                    FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

NORTHROP GRUMMAN CORPORATION,             
               Plaintiff-Appellee,               No. 07-56760
              v.
                                                  D.C. No.
                                               CV-05-08444-DDP
FACTORY MUTUAL INSURANCE
COMPANY,                                          OPINION
            Defendant-Appellant.
                                          
         Appeal from the United States District Court
            for the Central District of California
         Dean D. Pregerson, District Judge, Presiding

                     Argued and Submitted
              July 18, 2008—Pasadena, California

                      Filed August 14, 2008

  Before: Cynthia Holcomb Hall and Pamela Ann Rymer,
Circuit Judges, and Stephen M. McNamee,* District Judge.

                     Opinion by Judge Hall




   *The Honorable Stephen M. McNamee, United States District Judge for
the District of Arizona, sitting by designation.

                               10663
        NORTHROP GRUMMAN v. FACTORY MUTUAL INS.   10665


                      COUNSEL

Kirk A. Pasich, Esq., Los Angeles, California, for the
plaintiff-appellee.
10666        NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
Peter Abrahams, Esq., Encino, California, for the defendant-
appellant.


                           OPINION

HALL, Circuit Judge:

   Factory Mutual Insurance Company appeals the district
court’s summary judgment in favor of Northrop Grumman
Corporation. Northrop sued the insurance company after Fac-
tory Mutual denied coverage for water damage at Northrop’s
Mississippi subsidiary caused by Hurricane Katrina. Factory
Mutual argued that coverage for water damage was barred by
an exclusion for flooding in the policy, but the district court
held that the exclusion was ambiguous and construed it in
favor of Northrop. We reverse the district court’s grant of
summary judgment in favor of Northrop, and remand for a
determination of whether California’s efficient proximate
cause doctrine mandates coverage of the damage notwith-
standing our interpretation of the contractual language.

        I.    FACTS AND PROCEEDINGS BELOW

A.   The parties and the insurance policies at issue

   Northrop Grumman is a global defense contractor with
approximately 120,000 employees worldwide. Its Mississippi
subsidiary, Northrop Grumman Ship Systems, is head-
quartered in Pascagoula, Mississippi and has operations
throughout the Gulf area. Northrop maintains a risk manage-
ment department, and is represented by Aon Risk Services in
the insurance marketplace.

   Aon was responsible for brokering Northrop’s property
insurance for April 2005 to April 2006. In February 2005,
Aon prepared and submitted an Underwriting Detail to pro-
           NORTHROP GRUMMAN v. FACTORY MUTUAL INS.          10667
spective insurers. The Underwriting Detail explained that
Northrop sought blanket insurance for $19.8 billion in proper-
ties, and proposed that the insurance be layered. The primary
layer, termed “All Risk including Earthquake, Flood, Boiler
& Machinery,” would provide comprehensive property insur-
ance with a general limit of $500 million, and certain sub-
limits, such as a $400 million sublimit per flood occurrence.
The excess layer, described as “All Risk including Boiler &
Machinery (Excluding Earthquake and Flood),” would cover
additional losses up to the $19.8 billion total value of Nor-
throp’s property, but would not include earthquake or flood
coverage. The suggested premiums were $12,730,000 for the
primary layer, and $950,000 for the excess layer.

   Factory Mutual received the Underwriting Detail and pro-
vided Northrop with a quote for 15% participation in the first
$100 million of the primary layer, and full participation in the
excess layer. Northrop accepted the quote and Factory Mutual
transmitted the primary and excess policies to Northrop.

  The primary policy, derived from a hybrid Aon/Factory
Mutual form,1 was an “all risk” policy, insuring Northrop
against “all risk of physical loss or damage to property”
unless otherwise excluded. The policy included a glossary
section which defined various terms, including certain types
of losses, such as Flood, Wind, and Named Windstorm. The
policy defined Flood as:

      all physical loss or damage caused by or resulting
      from flood waters, rising waters, waves, tide or tidal
      water, surface waters, or the rising, overflowing, or
      breaking of boundaries of lakes, reservoirs, rivers,
      streams or other bodies of water, whether driven by
      wind or not, including spray and sewer back-up
      resulting from any of the foregoing, all regardless of
  1
  The hybrid form was drafted by Aon, but made available to Factory
Mutual’s clients who used Aon as a broker.
10668    NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
    any other cause or event contributing concurrently or
    in any other sequence of loss.

