and citation omitted).
As 	Defendants 	note 	(Doc. 	20 	at 	7), 	the 	Tuttles 	do 	not 	cite
any North Carolina statute or case that would establish independent
liability 	for 	fees 	and 	interest 	assessed 	on 	a 	mortgage 	during
periods where no statements were sent. 	Neither the Supreme Court
of North Carolina nor the North Carolina Court of Appeals has ever
considered 	whether 	a 	TILA 	violation 	of 	the 	type 	alleged 	here 	can
give rise to liability under the NCDCA or any other North Carolina
law. 	However, 	the 	North 	Carolina 	Court 	of 	Appeals 	has 	looked 	to
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federal interpretations of the Fair Debt Collection Practices Act
(the 	“FDCPA”), 	which 	is 	the 	NCDCA’s 	federal 	counterpart,4 	when
construing the NCDCA in other contexts. 	See, e.g., Reid v. Ayers,
531 	S.E.2d 	231, 	233-34 	(N.C. 	Ct. 	App. 	2000). 	There 	is 	no 	reason
to conclude North Carolina courts would do otherwise here.
Courts 	have 	consistently 	rejected 	attempts 	to 	enforce 	the
TILA against non-creditors using the FDCPA. 	For example, in Neff
v. Cap. Acquisitions & Mgmt. Co., 238 F. Supp. 2d 986, 992-93 (N.D.
Ill. 	2002), 	aff’d, 	352 	F.3d 	1118 	(7th 	Cir. 	2003), 	the 	court
rejected 	the 	plaintiff’s 	claim 	that 	the 	non-creditor 	defendants
violated 	the 	FDCPA 	through 	efforts 	to 	collect 	interest 	when 	no
periodic statements had been furnished. 	The court held that “there
is 	no 	affirmative 	obligation 	under 	the 	FDCPA 	to 	send 	monthly
statements, 	and 	[plaintiff] 	does 	not 	allege 	deceptive 	or 	unfair
practices 	independent 	of 	defendants' 	alleged 	TILA 	obligations.”
Accord Lee v. Northland Grp., No. 02-c-6083, 2003 WL 25765398, at
*1 (N.D. Ill. 2003) (“[Plaintiff]'s FDCPA . . . claims are entirely
predicated on her nonexistent TILA violation, and thus those claims
4 Compare N.C. Gen Stat. § 75-54(2) (forbidding false representation of
“the character, extent, or amount of a debt against a consumer or of its
status in any legal proceeding”) with 15 U.S.C. § 1692e(2) (forbidding
false representation of “the character, amount, or legal status of any
debt”); compare also N.C. Gen. Stat. § 75-55(4) (forbidding collection
of “any interest or other charge, fee or expense . . . 	unless legally
entitled to such fee or charge”) with 15 U.S.C. § 1692f(1) (forbidding
collection of “any interest, fee, charge, or expense . . . unless such
amount 	is 	expressly 	authorized 	by 	the 	agreement 	creating 	the 	debt 	or
permitted by law”).
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must 	also 	be 	dismissed.”). 	Indeed, 	multiple 	courts 	have 	reached
similar 	conclusions 	in 	parallel 	litigation 	involving 	repackaged
TILA claims against Shellpoint. 	See Linderman v. NewRez LLC, No.
25-cv-04271, 	2025 	WL 	3037795 	(N.D. 	Ill. 	Oct. 	31, 	2025); 	Cole 	v.
NewRez LLC, No. 25-cv-04265 (N.D. Ill. Dec. 17, 2025);5 Hodges v.
NewRez 	LLC, 	No. 	25-cv-10147, 	2026 	WL 	194652 	(D. 	Mass. 	Jan. 	6,
2026).
Here, the Tuttles concede that the NCDCA and FDCPA serve the
same 	purpose. 	(Doc. 	19 	at 	9.) 	Nevertheless, 	the 	Tuttles 	argue
that 	their 	NCDCA 	claims 	are 	distinguishable 	from 	existing 	FDCPA
caselaw 	because 	the 	claims 	in 	the 	present 	case 	are 	not 	“entirely
predicated on a failure to send statements.” 	(Id. at 10-11.) 	But
the substance of their complaint belies this argument. 	The alleged
NCDCA violations in Counts 1 through 4 all arise from Defendant’s
representations 	of 	interest 	and 	fees, 	or 	efforts 	to 	collect 	the
same, 	for 	“months 	that 	[Plaintiffs] 	were 	not 	sent 	monthly
statements.” 	(Doc. 	14 	¶¶ 	80-81, 	92-93, 	104-105, 	117-118.)
