Filed 1/27/15 Hydro Co. v. Elsinore Valley Mun. Water Dist. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE
STATE OF CALIFORNIA

THE HYDRO COMPANY, INC., Plaintiff and Appellant,

v. ELSINORE VALLEY MUNICIPAL WATER DISTRICT, Defendant and Respondent. D063673

(Super. Ct. No. 37-2012-00057077-CU-BC-NC)

APPEAL from an order of the Superior Court of Sa n Diego County, Timothy M. Casserly, Judge. Reversed with directions. Yale & Baumgarten and David W. Baumgarten for Plaintiff and Appellant. Best Best & Krieger, James B. Gilpin, and Holly E. Cheong for Defendant and Respondent. Plaintiff The Hydro Company, Inc., doing business as The Nevada Hydro Company, Inc. (Nevada Hydro ), appeals an order granting th e special motion to strike filed by defendant Elsinore Valle y Municipal Water District (t he District) under Code of2 Civil Procedure section 425.16, commonl y known as the "anti-SLAPP" statute. 1 Nevada Hydro contends that the court erred in (1) determining that Nevada Hydro's complaint for breach of contract arose from an act in furthera nce of the District's right of petition or free speech (§ 425.16, subd. (b)(1)); (2) finding that the comme rcial speech exception to the anti-SLAPP statute did not apply (§ 425.17, su bd. (c)); and (3) concluding that Nevada Hydro had not establis hed a probability that it would prev ail on its claim for breach of contract (§ 425.16, subd. (b)(1)). We conclude that Nevada Hydro has es tablished a probability that it will prevail on its claim. Therefore, even assuming that the trial court did not otherwise err, the District's anti-SLAPP motion shou ld not have been granted. The order is reversed with directions to deny the motion.
FACTUAL AND PROCEDUR AL BACKGROUND In 1995, the District obtained a pr eliminary permit from the Federal Energy Regulatory Commission (FERC) for the planne d Lake Elsinore Pumped Storage project, later known as the Lake Elsinore Advanced Pumped Storage project (LEAPS). The project involved construction of the followi ng elements: a reservoir adjacent to Lake Elsinore, California, at a higher elevation than the lake; a pumping system to deliver water from Lake Elsinore to the new reservoi r; and a series of turbines to generate electricity when water from the reservoir is released back to the lake. The project would

1 " 'SLAPP' is an acronym for 'strategic la wsuit against public participation.' " ( Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 268, fn. 1 ( Soukup ).) All further statutory references are to the Code of Civil Procedure unless otherwise stated.3 pump water into the new reservoir using elec tricity during periods of low electrical demand. During periods of high electrical demand, the project would release the pumped water into the lake, thereby ge nerating electricity that would be sold to a local utility. In order to transfer the necessary elec tricity, the LEAPS project included plans for an electrical transmission line connecting the LEAPS project to the wider power grid. The nature and configurati on of this transmission line would later prove to be controversial. The District and Nevada Hydro entere d into a Developmen t Agreement for the LEAPS project. The Development Agreem ent broadly granted Nevada Hydro the exclusive right to develop, fi nance, construct, and operate the project. In exchange, Nevada Hydro agreed, among othe r things, to bear the costs of developing, constructing, and operating the project; to reimburse the Di strict for its expend itures related to the project; to pay a one-time fee to the Dist rict; and to pay the District for water management services at Lake Elsinore related to the project. 2 The Development Agreement authorized Nevada Hydro to obtain all necessary licenses and permits for the LEAPS project, in cluding a FERC license. It also obligated Nevada Hydro to use its "best and reasonabl e judgment" to obtain a FERC license and construct and operate the proj ect. The Development Agreemen t required the District to "make every reasonable effort necessary or appropriate to effectuate" Nevada Hydro's