  Wind was defined as “[d]irect action of wind including
substance driven by wind.” Named Windstorm was separately
defined as:

    [t]he direct action of wind including any substance
    driven by wind, and/or flood when such wind or
    flood is associated with or occurs in conjunction
    with a storm or weather disturbance which is identi-
    fied by name prior to loss by any meteorological
    authority such as the U.S. National Weather Service
    or National Hurricane Center.

   The excess policy, which was derived from Factual Mutu-
al’s own Advantage form, was also an “all risk” policy. The
excess policy provided Northrop with $19.8 billion of insur-
ance in excess of the $500 million covered by the primary
policy, and insured Northrop for all risks unless specifically
excluded. The excess policy excluded loss or damage caused
by various occurrences, including Flood (the Flood Exclu-
sion). Flood was defined as:

    Flood; surface waters; rising waters; waves; tide or
    tidal water; the release of water, the rising, overflow-
    ing or breaking of boundaries of natural or man-
    made bodies of water; or the spray therefrom; or
    sewer back-up resulting from any of the foregoing;
    regardless of any other cause or event contributing
    concurrently or in any other sequence of loss. How-
    ever, physical damage by fire, explosion or sprinkler
    leakage resulting from Flood is not considered to be
    loss by Flood within the terms and conditions of this
    Policy.

  Neither Named Windstorm damage nor Wind damage was
defined or otherwise referenced in the excess policy.
           NORTHROP GRUMMAN v. FACTORY MUTUAL INS.                 10669
B. Hurricane Katrina and the damage to Northrop’s
shipyards

   On August 29, 2005, Hurricane Katrina struck the Gulf
Coast, making landfall near the Louisiana/Mississippi border.
Katrina was one of the strongest storms to impact the coast of
the United States in the past 100 years, with wind speeds of
up to nearly 175 miles per hour and an accompanying storm
surge that inundated parts of Louisiana, Alabama, and Missis-
sippi.2 Northrop’s ship building subsidiaries located in the
Gulf region were severely damaged by the storm. The major-
ity of the loss occurred at the Pascagoula, Mississippi ship-
yards, where the storm surge was as high as twenty-two feet.
According to the shipyard manager, Steve Pierce, the Pasca-
goula yard sustained water damage to transporters, translation
cars, electrical systems, and other property, as well as wind
damage to the roofs of the buildings. Photographs on the day
of the hurricane showed trucks in the shipyard halfway sub-
merged in water, and Pierce estimated that buildings were
covered in six to ten feet of water in some parts of the ship-
yard. Northrop’s preliminary estimates put the damage to its
property as a result of the hurricane at $1,257,100,000, pri-
marily attributable to the damage at the Pascagoula shipyards.

   Northrop timely notified its insurers of the loss it suffered
from Hurricane Katrina. Factory Mutual paid Northrop $15
million under the primary policy, but informed Northrop that
it was planning to examine the damages under the excess pol-
icy as two separate perils: a loss caused by wind, which has
no limitation on the amount of coverage, and a loss caused by
flood, which was not covered at all due to the Flood Exclu-
sion.
  2
    The National Hurricane Center describes storm surge as “water that is
pushed toward the shore by the force of the winds swirling around the
storm . . . [which] combines with the normal tides to create the hurricane
storm tide. . . . .” See National Hurricane Center, Storm Surge,
http://www.nhc.noaa.gov/HAW2/english/storm_surge.shtml (last visited
July 31, 2008).
10670     NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
C. This Litigation

  On November 4, 2005, Northrop filed suit against Factory
Mutual in California state court, demanding coverage for the
water damage under the excess policy. Factory Mutual
removed the case to the Central District of California, and the
parties filed cross-motions for partial summary judgment on
Northrop’s cause of action for declaratory relief — specifi-
cally, whether the Flood Exclusion in the excess policy barred
coverage for the water damage from Hurricane Katrina.