Similarly, Mr. Tuttle’s individual NCDCA claim in Count 7 rests on
an “inaccurate balance” and “inflated amount to cure the default”
that 	appeared 	on 	the 	notice 	of 	foreclosure 	he 	received 	from
Defendants. 	(Id. ¶¶ 145-48.) 	The alleged inaccuracy and inflation
are 	based 	exclusively 	on 	Defendants’ 	assessment 	of 	fees 	and
5 A copy of this unreported case was filed by Defendants. 	(Doc. 	31-1.)
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interest 	for 	months 	that 	the 	Tuttles 	were 	not 	sent 	monthly
statements 	— 	in 	other 	words, 	on 	a 	nonactionable 	TILA 	violation.
(See id. ¶¶ 65-66.)
Because 	the 	Tuttles 	have 	failed 	to 	allege 	any 	conduct 	that
would 	violate 	the 	NCDCA 	independent 	of 	Defendant’s 	putative 	TILA
violations, 	Counts 	1 	through 	4 	and 	7 	of 	the 	complaint 	will 	be
dismissed.
C. 	UDTPA Claim (Count 8)
Defendants likewise argue that Count 8 fails to state a claim
under the UDTPA because it is based on the same nonactionable TILA
violation 	as 	the 	NCDCA 	claims. 	(Doc. 	17-1 	at 	18-19 	(citing
Register v. N. Sun Hous. & Dev., Inc., No. 7:04-cv-68-FL, 2005 WL
8159532, 	at 	*10 	(E.D.N.C. 	2005), 	aff’d 	sub 	nom. 	Reg. 	v. 	Flagstar
Bank, 205 F. App’x 154 (4th Cir. 2006).) 	The Tuttles respond that
the 	UDTPA 	claim 	is 	not 	based 	Defendants’ 	failure 	to 	send 	monthly
statements, but rather on their “unfair and deceptive foreclosure
attempts.” 	(Doc 19 at 12-13.) 	Defendants reply that this claim,
like 	the 	others, 	is 	based 	on 	Defendants’ 	alleged 	assessment 	of
fees and interest at times when monthly statements were not sent.
(Doc. 20 at 10-11.)
Once 	again, 	the 	face 	of 	the 	complaint 	belies 	the 	Tuttles’
argument. 	Count 8 alleges:
“[In] 	seeking 	payment 	of 	amounts 	exceeding 	$100,000 	and
conducting 	a 	foreclosure 	sale 	of 	Plaintiff’s 	home 	without
having 	sent 	him 	monthly 	mortgage 	statements, 	[Defendants]
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violated 	TILA6 	. 	. 	. 	[which], 	in 	turn, 	“violated 	North
Carolina’s unfair and deceptive trade practices statute, N.C.
Gen. Stat. § 75-1.1 et seq.”
(Doc. 	14 	¶¶ 	155-56.) 	Because 	the 	UDTPA 	claim 	is 	based 	upon
nonactionable violations of the TILA, it fails as a matter of law.
See Register, 2005 WL 8159532, at *10. 	Therefore, Count 8 of the
complaint fails to state a claim and will be dismissed.
D. 	Breach of Contract (Count 6)
Defendants argue that the Trust’s alleged breach of the deed
of 	trust 	is 	predicated 	on 	the 	same 	nonactionable 	TILA 	violations
as 	the 	previous 	claims. 	(Doc. 	17-1 	at 	19-20 	(citing 	Penner 	v.
Chase 	Bank 	USA, 	N.A., 	2006 	WL 	2192435, 	at 	*5 	(W.D. 	Wash. 	2006).)
They 	further 	argue 	that 	the 	Tuttles 	have 	failed 	to 	allege 	actual
damages, 	as 	there 	is 	no 	allegation 	that 	they 	have 	paid 	the 	“fees
and costs” they allegedly do not owe, no allegation that they could
have 	paid 	the 	lesser 	amount 	they 	claim 	to 	owe, 	and 	no 	allegation
of 	any 	transfer 	or 	sale 	to 	support 	their 	assertion 	of 	“lost
equity.” 	(Id. 	at 	20-22.) 	Finally, 	they 	argue 	that 	the 	deed 	of
trust 	did 	not 	require 	a 	default 	notice 	to 	be 	sent 	to 	Ms. 	Tuttle,
because 	she 	did 	not 	sign 	the 	corresponding 	note 	and 	thus 	was 	not
personally liable as a borrower. 	(Id. at 22-23.) 	Alternatively,
they contend that Ms. Tuttle was properly notified by the default
6 Paragraph 155 of the complaint further alleges that the same conduct
violated an undefined “DCSA,” perhaps an errant reference to Indiana's
Deceptive Consumer Sales Act, Ind. Code § 24-5-0.5-1 et seq. 	(Doc. 14
¶ 155.)