2 Part of the District's inte rest in the LEAPS project a ppears to be related to the District's belief that the LEAPS project woul d ensure a baseline level of water in Lake Elsinore and improve water quality.4 development rights and to "use its re asonable best efforts to obtain all permits . . . necessary in th e reasonable opinion of [Nev ada Hydro], desirable for the purpose of . . . enabling [Nevada Hydro] to proceed with development of the Project." The Development Agreement also obligated each party, at the request of the other, to "execute such additional inst ruments and take such additi onal acts as are reasonably necessary to effectuate this Agreement." Nevada Hydro and the District obtained a second preliminary permit from FERC. The second preliminary permit appeared to c ontemplate that the LEAPS project would be larger than initially planned. The permit application file d by Nevada Hydro and the District identified two transmission lines fo r the project: a southerly line connecting to San Diego Gas & Electric's Ta lega-Escondido transmission line and a northerly line connecting to Southern California Edison's Valley-Serrano transmission line. Together, the transmission lines for the LEAPS project were called th e TE/VS transmission line or the TE/VS interconnect. While the application for the second preliminary permit was pending, the California Independent System Operator id entified a need for additional transmission capability, unrelated to the LEA PS project, in the area wher e the TE/VS interconnect would be constructed. The TE/VS interconnect could sa tisfy this need by transmitting electricity between the two existing lines ma intained by San Diego Gas & Electric and Southern California Edison. The District initiated a separate environmental review process for the development of a project covering only the TE/VS interconnect.5 After obtaining the second preliminary permit, Nevada Hydro and the District applied for a FERC license for the LEAP S project. FERC prepared a Final Environmental Impact Statemen t (EIS) for the project. Th e Final EIS noted that the license application included a proposal to buil d the TE/VS interconnect . In an appendix to the Final EIS, FERC concluded that the TE /VS interconnect "would be an appropriate long-term solution to southern California's transmission congestion bottlenecks as well as the transmission-constrained, generation-defici ent San Diego area." FERC noted that in such a scenario, the TE/VS in terconnect would fall outside any FERC license because FERC generally licenses only primary transmis sion lines, i.e., transmission lines that carry electricity solely to or from a FE RC-licensed project. Because the TE/VS interconnect would carry additional electrici ty, unrelated to the LEAPS project, FERC could not license it. Instead, the TE/VS interc onnect would be within the jurisdiction of the California Public U tilities Commission (CPUC). In order to obtain the FERC license, Neva da Hydro and the Dist rict were required to obtain certification of compliance w ith the Federal Clean Water Act from the California State Water Resources Control Boar d (State Water Board). Nevada Hydro and the District submitted and with drew applications for certification annually for several

years. 3 The final application, filed in 2009, wa s denied without prejudice based on a lack of documentation that the LEAPS project ha d been assessed for environmental impacts under the California Environmen tal Quality Act (CEQA).

3 The process of submitting an d withdrawing applications appears to be a procedure used to avoid formal denial of the application by the State Water Board.6 The reason for the delay in CEQA comp liance is unclear fro m the record. The allocation of the cost of preparing an en vironmental impact report (EIR) between the District and Nevada Hydr o appears to have been an issue. In any event, at the time of the State Water Board's denial, there was a disp ute regarding which pu blic agency should handle CEQA compliance, the District or the CPUC. The Governor's Office of Planning and Research eventually de termined that the CPUC, wh ich would license the TE/VS interconnect, was the proper lead agency for CE QA purposes. After this determination, Nevada Hydro applied to the CPUC for a Certificate of Public Convenience and Nece ssity for the TE/VS intercon nect. The CPUC announced that it would analyze both th e TE/VS interconnect and th e LEAPS project under CEQA and prepare an appropriate EIR. The CPUC explained, "Under CEQA, the lead agency must evaluate the impacts of an entire project, even if the ag ency does not have authority over all aspects of the project. The LEAPS project is dependent on the TE/VS Project; therefore, the LEAPS project is a connected action that must be c onsidered." In the CPUC's view, evaluating the entire project ma de logical sense as well: "[T]he CPUC's decisions regarding the proposed TE/VS Project must be made in light of the impacts of both projects, because the pr oposed TE/VS Project would facilitate development of the proposed LEAPS Project." The CPUC explained that its EIR was inte nded to satisfy the requirements for water certification by State Water Board: "The EIR being prepared by the CPUC is intended to provide sufficient information and analysis of the Proposed Project for the [State Water Board] to be able to use the EIR in its certification issuance process."7 In the meantime, the District responded to Nevada Hydro's request that the State Water Board reconsider its denial with a lette r to the Board supporting the denial. Noting this divergence between the District and Ne vada Hydro, and other evidence of longsimmering disagreements betw een the two entities, FERC aske d the District and Nevada Hydro to provide just cause why their joint application for a FERC license for the LEAPS project should not be dismissed. Nevada Hydro responde d by letter, requesting that FERC not dismiss the application. Nevada Hydro's letter summa rized the potential be nefits of the LEAPS project for the power grid (storing and stabiliz ing electricity supply) and for the District (compensation for its water ma nagement services). Nevada Hydro stated that it had met every requirement for a FERC license except water quality certification from the State Water Board, and explained that it planned to obtain certification from the State Water Board using the EIR that the CPUC was prep aring for the TE/VS interconnect and the LEAPS project. 4 Nevada Hydro contended that pursu ing the TE/VS inte rconnect made it more likely that the LEAPS project would be economically viable, beca use the cost of the TE/VS interconnect would not be borne by the LEAPS project alone. Nevada Hydro argued that limiting the TE/VS interconnect to electricity flowing only to or from the LEAPS project, as a primary line under FERC's jurisdicti on, "would be economically wasteful and deprive the grid of a highly useful transmission asset."

