In a September 13, 2016 Order, Department 7 of the Washoe County Business Court denied a securities fraud defendant’s motion to dismiss, but ordered the plaintiff to re-plead its complaint.


The Plaintiff alleged that he invested $1,000,000 in a redevelopment of the Cal Neva Lodge located in Crystal Bay, Lake Tahoe. He alleged that the defendants provided him with a subscription booklet and other solicitation materials. Approximately five months after investing, he learned that the project was over budget and behind schedule. In addition, he received a capitalization table showing that his investment had been credited to an entity other than the one in which he believed he had invested. The investor then sued multiple defendants for breach of contract, fraud, negligence, conversion, punitive damages, and fraud under NRS 90.570.

Two of the defendants, a real estate broker and his firm, responded with a motion to dismiss or, in the alternative, motion for more definite statement. The real estate broker argued that the complaint failed to identify with particularity his role in the alleged scheme.

Legal Analysis

The Court noted that the complaint identified the real estate broker as the broker and agent of the investment offeror. However, the Court noted that “the Complaint fails to identify what representations were made with respect to the fraud allegations.” Specifically, there was no mention of the degree to which the moving defendant made representations regarding the opening date of the Cal Neva Lodge or the financial conditions of Defendant Cal Neva Lodge, LLC. Moreover, the complaint “fails to identify which party made the statements pertinent to Plaintiff’s claims.” Accordingly, the complaint failed to meet the high pleading standard for fraud claims in Nevada.

The Court concluded that “because public policy prefers the case to be decided on the merits that the Court is not inclined to entertain dismissal.” But the Court granted the motion for more definite statement, which, in effect, required the Plaintiff to file an amended complaint pleading the fraud allegations with the particularity required by Rule 9(b).