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notice sent to Mr. Tuttle. 	(Id. at 23 n.8.)
The Tuttles respond that the alleged breach is not predicated
on a TILA violation, but on a defective default notice that “vastly
overstated 	the 	amount 	of 	[the] 	debt 	and 	therefore 	did 	not 	comply
with 	[the] 	Deed 	of 	Trust.” 	(Doc. 	19 	at 	14.) 	They 	contend 	that
the 	mere 	assessment 	of 	foreclosure 	fees 	constitutes 	lost 	equity,
because “if [Plaintiffs] were to try to refinance or payoff their
mortgage today, they would have to pay those fees.” 	(Id. at 15.)
They 	also 	note 	that 	a 	foreclosure 	proceeding 	is 	pending 	against
their home and cite cases where homeowners in similar circumstances
were allowed to seek prospective relief. 	(Id. (citing Mathews v.
PHH 	Mortg. 	Corp., 	724 	S.E.2d 	196 	(Va. 	2012); 	Blick 	v. 	Shapiro 	&
Brown, 	LLP, 	No. 	3:16-cv-00070, 	2017 	WL 	8774286, 	at 	*2 	(W.D. 	Va.
Jan. 	25, 	2017).) 	Finally, 	they 	argue 	that 	the 	language 	of 	the
deed 	of 	trust 	shows 	that 	Ms. 	Tuttle 	was 	a 	“borrower” 	entitled 	to
receive a default notice. (Id. at 16-17.)
Defendants 	reply 	that 	the 	“vastly 	overstated” 	amount 	that
appears on the notice of default is yet another reiteration of the
same 	nonactionable 	TILA 	violation 	that 	underlies 	the 	Tuttles’
other 	claims. 	(Doc. 	20 	at 	11-12.) 	Further, 	they 	argue 	that 	a
merely 	“pending” 	foreclosure 	is 	insufficient 	to 	show 	lost 	equity
or 	other 	damages. 	(Id. 	at 	12 	(citing 	Jaldin 	v. 	ReconTrust 	Co.,
N.A., 	539 	F. 	App’x 	97, 	101 	(4th 	Cir. 	2013).) 	Thus, 	they 	reason,
even 	if 	Ms. 	Tuttle 	was 	entitled 	to 	a 	default 	notice, 	she 	cannot
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show 	that 	she 	suffered 	any 	damage 	in 	not 	receiving 	it. 	(Id. 	at
13.)
The 	deed 	of 	trust, 	by 	its 	own 	terms,7 	is 	governed 	by 	North
Carolina law. 	(Doc 17-1 at 32, ¶ 13.) 	In North Carolina, a claim
for breach of contract requires only (1) the existence of a valid
contract and (2) a breach of the terms of that contract; proof of
damages 	is 	not 	required. 	See 	Poor 	v. 	Hill, 	530 	S.E.2d 	838, 	843
(N.C. 	Ct. 	App. 	2000). 	A 	plaintiff 	who 	establishes 	both 	elements
is entitled “to nominal damages at least.” 	Bryan Builders Supply
v. Midyette, 162 S.E.2d 507, 511–12 (N.C. 1968). 	However, a breach
of 	contract 	is 	only 	actionable 	if 	it 	is 	material, 	“one 	that
substantially defeats the purpose of the agreement or goes to the
very 	heart 	of 	the 	agreement, 	or 	can 	be 	characterized 	as 	a
substantial failure to perform.” 	Crews v. Crews, 826 S.E.2d 194,
199 (N.C. Ct. App. 2019).