4 Nevada Hydro also noted that it had file d a challenge to the State Water Board's denial in superior court, which was pending . Nevada Hydro believed that FERC's own environmental analysis should have been sufficient under CEQA for the State Water Board to issue water quality certification. Ne vada Hydro later dismissed the challenge.8 The District, also responding by letter, expressed its concern that it lacked the statutory authority to pursue the TE/VS interc onnect as a stand-alone project because the TE/VS interconnect would tran sport electricity independent of the LEAPS project. The District stated, "[Nevada Hydro's] pursuit of a stand-alone transmission project is consistent with neither the District's hist orical position nor with its current statutory authority." The District argued that Nevada Hydro's pursuit of the TE/VS interconnect was hindering the successful prosecution of a FERC license for the LEAPS project. The District explained why it believed the Stat e Water Board's earlier denial of water certification was proper, and expressed concer n that the CPUC's analysis of the LEAPS project would also be insufficient to obtain water quality certification. The District's letter concluded as follows: "[ T]he District reiterates its status as a municipal water district whose authority is defined and limite d by the state Legislature. Although the District has clear authority to pursue h ydroelectric projects and transmission lines necessary or convenient for th e delivery of hydroelectric po wer, the type of stand-alone transmission project apparently envisioned by [Nevada Hydro] is one that the District cannot pursue." FERC, through a director, dismissed the jo int application for th e LEAPS project. The director's order stated, "B ased on our review of both [the District's] and Nevada Hydro's responses and the 1997 Developm ent Agreement between Nevada Hydro and [the District], it is clear that [the District's ] goal is to develop the hydroelectric project and improve the water quality of Lake Elsinore through the opera tion of that project. On the other hand, Nevada Hydro's primary interest is in the TE/VS transmission line." The9 director's order concluded, "The co-applicants ' divergent responses to the . . . just cause letter further clarify that the co-applicants have different goals, th at they have been unable to work together in the past, and that th ey likely would be unable to do so if issued a license for the project. Moreover, the non- primary transmission line that Nevada Hydro now seeks to construct is beyond our jurisd iction to authorize as a stand-alone line. Based on these factors, it would be unreas onable to expend further public resources on this matter." Several days later, the District provide d Nevada Hydro with notice of events of default under the Development Agreement. The notice also purporte d to terminate the Development Agreement. In the notice, th e District alleged that Nevada Hydro had failed to reasonably prosecute the FERC license, failed to pay permitting fees to the State Water Board, and failed to abide by other ob ligations in the Deve lopment Agreement. The District later paid the State Water Board fees referenced in the letter. Nevada Hydro requested that the full commi ssion rehear the director's decision to dismiss the joint application. The Distri ct filed a motion to respond, which the commission granted. In a comprehensive order, the commission denied rehearing. The commission's order denying reheari ng examined the history of the LEAPS project, the positions of the parties, and the propriety of the direct or's action dismissing the joint application. The co mmission emphasized that the director's decision to dismiss the joint application was not based on the merits of the LEAPS project or the TE/VS transmission line. The commission explained that "the Director did not dismiss the application because Nevada Hy dro decided to develop the TE/VS as an open-access line10 or because the TE/VS, as a stand-alone tr ansmission line, would not be subject to Commission jurisdiction, as Nevada Hydro assert s. In referring to Nevada Hydro's focus on the certification of TE/VS as a line th at the Commission could not license, the Director was addressing the contrast between Nevada Hydro's prior ities and those of the District: as he stated, the District has made it clear that it has no interest in pursuing a transmission line other than a primary line, while Nevada Hydro has insisted that limiting it to construction of a primar y line would undermine the succ essful development of the LEAPS Project. It is this c onflict in priorities and objectives that was the basis for the Director's dismissal." (Footnote omitted.) The commission stated that whether "the District's concerns are well-foun ded or consistent with its ea rlier position is not relevant to our review of the Director's order; the Director dismissed the application not because the District's concerns were necessarily valid but because the co-app licants' long-standing disagreement suggests that they would be unlik ely to cooperate as licensees." (Footnote omitted.) The commission noted the incons istency in the parties' responses to the Director's order: "It is worth noting that the District did not file a request for rehearing of the dismissal order or oppose the dismissal in its response to Neva da Hydro's rehearing request. We must infer from th is that the District has no obj ection to the dismissal. The District's failure to object to dismissal of the application, in contrast to Nevada Hydro's strong objection to it, only reinforces the c onclusion that the co-applicants have very different attitudes about the project proposal as it has developed, such that they could not be expected to cooperat e as co-licensees."11 After the commission issued its order de nying rehearing, Nevada Hydro filed a new application for a FERC license for the LEAPS project, in its own name. Several months later, the District's st aff recommended to its board of directors that the District file a notice of intent to file a compe ting application for the LEAPS project. The District's staff believed that such a notice would allow th e District more input into Nevada Hydro's pending applicati on. The District's board of directors did not adopt the recommendation. The minutes of the board of directors meeting reflect several directors' concerns that public sentiment was neutra l or opposed to the LEAPS project. The District later provided a second notice of default under the Development Agreement. The second notice was based on Nevada Hydro's alle ged failure to pay additional fees to the State Water Board. The District c ontended that Ne vada Hydro's obligation to pay these additional fees arose before the District's termination of the Development Agreement. Several months later, Nevada Hydro brought this action. In its complaint, Nevada Hydro alleged a single cause of action for breach of contract against the District. Nevada Hydro's complaint recounted the history of the LEAPS project and the related proceedings before the State Water Board, FERC, and the CPUC. In particular, the complaint described the District's response to FERC's just cause letter, which, Nevada Hydro alleged, failed to support the joint LEAPS application and wrongfully claimed that Nevada Hydro was pursuing the TE/VS tran smission line to the exclusion of water quality certification for the LEAPS project. As to the District's alleged breach of contract, Nevada Hydro made the following a llegation: "The defenda nt, by reason of its12 conduct alleged hereinabove, which resulted in the dismissal of th