Storybook Residential, LLC v. Allegion U.S. Holding III, Inc., et al.

• Court: District Court, D. Nevada
• Decided: July 6, 2026
• Docket: 2:25-cv-01605
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 STORYBOOK RESIDENTIAL, LLC, Case No.: 2:25-cv-01605-APG-DJA

4 Plaintiff Order Granting Defendants’ Motion To Dismiss 5 v.

6 ALLEGION U.S. HOLDING III, INC., et al., [ECF No. 17]

7 Defendants

8 In 2017, StoryBook Residential, LLC, the owner of a multi-family apartment building, 9 purchased a commercial lock system from defendants Allegion US Holding III, Inc. and its 10 affiliate, Schlage Lock Company, LLC, for its apartment building. ECF No. 1-1 at 5-6. 11 StoryBook believed these locks should last fifteen to twenty years. Id. at 7. The defendants 12 represented to StoryBook that the lock system would work and be supported for the foreseeable 13 future. Id. at 6. But StoryBook alleges that the defendants intended to discontinue technical 14 support and parts production for the system within three years, rendering it obsolete. Id. In 2023, 15 StoryBook noticed problems with the locking system and its associated key-fob hardware. Id. It 16 contacted the defendants and purchased a second lock system on the defendants’ representation 17 that the new system’s battery would cover a year of normal use. Id. As with the initial system, 18 the new locks were deficient. Id. at 6-7. The new system’s battery life quickly depleted, which 19 locked StoryBook’s tenants out of their homes. Id. StoryBook alleges that the defendants knew 20 that these new locks were defective when they sold them to StoryBook. Id. at 6. 21 StoryBook brings two claims against the defendants. First, it argues the defendants are 22 liable for fraud in the inducement for intentionally misrepresenting the “nature, viability, lifespan 23 and support available” for both lock systems on which it “reasonably and justifiably relied” when 1 purchasing them. ECF 1-1 at 7. Second, it brings a fraudulent concealment claim, alleging the 2 defendants concealed material facts about both lock systems’ defects. The defendants move to 3 dismiss, arguing that StoryBook failed to meet the heightened pleading standard under Federal 4 Rule of Civil Procedure (FRCP) 9(b) and failed to state a claim under FRCP 12(b)(6). I dismiss

5 both claims but grant StoryBook leave to amend. 6 I. DISCUSSION 7 In considering a motion to dismiss, I take all well-pleaded allegations of material fact as 8 true and construe them in a light most favorable to the non-moving party. Kwan v. SanMedica 9 Int’l, 854 F.3d 1088, 1096 (9th Cir. 2017). However, I do not “assume the truth of legal 10 conclusions merely because they are cast in the form of factual allegations.” Navajo Nation v. 11 Dep’t of the Interior, 876 F.3d 1144, 1163 (9th Cir. 2017). 12 To withstand a motion to dismiss, a complaint must make sufficient factual allegations to 13 establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). 14 Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of

15 the elements of a cause of action.” Id. at 555. Instead, the complaint must include “a short and 16 plain statement of the claim” that shows the plaintiff “is entitled to relief” and gives the 17 defendants “fair notice of what the claim is and the grounds upon which it rests.” Id. (simplified). 18 “In alleging fraud or mistake, Rule 9(b) requires a party to state with particularity the 19 circumstances constituting fraud or mistake, including the who, what, when, where, and how of 20 the misconduct charged.” Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) 21 (simplified). Additionally, a plaintiff alleging the defendant made a misrepresentation “must set 22 forth what is false or misleading about a statement, and why it is false.” Id. (simplified). In sum, 23 it “must provide enough detail to give [the defendants] notice of the particular misconduct which 1 is alleged to constitute the fraud charged so that [they] can defend against the charge and not just 2 deny that [they have] done anything wrong.” Id. at 999 (simplified). The plaintiff is “not 3 required to allege facts that are peculiarly within the opposing party’s knowledge,” and 4 allegations “based on information and belief may suffice, so long as the allegations are

5 accompanied by a statement upon which the belief is founded.” Nayab v. Cap. One Bank (USA), 6 N.A., 942 F.3d 480, 493-94 (9th Cir. 2019) (quotation omitted). In “a fraud suit involving 7 multiple defendants, a plaintiff must, at a minimum, identify the role of each defendant in the 8 alleged fraudulent scheme” “and inform each defendant separately of the allegations surrounding 9 his alleged participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir. 10 2007) (per curiam) (simplified). 11 I must “freely give leave” to amend “when justice so requires.” Fed. R. Civ. P. 15(a)(2). 12 I apply this policy “with extreme liberality.” Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 13 1048, 1051 (9th Cir. 2003) (quotation omitted). I consider “five factors in assessing the 14 propriety of leave to amend—bad faith, undue delay, prejudice to the opposing party, futility of

