The economic loss rule kills fraud claims at MSJ that survived demurrer -- because discovery reveals the 'inducement' was really about contract performance. Complete guide to what the moving party builds in discovery and what the opposing party must lock in at deposition before the motion arrives.

You Survived the Fraud Demurrer. Here's Why You'll Lose at MSJ.

Your fraud claim cleared the demurrer. The judge found you pleaded it as independent from the contract. Now you're in discovery, and the defense is building a record that will kill your case at summary judgment -- because what looked like inducement on the face of the complaint may look very different once documents and depositions are in.

The economic loss rule operates differently at MSJ than at demurrer. Understanding that shift is the difference between a viable fraud claim and a summary judgment loss you didn't see coming.

The Motion

A plaintiff sues for both breach of contract and fraud. The fraud claim survived demurrer because the operative complaint pleaded the misrepresentation as a pre-contractual inducement -- a fact that caused the plaintiff to enter the deal, not a promise about how the defendant would perform. At MSJ, the defense moves to dismiss the fraud claim under the economic loss rule. The motion argues that discovery has revealed the "inducement" was really about contract performance, and that the plaintiff's damages are purely economic losses flowing from the breach of contract.

What the Law Requires

The economic loss rule bars tort claims where the plaintiff seeks only economic losses arising from a contractual relationship. Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552. In a commercial dispute between sophisticated parties, this means a fraud claim that duplicates the contract damages will be barred unless the plaintiff can bring itself within an established exception.

Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th 979, 990-991, carved the controlling exception: a plaintiff may recover in tort for fraud despite the economic loss rule where the defendant made an affirmative misrepresentation that was (a) independent of the contract, (b) caused harm beyond the contract damages, and (c) of the kind tort law protects against.

All three prongs matter. Independence is the fight at MSJ. At the pleading stage, independence is judged from the face of the complaint. At the evidence stage, independence is judged from the record -- emails, deposition testimony, authenticated contract terms, and the timing of the alleged representations relative to contract execution.

Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 41, extended the Robinson Helicopter exception to fraudulent concealment claims, establishing a two-prong test for concealment theories. If your fraud theory runs on concealment rather than affirmative misrepresentation, Rattagan is your authority -- but you still need to build the factual record for both prongs.

What the Corpus Shows

The Beverly Hills Dept. 205 corpus flagged an ELR signal in a commercial fraud MSJ, but the court resolved the motion on other grounds before reaching the economic loss rule analysis. The takeaway from that pattern: ELR is often the final line of defense, which means the plaintiff's evidence on independence needs to be airtight before the motion arrives, not assembled in opposition.

The pattern across commercial fraud cases is consistent: where the authenticated contract and the alleged misrepresentation address the same subject matter -- product capability, service delivery timeline, project completion -- the court finds the representation goes to performance, not inducement. The ELR bar holds. Where the plaintiff can show the representation described an extrinsic fact that was a precondition to entering the deal, the Robinson Helicopter exception survives.

What Counsel Does

If you are the moving party:

Start with the authenticated contract. Pull every provision that addresses the subject matter of the alleged misrepresentation. If the contract says anything about product capability, service scope, or performance standards, highlight it.
Build the timeline in the deposition record. When was the alleged misrepresentation made relative to contract execution? If the representation is contemporaneous with or post-dates the contract signing, independence is weak.
Attack the harm prong. Identify every category of damages the plaintiff is claiming in the fraud case and map each one to the contract's damage measure. If the plaintiff's economic losses are coextensive with benefit-of-the-bargain contract damages, the harm-beyond-the-contract prong fails.
Get the plaintiff's witness to confirm the subject matter overlap. Ask whether the contract addresses the same topic the defendant allegedly misrepresented. Ask whether the plaintiff understood, at signing, that the written contract governed those terms.
Frame the summary judgment motion around the contract text first, the deposition testimony second. The judge needs a clean record showing the representation was about what the defendant would do under the contract -- not an extrinsic fact that caused the plaintiff to contract at all.

If you are the opposing party:

Build the independence record in discovery, not in opposition. By the time the MSJ is filed, you need deposition testimony and documents that clearly show when the representations were made, what specific facts they described, and how those facts differ from what the contract governs.
Nail the timeline. The pre-contractual nature of the inducement is your most important factual argument. Get the earliest document or communication referencing the alleged misrepresentation. Establish the sequence: representation came first, contract was signed after, reliance was the causal link between the two.
Distinguish the subject matter. If the misrepresentation concerned a fact external to the contract's scope -- the defendant's financial condition, a third-party relationship, a regulatory approval -- the independence argument is much stronger than if the representation tracks a contract term.
Quantify harm beyond the contract. Prepare a damages analysis that identifies losses the contract's damage measure does not capture: consequential losses flowing from the decision to enter the deal, reliance costs incurred before the contract, business opportunities foregone. These are your "beyond the contract" damages.
If your theory is concealment, build the Rattagan record. Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 41, holds that fraudulent concealment can fall within a tort exception even under the ELR -- but you need to satisfy both prongs at the evidence stage. Brief the two-prong test in your opposition and map your evidence to each element.

This article is for educational purposes only and is not legal advice. All frameworks and sample language should be reviewed by a licensed attorney and adapted to your particular client, case, and situation.