e FERC application for licensure of the LEAPS Project, has brea ched the Development Agreement." In response, the District filed (1) an answer generally denying Nevada Hydro's allegations and asserting various affirmativ e defenses; (2) a cro ss-complaint against Nevada Hydro for breach of contract, contri bution, and declaratory relief; and (3) a special motion to strike, or anti-SLAPP motion, under section 425.16. In its anti-SLAPP motion, the District argued that Nevada Hydr o's claim for breach of contract arose from acts in furtherance of the District's right of petition or free speech, i.e., its responses to FERC's just cause letter and Nevada Hydr o's request for rehear ing. (§ 425.16, subd. (b)(1).) The District further argue d that Nevada Hydro could not show a probability that it would prevail on its claim because the Distri ct's responses were not the cause of FERC's dismissal of the joint application. ( Ibid. ) Nevada Hydro opposed the District's anti-SLAPP motion, arguing that the District's wrongful conduct was not limited to its FERC responses. Instead, th e responses were mere ly evidence of the District's breaches. Nevada Hydro also conte nded that the District's conduct fell within the commercial speech exception to the anti-SLAPP statute under section 425.17, subdivision (c), and that Nevada Hydro c ould show a probability of prevailing on its claim. The trial court granted the District's anti-SLAPP motion. Th e court found that Nevada Hydro's claim arose from an act in furtherance of the District's right of petition or free speech, and that the comme rcial speech exception did not apply. The court also found that Nevada Hydro had not shown a pr obability of prevailing on its claim. The13 court characterized the District 's FERC responses as "simpl y informational" and did not believe that they constituted breaches of th e Development Agreement. The court also determined that Nevada Hydro had not pr ovided evidence of its own substantial performance or excuse for nonp erformance, i.e., its failure to pay required fees to the State Water Board under the Development Agreement. The court dismissed Nevada Hydro's co mplaint and awarded the District its reasonable attorney's fees under section 425.16, subdivision (c ). Nevada Hydro appeals.
DISCUSSION
I Section 425.16, subdivision (b)(1), provides as follows: "A cause of action against a person arising from any act of that person in furtherance of the pe rson's right of petition or free speech under the United States C onstitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has esta blished that there is a probability that the plaintiff will prevail on the claim." The statute "requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity." ( Equilon Enterprises v. Consumer Cause , Inc. (2002) 29 Cal.4th 53, 67.) "If the court finds such a showing has been made, it th en determines whether the plaintiff has demonstrated a probability of prevailing on the claim." ( Ibid. ) "Only a cause of action that satisfies both prongs of the anti- SLAPP statute--i.e., that arises from protected speech or petitioning and lacks even minimal merit--is a14 SLAPP, subject to being stri cken under the statute." ( Navellier v. Sletten (2002) 29 Cal.4th 82, 89 ( Navellier ).) If Nevada Hydro demonstrates a probability of prevailing on its claim for breach of contract, therefore, its claim is not a SLAPP and may not be stricken as such. (See ibid. ; see also § 425.16, subd. (b)(1).) We review de novo the trial court's determination that Neva da Hydro did not de monstrate a probability of prevailing. ( Oasis West Realty , LLC v. Goldman (2011) 51 Cal.4th 811, 820; Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1436.) "In order to establish a probability of prev ailing on the claim [citation], a plaintiff responding to an anti-SLAPP motion must ' "sta te[] and substantiate[] a legally sufficient claim." ' [Citation.] Put anot her way, the plaintiff 'must de monstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by th e plaintiff is credited.' [Citations.]" ( Wilson v. Parker , Covert & Chidester (2002) 28 Cal.4th 81 1, 821.) "[T]he plaintiff cannot rely on the allegations of th e complaint, but must produce evidence that would be admissible at trial." ( Integrated Healthcare Holdings , Inc. v. Fitzgibbons (2006) 140 Cal.App.4th 515, 527; see Roberts v. Los Angeles County Bar Association (2003) 105 Cal.App.4th 604, 613.) "In making a probability of prevailing asse ssment, a court evaluates the pleadings and evidentiary submissions of both parties. [Citations.] But as explained by our Supreme Court, we do not weigh the comp eting evidence: '[T]he court does not weigh the credibility or comparative probative strength of compe ting evidence, it should grant the motion if, as a matter of law, the defe ndant's evidence supporting the motion defeats15 the plaintiff's attempt to esta blish evidentiary support for the claim. [Citation.] In making this assessment it is "the court's res ponsibility . . . to accept as true the evidence favorable to the plaintiff . . . ." [Citation.] The plaintiff need only establish that his or her claim has "minimal merit" [citation] to avoid being stricken.' [Citation.] Our Supreme Court has described the plaintiff's probability of prevailin g obligation: '[The statute] requires only "a minimum level of le gal sufficiency and tria bility[.]" [Citation.]' [Citation.]" ( Anschutz Entertainment Group , Inc. v. Snepp (2009) 171 Cal.App.4th 598, 638-639 ( Anschutz ).) "If the plaintiff 'can show a probability of prevailing on any part of its claim , the cause of action is not meritless' a nd will not be stricken; 'once a plaintiff shows a probability of prev ailing on any part of its claim, the plaintiff has established that its cause of action has some merit and the entire cause of action stands.' [Citation.]" ( Oasis West Realty , LLC v. Goldman , supra , 51 Cal.4th at p. 820.)
II
A We assess Nevada Hydro's claim for brea ch of contract under the substantive law governing that cause of action. "The standard elements for a claim fo r breach of contract are: '(1) the contract, (2) plaintiff's perfo rmance or excuse for nonperformance, (3) defendant's breach, and (4) dama ge to plaintiff therefrom. [Citation.]' [Citation.]" ( Wall Street Network , Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1179 ( Wall Street ).) For purposes of this appeal, the Distri ct does not appear to dispute that the Development Agreement was a valid and enfo rceable contract and that Nevada Hydro16 has suffered damages. 5 Based on our review, we simila rly conclude that Nevada Hydro has established a probability of prevailing on the first and fourth elements of its breach of contract claim. We therefore address onl y the disputed second and third elements
below. 6
B The second element of Nevada Hydro's br each of contract claim requires evidence of Nevada Hydro's performance or excuse for nonp erformance. ( Wall Street , supra , 164 Cal.App.4th at p. 1179.) Nevada Hydro pr ovided admissible eviden ce of its efforts, over more than a decade, to fulfill its obligations under th e Development Agreement to develop the LEAPS project. For example, Ne vada Hydro applied to FERC for a license, which required substantial tim e, effort, and money to prep are. Nevada Hydro pursued other required licenses and permits from add itional government agencies, as well. As part of the FERC licensing process, Nevada Hydro submitted annual applications to the State Water Board for water quality certificati on. When certificati on was denied, Nevada Hydro filed a challenge to the State Water Bo ard's action in superior court. Nevada