   On August 16, 2007, the district court granted Northrop’s
motion for partial summary judgment. The court agreed with
Northrop that the Flood Exclusion was ambiguous because it
did not “plainly and clearly reference hurricanes or damage
caused by wind.” The court then deferred to what it found to
be Northrop’s reasonable interpretation of the Flood Exclu-
sion — that it was limited to floods not caused by wind.

   Factory Mutual filed an unopposed motion for entry of
final judgment under Fed. R. Civ. P. 54(b). The district court
found no cause for delay and granted the motion on Novem-
ber 20, 2007. Factory Mutual timely appealed.

              II.    STANDARD OF REVIEW

   A district court’s grant of summary judgment is reviewed
de novo, under the same standards applied by the district
court. “We must determine whether, viewing the evidence in
the light most favorable to the nonmoving party, any genuine
issues of material fact exist, and whether the district court cor-
rectly applied the relevant substantive law.” Fazio v. City and
County of San Francisco, 125 F.3d 1328, 1331 (9th Cir.
1997).
           NORTHROP GRUMMAN v. FACTORY MUTUAL INS.                   10671
                         III.   DISCUSSION

   [1] Though insurance contracts have special features, the
general rules of contract interpretation still apply in California.3
Bank of the W. v. Superior Court, 833 P.2d 545, 551 (Cal.
1992); MacKinnon v. Truck Ins. Exch., 73 P.3d 1205, 1212
(Cal. 2003). The interpretation of a contract must “give effect
to the ‘mutual intent’ of the parties . . . at the time the contract
was formed.” Id. at 1212-13 (citing Cal. Civ. Code § 1636).
Such intent is to be inferred, if possible, from the written pro-
visions of the contract based on their “ordinary and popular
sense,” unless a “technical sense or special meaning is given
to them by their usage.” Id. at 1213. (citing Cal. Civ. Code
§§ 1639, 1644, 1638). If the contractual language is clear and
explicit, it governs. Id.; AIU Ins. Co. v. Superior Court, 799
P.2d 1253, 1264 (Cal. 1990). Ambiguous terms are generally
construed against insurers, but “[a] policy provision is ambig-
uous only if it is susceptible to two or more reasonable con-
structions despite the plain meaning of its terms within the
context of the policy as a whole.” Palmer v. Truck Ins. Exch.,
988 P.2d 568, 573 (Cal. 1999).

   [2] In this case, an examination of the written provisions of
the excess policy, understood in their ordinary and popular
sense, leads to the result that the Flood Exclusion encom-
passes the water damage to Northrop’s shipyards. The first
word used to define the term Flood in the excess policy was
“flood.” Both lay and legal dictionaries characterize flood as
an overflowing or inundation of water over usually dry land.
See American Heritage Dictionary of the English Language
674 (4th ed. 2000) (“[a]n overflowing of water onto land that
is normally dry”); Merriam-Webster’s Collegiate Dictionary
480 (11th ed. 2003) (“a rising and overflowing of a body of
  3
   The district court applied California law because Factory Mutual did
not argue that any other any other law should control. On appeal, Factory
Mutual does not dispute that California law applies to the interpretation of
the excess policy.
10672      NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
water esp. onto normally dry land”); Black’s Law Dictionary
640 (6th ed. 1990) (“[a]n inundation of water over land not
usually covered by it”).4