Here, 	no 	party 	disputes 	that 	the 	deed 	of 	trust 	is 	a 	valid
contract. 	Thus, the court must determine whether the Tuttles have
adequately 	alleged 	that 	Defendants 	breached 	its 	terms, 	either 	by
7 Under limited circumstances, a court may consider documents beyond the
complaint 	without 	converting 	a 	motion 	to 	dismiss 	into 	one 	for 	summary
judgment. 	Goldfarb v. Mayor & City Council of Balt., 791 F.3d 500, 508
(4th Cir. 2015); Fed. R. Civ. P. 12(d) (limiting consideration of matters
outside 	of 	the 	pleadings 	on 	12(b)(6) 	motion). 	A 	court 	may 	properly
consider documents that are “explicitly incorporated into the complaint
by 	reference.” 	Goines 	v. 	Valley 	Cmty. 	Servs. 	Bd., 	822 	F.3d 	159, 	166
(4th Cir. 2016). 	Here, both the deed of trust (Doc. 17-1 at 30-35) and
the notice of default (id. at 37-39) are expressly incorporated into the
complaint by reference. 	(Doc. 14 ¶¶ 135-36.)
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overstating the amount owed in the default notice that was mailed
to 	Mr. 	Tuttle, 	or 	by 	failing 	to 	send 	a 	default 	notice 	to 	Ms.
Tuttle.
With 	respect 	to 	the 	first 	alleged 	breach, 	the 	Tuttles 	have
not 	alleged 	sufficient 	facts 	to 	show 	that 	the 	default 	notice 	was
“defective because it listed an incorrect amount due on the loan.”
(Doc. 	14 	¶ 	136.) 	Their 	complaint 	indicates 	neither 	the 	amount
that 	appeared 	on 	the 	default 	notice 	nor 	the 	lesser 	amount 	that
they 	believe 	should 	have 	appeared. 	Plaintiffs 	rely 	entirely 	on
Defendants’ putative violations of the TILA to show that the amount
was 	excessive. 	(Id. 	(“Specifically, 	[the 	amount] 	included
interest 	and/or 	late 	fees 	that 	Plaintiff 	did 	not 	owe 	because 	he
was 	not 	being 	sent 	monthly 	statements.”).) 	The 	Trust 	is 	also
exempt 	from 	TILA 	liability 	as 	an 	assignee 	because 	the 	alleged
violation 	(failure 	to 	send 	statements) 	was 	not 	apparent 	on 	the
face 	of 	the 	disclosures 	the 	Trust 	received 	when 	it 	acquired 	the
loans 	from 	the 	originating 	lender. 	15 	U.S.C. 	§ 	1641(e)(1)(A).
Thus, 	the 	alleged 	breach 	simply 	repackages 	the 	same 	unactionable
conduct that serves as the basis of the Tuttles’ other claims.
As to the second alleged breach, the Trust’s alleged failure
to notify Ms. Tuttle as a condition precedent to foreclosure is an
issue 	that 	would 	seem 	to 	be 	more 	properly 	raised 	in 	the 	pending
foreclosure 	proceeding, 	rather 	than 	before 	this 	court.
Nevertheless, 	the 	claim 	appears 	to 	be 	meritless. 	Admittedly,
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Defendants’ 	argument 	that 	Ms. 	Tuttle 	was 	not 	entitled 	to 	receive
a notice is unpersuasive. 	(Doc. 17-1 at 22-23.) 	The deed of trust
plainly 	defines 	“Borrower” 	as 	“Gregory 	Dwayne 	Tuttle 	and 	Sarah
Leandra 	A. 	Tuttle, 	Husband 	and 	Wife” 	and 	requires 	notices 	to 	be
sent 	“by 	certified 	mail 	addressed 	to 	Borrower” 	prior 	to
acceleration. 	(Id. at 30, 32 (emphasis added).) 	Thus, Ms. Tuttle
was 	entitled 	to 	notice 	before 	the 	Trust 	commenced 	foreclosure
proceedings. 	However, the Trust’s failure does not appear to rise
to 	the 	level 	of 	a 	material 	breach. 	The 	notice 	of 	default 	was
delivered to Mr. Tuttle, Ms. Tuttle’s husband and co-borrower, at
the 	same 	property 	address. 	(Doc. 	14 	¶ 	66; 	see 	Doc. 	17-1 	at 	37.)