5 The District raises one argum ent that could be interprete d as bearing on causation, although it is not denominated as such. We address this ar gument together with the third element in section II.C., post

. 6 The District contended for the first time at oral argument that its statements to FERC are protected by the absolute litigation pr ivilege (Civ. Code, § 47, subd. (b)), and that Nevada Hydro thus cannot demonstrate a probability of prevailing. Because the District did not include this argument in its br iefing, and raised it for the first time at oral argument, we decline to consider its merits. ( Palp, Inc. v. Williamsburg National Insurance Co. (2011) 200 Cal.App.4th 282, 291, fn . 2 [" 'We do not consider arguments that are raised for the first time at oral argument.' "].)17 Hydro also secured an envir onmental review of the LEAPS project under CEQA by the CPUC. Nevada Hydro's vice president estimated that Nevada Hydro had spent approximately $24 million in de velopment costs in connection with the LEAPS project. This evidence constitutes a prima facie show ing of Nevada Hydro's performance under the Development Agreement. The District argues that Nevada Hydro has not made a prima facie showing of performance because Nevada Hydro materia lly breached the Deve lopment Agreement by failing to pay approximately $260,000 in Stat e Water Board fees for the years 2010-2011 and 2011-2012. In order to rebut Nevada Hydro's prima facie showing, the District would have to establish that Nevada Hydro's alleged breach forecloses Nevada Hydro's breach of contract claim as a matter of law. (See Soukup , supra , 39 Cal.4th at p. 269, fn. 3 [" '[We] accept as true the ev idence favorable to the plain tiff [citation] and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law.' "]; see also Anschutz , supra , 171 Cal.App.4th at p. 638) "When a party's failure to perform a c ontractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract." ( Brown v. Grimes (2011) 192 Cal.App.4th 265, 277 ( Brown ).) "Normally the question of whether a breach of an obligati on is a material breach, so as to excuse performance by the other party, is a question of fact." ( Ibid. ) Only where reasonable minds could not differ on the qu estion of materiality may the issue be resolved as a matter of law. ( Insurance Underwriters Clearing House , Inc. v. Natomas Co. (1986) 184 Cal.App.3d 1520, 1526-1527.) We note that the District has alleged, at most, a partial18 breach of Nevada Hydro's oblig ations under the Developmen t Agreement. "Whether a partial breach of a contract is material de pends on 'the importance or seriousness thereof and the probability of the injured party getting substan tial performance.' [Citations.]" ( Brown , supra , 192 Cal.App.4th at p. 278.) On the current record, a reasonable trie r of fact could determine that Nevada Hydro's alleged breach was not material. Nevada Hydro spent over $24 million on development in connection with the LEAPS proj ect. The unpaid St ate Water Board fees were comparatively small, approximately one pe rcent of that total. In light of Nevada Hydro's history of performan ce, and its expenditure of $24 million, it would be reasonable for a trier of fact to conclude th at Nevada Hydro's alleged breach was not so serious that the District could be entirely excused from its own obligations to perform under the Development Agreement. (See Brown , supra , 192 Cal.App.4th at p. 277.) Moreover, even after the alleged breach, Neva da Hydro continued to actively pursue the LEAPS project before FERC and through th e environmental review conducted by the CPUC. In light of these activities, District has not shown that it c ould not have received substantial performance of the Developmen t Agreement even with Nevada Hydro's alleged breach. 7 (See id. at p. 278.)