   [3] Courts have endorsed these dictionary meanings of
flood as the ordinary, plain meaning of the word. See, e.g.,
Sher v. Lafayette Ins. Co., ___ So. 2d. ___, 2008 WL 928486
(La. April 8, 2008) (“The plain, ordinary, and generally pre-
vailing meaning of the word ‘flood’ is the overflow of a body
of water causing a large amount of water to cover an area that
is usually dry.”); Kane v. Royal Ins. Co. of Am., 768 P.2d 678,
680-81 (Colo. 1989) (relying on dictionaries to define flood
as “an overflowing of water on an area normally dry”); Stover
v. United States, 204 F. Supp. 477, 485 (C.D. Cal. 1962) (“A
‘flood’ is water which inundates an area of the surface of the
earth where it ordinarily would not be expected to be.”), aff’d,
332 F.2d 204 (9th Cir. 1964). We follow the same approach
here, and find that the water damage to Northrop’s shipyards
falls squarely within the ordinary and plain meaning of flood.
The shipyards, which were covered in up to ten feet of water,
unquestionably experienced “an inundation of water over nor-
mally dry land,” and therefore experienced a flood within the
meaning of the excess policy. See Kane, 768 P.2d at 681
(“The inundation of insureds’ normally dry land falls squarely
within the[ ] generally accepted definitions of the term
‘flood.’ ”). Moreover, the other terms used to define Flood in
the excess policy —“rising waters,” “waves,” and “tide or
tidal water” — also describe the type of damage Northrop
experienced. See, e.g., Leonard v. Nationwide Mut. Ins. Co.,
499 F.3d 419, 437 (5th Cir. 2007) (“The phrase ‘storm surge’
is little more than a synonym for a ‘tidal wave’ or wind-
  4
   Contrary to the district court’s finding, dictionary definitions are an
appropriate consideration in evaluating the ordinary meaning of terms in
an insurance contract. Jordan v. Allstate Ins. Co., 11 Cal. Rptr. 3d 169,
176 (Ct. App. 2004) (“It is well settled that in order to construe words in
an insurance policy in their ‘ordinary and popular sense,’ a court may
resort to a dictionary.” (citing Scott v. Continental Ins. Co., 51 Cal. Rptr.
2d 566, 569 (Ct. App. 1996)).
          NORTHROP GRUMMAN v. FACTORY MUTUAL INS.           10673
driven flood . . . .”). Thus, the plain language of the Flood
Exclusion unambiguously bars coverage for the water damage
to Northrop’s shipyards.

   Northrop argues that this interpretation is flawed because it
fails to read the excess policy in light of the primary policy.
Northrop points out that the phrase “whether driven by wind
or not” is used in the primary policy’s definition of Flood but
does not appear in the excess policy’s definition of flood,
even though the phrase is used elsewhere in the excess policy.
It also notes that while the terms Wind and Named Wind-
storm were defined in the primary policy, they were not refer-
enced or excluded from coverage in the excess policy.
According to Northrop, these distinctions demonstrate that the
Flood Exclusion is ambiguous, because when the excess pol-
icy is read in the context of the primary policy, it fails to
clearly and explicitly include wind-driven flood damage. See
State Farm Mut. Auto. Ins. Co. v. Jacober, 514 P.2d 953, 958
(Cal. 1973) (exclusions in insurance contracts must be con-
spicuous and clear).

   We disagree. To begin with, we are not convinced by Nor-
throp’s argument that the primary and excess policies must be
construed as one document. We recognize that insurance poli-
cies must be construed in context, Palmer, 988 P.2d at 572-
73, but in this case, Northrop urges us to find an ambiguity
based on differing language in two separate policies. Though
the primary policy may be consulted in interpreting the excess
policy, we decline to treat the two documents as one contract.
See, e.g., Hartford Accident & Indemnity Co. v. Sequoia Ins.
Co., 260 Cal. Rptr. 190, 197 (Ct. App. 1989) (“ ‘While it is
the rule that several contracts relating to the same matters are
to be construed together . . . it does not follow that for all pur-
poses they constitute one contract.”) (quoting Malmstedt v.
Stillwell, 294 P. 41, 42 (Ct. App. 1930)); Powerine Oil Co. v.
Superior Court, 118 P.3d 589, 602-03 (Cal. 2005) (consider-
ing primary policy in interpreting excess policy but not con-
struing them as one document). Consequently, Northrop’s
10674     NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
citation to cases addressing inconsistent definitions within a
single policy is unhelpful. See, e.g., Mirpad, LLC v. Califor-
nia Ins. Guarantee Ass’n, 34 Cal. Rptr. 3d 136, 146 (Ct. App.
2005) (rejecting definition of person to include organization
because organization was defined separately in the policy).

