Is the lesion progressing and are the margins frayed? It does look like lateral line disease however that condition usually doesn't start there but rather behind the eyes. Also, this is a bit acute. When theres an ulcer like that I always worry about the ciliated protozoan, uronema. It's opportunistic and present in some reef tanks laying low. When your fish gets a scratched or the slim coat is worn away, the little buggers can get in. Another possibility, and also from cuts/slime coat compromisation, is an infection from the ambient gram negative bacteria such as vibrio and pseudomonas. Maybe watch for a few days to see what happens. Happy healthy fish might fight off infection. If things take a turn for the worse, I would try to get the fish out and treat. If you can scrape the area with a cover slip and look at it under a icroscope you'd know right away if you were dealing with a protozoan. If not, you could try a gram negative spectrum antibiotic like kanacyn (kanamycin).