7 The District did not give no tice of Nevada Hydro's failure to fulfill its obligation to pay the first portion of the St ate Water Board fees until after the District's own alleged breach and after FERC had dismis sed the joint application. The timing of the District's notice would also support a finding that Nevada Hydro's alleged breaches were immaterial because the District did not raise Nevada Hydro's alleged breaches until after the LEAPS project had failed.19 The District contends, in passing, th at Nevada Hydro also breached the Development Agreement by failing to timely pursue the FERC license. The District does not explain this assertion, a nd we find it unpersuasive. Ba sed on the current record, and given the many hurdles to FE RC licensing, some of whic h appear to have been exacerbated by the District itsel f, a reasonable trier of fact could find that Nevada Hydro did not breach the Developmen t Agreement by failing to timely pursue the FERC license.
C The third element of Nevada Hydro's breac h of contract claim requires evidence of the District's breach. ( Wall Street , supra , 164 Cal.App.4th at p. 1179.) "The wrongful , i.e., the unjustified or unexcused, fa ilure to perform a contract is a breach ." (1 Witkin, Summary of Cal. Law. (10th ed. 2005) Contract s, § 847, p. 935.) "Ordinarily, a breach is a result of an intentional act, but negligent performance may also constitute a breach, giving rise to alternative cont ract and tort actions." ( Ibid. ) Nevada Hydro relies primarily on the Dist rict's response to FERC's just cause letter to establish the Distri ct's breach. Nevada Hydro c ontends that the District's response undermined Nevada Hydro's efforts to obtain a FERC license for the LEAPS project and thus breached the District's oblig ations under the terms of the Development Agreement to "make every reasonable effort necessary or appropriate to effectuate" Nevada Hydro's development rights and to "u se its reasonable best efforts to obtain all permits . . . necessary in th e reasonable opinion of [Nev ada Hydro], desirable for the purpose of . . . enabling [Nevada Hydro] to proceed with development of the Project."20 The District contends that its response to FERC's just cause letter was not a breach of the Development Agreement because FERC requested the District's input, and the District did not expressly advocate that the join t application be dismissed. On the record before us, we disagree that these facts establis h as a matter of law that the District did not breach the Development Agreement. (See Soukup , supra , 39 Cal.4th at p. 269, fn. 3.) The District has provided no authority to support its argumen t that the mere fact that FERC requested the District's input immunizes the District from any subsequent breach of contract claim based on the District 's response, and we find that argument unpersuasive. 8 To the contrary, the Development Agreement required the District to "make every reasonable effort necessary or appropriate to effectuate" Nevada Hydro's