   [4] Moreover, the case law addressing multiple policies
does not support Northrop’s view that an ambiguity exists
because of the different definitions of Flood in the primary
and excess policies. In fact, in Smyth v. USAA Prop. & Cas.
Ins. Co., 7 Cal. Rptr. 2d 694 (Ct. App. 1992), the court explic-
itly rejected a similar argument, holding that the meaning of
the term “business” in an excess policy was unambiguous and
clear even though it was defined differently in the primary
policy. Id. at 697 (“That this definition is not identical in the
primary and excess policies does not create an ambiguity.”).
Northrop relies on Powerine Oil, but that case does not show
that differences between a primary and excess policy control
judicial interpretation. In Powerine, the court held that cover-
age for “damages . . . and expenses” in an excess policy
extended beyond court-awarded monetary damages. 118 P.3d
at 601-02. While Powerine noted certain differences between
primary and excess policy language in interpreting the excess
policy — the primary policy covered only “damages,”
whereas the excess policy included “damages . . . and
expenses” — these distinctions did not drive the court’s
result. Id. at 601-02. Rather, the court focused on the addition
of the word “expenses” within the excess policy itself in
determining the breadth of coverage. Id. at 602 (“We agree
with the Court of Appeal that the addition of the term
‘expenses’ in the central insuring clause of these excess/
umbrella policies extends coverage beyond the limitation
imposed were the term ‘damages’ used alone . . . .”). Accord-
ingly, the different definitions of Flood in the primary and
excess policies do not create ambiguity.

   In a variation of the same argument, Northrop contends that
the absence of the phrase “whether driven by wind or not” in
           NORTHROP GRUMMAN v. FACTORY MUTUAL INS.                  10675
the Flood Exclusion evidences an intent on Factory Mutual’s
part to expand coverage to include wind-driven flood. Relying
on Maxconn, Inc. v. Truck Ins. Exch., 88 Cal. Rptr. 2d 750,
758 (Ct. App. 1999) (“The absence of an expression or word
in a policy is clearly an appropriate consideration in the inter-
pretation of contracts.”), and Fireman’s Fund Ins. Cos. v. Atl.
Richfield Co., 115 Cal. Rptr. 2d 26, 33 (Ct. App. 2001) (“[A]n
insurance company’s failure to use available language to
exclude certain types of liability gives rise to the inference
that the parties intended not to so limit coverage.”), Northrop
argues that Factory Mutual could and should have used the
phrase “whether driven by wind or not” in the Flood Exclu-
sion if it wanted to limit coverage, and that its failure to do
so must be read as expanding coverage. Northrop correctly
observes that Factory Mutual used the phrase “whether driven
by wind or not” not only in the primary policy, but also else-
where in the excess policy, and that it used similar language
in earlier policies issued to Northrop. Northrop also argues
that inclusion of the phrase “whether driven by wind or not”
in flood exclusions is industry custom, and that Factory
Mutual defied custom when it created a purportedly narrower
exclusion for flood damage.

   [5] We are not convinced that the absence of the phrase
“whether driven by wind or not” renders the otherwise clear
language of the Flood Exclusion ambiguous. Maxconn and
Fireman’s Fund are distinguishable as involving more con-
spicuous omissions than the one here,5 and we view the fail-
  5
    For example, in Maxconn, the insured attempted to argue that a provi-
sion covering “infringement of copyright, title or slogan” included patent
infringement. The court disagreed, holding that “[t]he absence of any
express reference to patent infringement [which was a ‘distinct legal claim
governed by a vast body of statutory and case law’] would lead a reason-
able layperson to the conclusion that patent infringement is not covered.”
88 Cal. Rptr. 2d at 755-56. In contrast, the omitted phrase here —
“whether driven by wind or not” — is not a distinct legal claim whose
absence would be equally noticeable.
10676      NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
ure to include the phrase “whether driven by wind or not” as
more indicative of a lack of specificity on Factory Mutual’s
part than an omission evidencing its intent to narrow its exclu-
sion. See California Cas. Co. v. Northland Ins. Co., 56 Cal.
Rptr. 2d 434, 440 (Ct. App. 1996) (“Although it might have
promoted clarity in CCIC’s policy to state specifically that jet
pump powered watercraft were excluded, ‘the fact that lan-
guage could be more explicit does not render it ambiguous.’ ”
(citing Suarez v. Life Ins. Co. of N. Am., 254 Cal. Rptr. 377,
383 (Ct. App. 1988)); Great Western Drywall, Inc. v. Inter-
state Fire & Cas. Co., 74 Cal. Rptr. 3d 657, 664 (Ct. App.
2008) (also rejecting premise that exclusion was ambiguous
because it could have been drafted with more clarity). In addi-
tion, Northrop has not shown that it is industry custom to use
the phrase “whether driven by wind or not” in flood exclu-
sions, weakening its argument that Factory Mutual bucked a
trend when it left the language out.6