15 amendment, and whether the plaintiff has previously amended the complaint.” United States v. 16 Corinthian Colls., 655 F.3d 984, 995 (9th Cir. 2011). 17 A. The economic loss doctrine does not bar StoryBook’s claims. 18 As an initial matter, the parties dispute whether StoryBook’s claims are barred by the 19 economic loss doctrine. The doctrine “bars unintentional tort actions when the plaintiff seeks to 20 recover purely economic losses,” which are “defined as the loss of the benefit of the user’s 21 bargain . . . including . . . the cost of repair and replacement of a defective product, or consequent 22 loss of profits, without any claim of personal injury or damage to other property.” Terracon 23 Consultants W., Inc. v. Mandalay Resort Grp., 206 P.3d 81, 83, 86 (Nev. 2009) (en banc) 1 (simplified). “Intentional torts are not barred by the economic loss doctrine.” Halcrow, Inc. v. 2 Eighth Judicial Dist. Ct., 302 P.3d 1148, 1154 n.2 (Nev. 2013) (en banc). Both of StoryBook’s 3 claims are intentional torts, so they are not barred by the economic loss doctrine. See Aliya 4 Medcare Fin., LLC v. Nickell, 156 F. Supp. 3d 1105, 1122 (C.D. Cal. 2015) (holding that the

5 economic loss doctrine does not bar a claim for fraudulent inducement under Nevada law). 6 B. I dismiss StoryBook’s fraud in the inducement claim. 7 StoryBook’s fraud in the inducement claim alleges that the defendants represented that 8 the first set of locks was “suitable, working, and supported for the foreseeable future,” even 9 though the defendants planned to discontinue technical support for them during the sale to 10 StoryBook. ECF No. 1-1 at 6. It also alleges that the defendants represented that the second lock 11 system “had a battery life that would easily cover a year of normal use.” Id. And StoryBook “is 12 informed and believes that the Defendants were aware” that these second locks “consumed 13 battery life much faster than represented.” Id. 14 The defendants argue that StoryBook’s fraud in the inducement claim does not meet the

15 heightened pleading standard under FRCP 9(b) because it does not identify who made the 16 representations, when they were made, their precise content, and the medium or context in which 17 they were made. StoryBook responds that its complaint contains the required level of 18 specificity.1 19 20 1 StoryBook attached several exhibits to its response to the motion to dismiss, including emails 21 between the parties, demand letters, and an affidavit from a StoryBook employee. I may consider documents outside of the complaint when they are incorporated by reference in the 22 complaint or are matters of judicial notice. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Storybook does not reference these exhibits in its complaint. Additionally, these 23 affidavits, demand letters, and emails are not proper subjects of judicial notice because they are not “generally known” or “capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned.” Fed. R. Evid. 201(b)(1), (2); see Ritchie, 342 1 To state a claim for fraud in the inducement, StoryBook must plausibly allege: (1) the 2 defendant made a false representation; (2) the defendant believed or knew that the representation 3 was false (or knew that it had an insufficient basis for making the representation); (3) the 4 defendant intended the false representation to induce StoryBook to consent to the contract’s

5 formation; (4) StoryBook justifiably relied on the misrepresentation; and (5) StoryBook was 6 damaged as a result of such reliance. J.A. Jones Constr. Co. v. Lehrer McGovern Bovis, Inc., 89 7 P.3d 1009, 1018 (Nev. 2004) (per curiam). 8 The complaint’s fraud in the inducement claim fails Rule 9(b)’s heightened pleading 9 standard. It does not allege who specifically made the representations, where they were made, or 10 when they were made. It does not allege facts to support StoryBook’s beliefs that the defendants 11 planned to end support of the lock system during the initial sale to StoryBook or that years later 12 they knowingly sold StoryBook defective locks. It also does not sufficiently allege the falsity of 13 the defendants’ representation that the new lock system’s battery would last a year because the 14 complaint does not allege when the batteries died relative to their installation. Finally, the

15 complaint does not identify Allegion’s and Schlage’s separate roles in the fraud and instead 16 treats them as one entity “with all substantive allegations referring to Defendants in the 17 collective.” Claridge v. I-Flow Corp., No. 2:18-cv-01654-GMN-BNW, 2019 WL 4139433, at *5 18 (D. Nev. Aug. 30, 2019). Therefore, I dismiss this claim without prejudice.2 19

20 F.3d at 908-09; Mendocino Ry. v. Ainsworth, 113 F.4th 1181, 1188 n.6 (9th Cir. 2024). I therefore will not consider StoryBook’s exhibits. 21 2 The defendants also argue that, because StoryBook did not investigate the lock systems before 22 purchasing them, StoryBook’s reliance on the alleged representations was not justifiable. Justifiable reliance for a fraud claim “does not impose a duty to investigate absent any facts to 23 alert the defrauded party his reliance is unreasonable.” Collins v. Burns, 741 P.2d 819, 821 (Nev. 1987) (simplified). “The test is whether the recipient has information which would serve as a danger signal and a red light to any normal person of his intelligence and experience.” Id. The 1 C. I dismiss StoryBook’s fraudulent concealment claim. 2 StoryBook alleges the defendants fraudulently concealed material information regarding 3 the lock systems, including their “planned discontinuation of technical and production support,” 4 the locks’ “lower than projected lifespan,” and “the existence of a known defect” in the

