Does this count for a fraud or non disclosure lawsuit???

The answer depends on several factors. First, did the car actually have storm damage. If it did not, then the purchaser is trying to cheat you..GET A SECOND OPINION. Even a car that suffered storm damage in its history has a value, especially if it has been operating properly and there is no actual evidence that the storm did any material damage. The $0 value sounds very suspicious, especially so because you have been driving the car for 2 years and not had a storm damage related problem. Ask the dealer to document the basis for his allegation.
Second, did the dealer you bought the car from know or have reason to know that the car had storm damage. This is very difficult to prove. If he/she didn't know, and very few dealers would admit that they did, then you may have a claim for innocent misrepresentation, but not for fraud.
Third, what disclaimers does carfax put on a report. Since they can't find out everything about a car, their reports cannot be taken as absolutes. They do not look at or personally inspect cars, they get reports from various clearinghouses.

My best suggestion is to get other opinions about the value of the car, or sell it personally and let potential buyers know that the carfax report said nothing about storm damage, but one dealer claimed such damage had occurred. Let them drive the car and do their own inspection. Then noone can say you did anything dishonest.