8 The implicit basis for the District's ar gument appears to be that a breach of contract action can never rest on statements made in furtherance of a party's right of petition or free speech. In its brief, the Distri ct quotes a statement from the trial court to that effect: "I am just not sure you can ever ge t a breach of contract out of what they said to FERC, and that is what I'm really struggling with, that th at wouldn't fall under their free speech rights at that point ." The Supreme Court has e xpressly rejected this view: "[P]laintiffs fall prey . . . to the fallacy that the anti-SLAPP statute allows a defendant to escape the consequences of wrongful conduct by asserting a spurious First Amendment defense. [Citation.] In fact, the statute does not bar a plaintiff from litigating an action that arises out of the defendant's free speech or petitioning [cita tion]; it subjects to potential dismissal only those actions in which the plaintiff cannot 'state[] and substantiate[] a legally suffi cient claim' [citation]." ( Navellier , supra , 29 Cal.4th at p. 93; see DaimlerChrysler Moto rs Co. v. Lew Williams , Inc. (2006) 142 Cal.App.4th 344, 351- 352 [finding probability of prevailing on breach of contract claim after determining that the claim was based on the opposing party's constitutional right to petition].) Indeed, the District's argument would rend er the second prong of the anti-SLAPP statute entirely superfluous, since any action that satisfied the first prong, i.e., that arose from an act in furtherance of a party's right of petition or fre e speech, would have to be dismissed under the District's interpretation.21 development rights. The Development Agreem ent did not exclude the District's direct interactions with FERC from its scope. FERC's letter asked the parties to "p rovide an explanation why the license application for the LEAPS Project should not be dismissed." A reasonable trier of fact could find that the District's response -- whic h highlighted the disagreements between the parties, drew attention to the stand-alone TE/VS transmission line, expressed concern over Nevada Hydro's ability to satisfy the conditions for the FERC license, and likely exacerbated FERC's concerns over the parties' ability to work together as co-licensees -- was inconsistent with the District's oblig ations under the Development Agreement. Indeed, a reasonable trier of fact could find that the District's focus on the stand-alone TE/VS transmission line in its response to FERC's request was improper because FERC did not have the authority to license such a line in any even t, as FERC well understood. The fact that the District did not expressl y advocate for dismissal is irrelevant. A reasonable trier of fact could find that the District's response hindered, rather than "effectuate[d]," Nevada Hydro' s right to develop the LEAPS project, contrary to the District's obligations unde r the Development Agreement. 9