5 replacement locks. Id. at 8. The defendants argue that this claim also fails Rule 9(b)’s pleading 6 requirement and that there were no conditions that would give rise to a duty to disclose future 7 internal plans or product defects. 8 To establish fraudulent concealment, a plaintiff must show: 9 (1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally 10 concealed or suppressed the fact with the intent to defraud the plaintiff . . . ; (4) the plaintiff was unaware of the fact and would have acted differently if she had 11 known of the concealed or suppressed fact; (5) and, as a result of the concealment or suppression of the fact, the plaintiff sustained damages. 12

13 Leigh-Pink v. Rio Properties, LLC, 512 P.3d 322, 325-26 (Nev. 2022) (en banc) (quotation 14 omitted). 15 StoryBook did not sufficiently plead that the defendants had a duty to disclose the alleged 16 information. “With respect to fraudulent concealment, a duty to disclose arises from the 17 relationship of the parties.” Dow Chem. Co. v. Mahlum, 970 P.2d 98, 110 (Nev. 1998), overruled 18 in part on other grounds by GES, Inc. v. Corbitt, 21 P.3d 11 (Nev. 2001). “A duty to disclose 19 may . . . arise where the parties enjoy a ‘special relationship,’ that is, where a party reasonably 20 imparts special confidence in the defendant and the defendant would reasonably know of this 21 confidence.” Id. (quoting Mackintosh v. Jack Matthews & Co., 855 P.2d 549, 553 (Nev. 1993)). 22

23 defendants do not argue that there was any information to alert StoryBook to investigate the defendants’ representations, so this argument fails at this stage. 1 StoryBook has not sufficiently alleged that its relationship with the defendants went beyond a 2 “straightforward vendor-vendee relationship, which, as a matter of law, creates no fraud-based 3 duty to disclose.” Nev. Power Co. v. Monsanto Co., 891 F. Supp. 1406, 1417 (D. Nev. 1995) 4 (simplified).

5 Nonetheless, StoryBook argues that the defendants had a duty to disclose because they 6 omitted material facts regarding the lock systems while communicating with StoryBook. “Even 7 when the parties are dealing at arm’s length, a duty to disclose may arise from ‘the existence of 8 material facts peculiarly within the knowledge of the party sought to be charged and not within 9 the fair and reasonable reach of the other party.’” Dow Chem. Co, 970 P.2d at 110 (quoting 10 Villalon v. Bowen, 273 P.2d 409, 414-15 (Nev. 1954)). But again, StoryBook has not alleged 11 with sufficient particularity that the defendants knew the relevant material facts at the time they 12 allegedly concealed them from StoryBook. The complaint does not state the facts that support 13 StoryBook’s belief that the defendants planned to stop technical support and parts production of 14 the initial lock system when they sold it to StoryBook. Nor does it state facts that support the

15 belief the defendants knew the second lock system was defective with a lower battery life when 16 they sold it to StoryBook. Therefore, dismissal is appropriate. See Nayab, 942 F.3d at 493-94; 17 Bontly v. Audi of Am., LLC, No. 2:23-cv-02025-APG-EJY, 2025 WL 1555993, at *3-4 (D. Nev. 18 June 2, 2025). 19 StoryBook’s fraudulent concealment claim faces other problems under Rule 9(b). It does 20 not state with particularity who concealed these material facts, when they concealed the facts, or 21 in what context they did so. Cf. Couturier v. Am. Invsco Corp., 10 F. Supp. 3d 1143, 1157 (D. 22 Nev. 2014) (holding that a plaintiff sufficiently pleaded a fraudulent concealment claim under 23 1} Rule 9(b) by alleging the who, what, when, where, and how of the fraud). I therefore dismiss without prejudice StoryBook’s fraudulent concealment claim against the defendants. 3 Because it is not clear that amendment would be futile, I grant StoryBook leave to amend Allits complaint. If StoryBook chooses to reassert its fraud in the inducement claim, it should be 5] prepared to address the defendants’ argument that their representations were unactionable 6|| puffery. 7) II. CONCLUSION 8 I THEREFORE ORDER that defendants Allegion US Holding III, Inc.’s and Schlage Lock Company, LLC’s motion to dismiss (ECF No. 17) is GRANTED. 10 I FURTHER ORDER that plaintiff StoryBook Residential, LLC may file an amended 11|}complaint by August 5, 2026. Failure to file an amended complaint by that date will result in 12|| this case being closed. 13 DATED this 6th day of July, 2026. 14 Ge— ANDREWP.GORDON. 16 CHIEF UNITED STATES DISTRICT JUDGE

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