Plaintiffs 	do 	not 	allege 	that 	Ms. 	Tuttle 	was 	unaware 	of 	the
impending 	foreclosure, 	or 	that 	she 	would 	have 	acted 	differently
had her name been included on address line. 	In short, the Trust’s
failure to properly address the notice of default appears to be a
non-material 	breach, 	one 	that 	neither 	“substantially 	defeats 	the
purpose 	of 	the 	agreement 	[nor] 	goes 	to 	the 	very 	heart 	of 	the
agreement, 	[or] 	can 	be 	characterized 	as 	a 	substantial 	failure 	to
perform.” 	Crews, 826 S.E.2d at 199.
Because 	Plaintiffs 	have 	failed 	to 	allege 	any 	facts 	that, 	if
proven, 	would 	constitute 	a 	material 	breach 	of 	the 	deed 	of 	trust,
Count 6 of the complaint will be dismissed.
E. 	Declaratory Judgment (Count 5)
Defendants argue that because the Tuttles’ substantive claims
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have 	been 	dismissed, 	their 	claim 	for 	declaratory 	relief 	under 	28
U.S.C. 	§ 2201 	lacks 	a 	viable 	underlying 	cause 	of 	action 	and 	thus
fails 	as 	a 	matter 	of 	law. 	(Doc. 	17-1 	at 	23-24. 	(citing 	Laws 	v.
Priority 	Tr. 	Servs. 	of 	N.C., 	610 	F. 	Supp. 	2d 	528, 	532 	(W.D.N.C.
Mar. 	16, 	2009)).) 	The 	Tuttles 	respond 	that 	they 	have 	alleged 	a
real 	and 	immediate 	controversy, 	namely, 	whether 	Defendants 	have
waived 	the 	right 	to 	collect 	fees 	and 	interest 	assessed 	during
periods 	when 	statements 	were 	not 	sent 	to 	borrowers. 	(Doc. 	19 	at
18-19.)
The Declaratory Judgment 	Act 	provides 	that 	the court
“may declare the rights and other legal relations of any interested
party 	seeking 	such declaration.” 	28 	U.S.C. 	§ 2201(a). 	However,
“a 	request 	for 	declaratory 	relief is 	barred 	to 	the 	same 	extent
that 	the 	claim 	for 	substantive 	relief 	on 	which 	it 	is 	based 	would
be 	barred.” 	CGM, 	LLC 	v. 	BellSouth 	Telecomm., 	Inc., 	664 	F.3d 	46,
55-56 	(4th 	Cir. 	2011). 	Because 	the 	Tuttles 	have 	no 	surviving
substantive claims, Count 5 of the complaint fails as well, and it
will be dismissed.
F. 	Class Allegations
The Tuttles argue finally that no basis exists to strike Mr.
Tuttle’s class claims and that, in any event, doing so now, before
discovery, 	would 	be 	premature. 	(Doc. 	19 	at 	19.) 	However, 	as
Defendants 	correctly 	argue 	(Doc. 	20 	at 	15), 	where 	the 	underlying
substantive 	claims 	are 	dismissed, 	the 	class 	claims 	lack 	any
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predicate and should also be dismissed. 	Sullivan v. Lab Corp. of
Am. 	Holdings, 	No. 	1:17cv193, 	2018 	WL 	1586471, 	at 	* 	12 	(M.D.N.C.
2018); 	Stewart 	v. 	Legal 	Helpers 	Debt 	Resolution, 	PLLC, 	No.
2:11CV26, 	2014 	WL 	31797, 	at 	*1 	(W.D.N.C. 	Jan. 	6, 	2014) (“As 	a
general 	rule, 	when 	the 	named 	plaintiff 	in 	a 	class 	action 	settles
his 	or 	her 	individual 	claims 	or 	they 	become 	moot 	prior 	to 	the
district 	court 	certifying 	a 	class, 	the 	district 	court 	should
dismiss 	the 	class 	claims 	as 	moot 	because 	there 	is 	no 	case 	or
controversy 	under 	Article 	III 	of 	the 	United 	States
Constitution.”). 	Therefore, 	the 	dismissal 	of 	Mr. 	Tuttle’s
individual 	claims, 	for 	which 	he 	was 	the 	only 	proposed 	class
representative, dooms his putative class claims, and they fail to
prevent dismissal of the complaint.
III. CONCLUSION
For the reasons stated,
IT 	IS 	THEREFORE 	ORDERED 	that 	Defendants’ 	motion 	to 	dismiss
(Doc. 	17) 	is 	GRANTED 	and 	the 	amended 	complaint 	(Doc. 	14) 	is
DISMISSED.
/s/ 	Thomas D. Schroeder
United States District Judge
February 23, 2026
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