9 Indeed, as previously noted, in its re view of the proceedings, FERC reached a similar conclusion: "It is worth noting that the District did not file a request for rehearing of the dismissal order or oppose the dismissa l in its response to Nevada Hydro's rehearing request. We must infer from th is that the District has no obj ect to the dismissal. The District's failure to object to dismissal of the application, in contrast to Nevada Hydro's strong objection to it, only reinforces the c onclusion that the co-applicants have very different attitudes about the project proposal as its has developed, such that they could not be expected to cooper ate as co-licensees."22 The District also contends that its res ponse to FERC's just cause letter was not a breach because the Development Agreement did not apply to a stand-alone TE/VS transmission line. In making this argument, the District fails to acknowledge that the FERC license under consideration was for the LEAPS project itself, which was the object of the Development Agreemen t. As FERC recognized, it could not license the standalone TE/VS transmission line: "[A]uthorization and construction of the transmission line is not dependent on the status of the license appli cation filed with [FERC]." (Emphasis added.) Whatever the District 's attitude toward that line, it was not part of the FERC license. The Development Agre ement obligated the District to support Nevada Hydro in its pursuit of the FERC license for the LEAPS project. For the reasons that we have explained, a reasonable trier of fact could find that the District's re sponse breached this obligation. In a related vein, the District argues that its response was "not the cause of FERC's ultimate dismissal of the parties' applica tion" because Nevada Hydro's pursuit of the stand-alone TE/VS transmission line "took the project outside of the FERC's jurisdiction." " 'The test fo r causation in a breach of contr act . . . action is whether the breach was a substantial factor in causing the damages.' " ( Haley v. Casa Del Rey
Homeowners Ass'n (2007) 153 Cal.App.4th 863, 871.) " 'The te rm "substantial factor" has no precise definition, but "it seems to be something wh ich is more than a slight, trivial, negligible, or theoretical factor in producing a particul ar result." ' " ( Id. at pp. 871-872.)23 Based on the current record, the evid ence amply supports a finding that the District's response was a substantial factor in causing the dismissa l of the joint FERC application and, therefore, Ne vada Hydro's alleged damages. As we have explained, the FERC license at issue covered only the LEA PS application itself, not the stand-alone TE/VS transmission line, as FERC recogn ized. The FERC order denying rehearing, issued by the commission itself, expressly reje cted the idea that Nevada Hydro's pursuit of the stand-alone line was the reason for the dismissal of the joint application: "[T]he Director did not dismiss the application b ecause Nevada Hydro d ecided to develop the TE/VS as an open-access line or because the TE/VS, as a st and-alone transmission line, would not be subject to [the FERC's] jurisdicti on . . . . Nor did the Director imply that a hydro facility could not be connected w ith an open access, non-primary transmission line . . . ." In the commission's view, the dismissal rest ed solely on th e divergence of interests demonstrated by the parties' responses and the apparent inability of the parties to cooperate. Because the District's response created, or at least highly exacerbated, this divergence, a reasonable trier of fact coul d find that the Distri ct's response was a substantial factor in causi ng the dismissal. (See DaimlerChrysler Motors Co. v. Lew Williams, Inc. , supra , 142 Cal.App.4th at p. 354; see also Haley v. Casa Del Rey
Homeowners Ass'n , supra , 153 Cal.App.4th at pp. 871-872.) Nevada Hydro has thus made a prima facie showing on this element of its breach of contract claim, as well.
D Based on the foregoing, we conclude that Nevada Hydro has stated and substantiated a prima facie claim for breach of contract against the District. Nevada24 Hydro has therefore established a probability of prevailing on that claim. (See Wilson v. Parker , Covert & Chidester, supra , 28 Cal.4th at p. 821.) Because such a showing requires reversal of the trial court's orde r granting the District 's anti-SLAPP motion (see Navellier , supra , 29 Cal.4th at p. 88), we need no t decide whether Nevada Hydro's claim arises from an act on the part of the Dist rict in furtherance of its right to petition or free speech (§ 425.16, subd. (b )(1)) or whether the commerci al speech excep tion to the anti-SLAPP statute applies (§ 425.17, subd. (c)). Even assuming that the trial court correctly decided these two issues, the Dist rict's anti-SLAPP motion should have been denied. (See Navellier , supra , 29 Cal.4th at p. 88

. )
DISPOSITION The order is reversed. The court is di rected to enter a new and different order denying the District's special moti on to strike under section 425.16.

AARON, J. WE CONCUR:

NARES, Acting P. J.

O'ROURKE, J.