   [6] Last, it is of no import that the primary policy defined
the term Named Windstorm and Wind and that those terms

   In Fireman’s Fund, the court rejected the insurer’s narrow interpretation
of the phrase “arising out of,” and suggested that the insurer should have
included qualifying language if it wanted to limit the phrase given that
“courts have been broadly interpreting [that language] since at least 1986.”
115 Cal. Rptr. 2d at 30. Here, there is no narrow interpretation of flood
exclusions omitting the phrase “whether driven by wind or not” that would
have put Factory Mutual on notice to include qualifying language.
   6
     Factory Mutual’s experts stated that “[t]here is no custom and practice
in the insurance industry to use the phrase ‘whether driven by wind or not’
either to exclude coverage for, or provide coverage for, storm surge flood
damage.” Northrop cites a handful of cases that use the phrase “whether
driven by wind or not,” but Factory Mutual also cites cases in which that
term is not noted or discussed in flood exclusions. Northrop notes that the
Insurance Service’s Office’s Standard Property Policy Form refers to
wind-driven floods, but other standard policies — such as the National
Flood Insurance Program standard policy and a 2002-2003 Lloyd’s of
London Primary Master Policy issued to Northrop — do not reference the
phrase.
           NORTHROP GRUMMAN v. FACTORY MUTUAL INS.                  10677
were not referenced in the excess policy. The primary policy
was an all risk policy, covering all acts unless specifically
excluded. Strubble v. United Servs. Auto Ass’n, 110 Cal. Rptr.
828, 831 (Ct. App. 1973). Accordingly, defining Named
Windstorm and Wind in the primary policy did not create
coverage that the excess policy failed to exclude. Rather, a
sensible reading of the primary policy suggests that the terms
were defined to explain when the special Named Windstorm
deductible would apply.7 See Six Flags Inc. v. Westchester
Surplus Lines Ins. Co., 535 F. Supp. 2d 744, 754 (E.D. La.
2008) (term “Weather Cat Occurrence” simply “lumps all
losses or damages occurring within a 72-hour period of time
into one covered loss for adjustment purposes.”). Because
there was no defined coverage for Wind nor Named Wind-
storm, there was no reason for the excess policy — which was
also an all risk policy, and included no deductible for Named
Windstorm — to specifically exclude or even reference those
terms. Accordingly, no ambiguity results in the excess policy
based on the labels placed on certain types of damages in the
primary policy. See id. at 754-55 (flood sublimit unambigu-
ously applied to storm surge damages from Hurricane Katrina
even though those damages were separately described in the
defined term “Weather Cat Occurrence”).8

   [7] In light of the above, we hold that the Flood Exclusion
unambiguously bars coverage for the water damage to Nor-
throp’s shipyards under the excess policy. The words used to
define the Flood Exclusion, understood in their ordinary and
popular sense, clearly and conspicuously preclude coverage
for the water damage at Northrop’s shipyards. State Farm
  7
     There was a $10 million deductible for Named Windstorms, whereas
the policy had a general deductible of $1 million.
   8
     Pinnacle Entm’t, Inc. v. Allianz Global Risk US Ins. Co., No. 2:06-CV-
00935-BES-PAL, slip op., at 9 (D. Nev. Mar. 26, 2008), cited by Nor-
throp, does not demonstrate otherwise. That case is an unpublished memo-
randum out of the District of Nevada, and its holding was based on the
district court’s reasoning in this case, which we disagree with here.
10678     NORTHROP GRUMMAN v. FACTORY MUTUAL INS.
Mut. Auto. Ins. Co., 514 P.2d at 958. Neither the absence of
the phrase “whether driven by wind or not” nor the terms
Wind and Named Windstorm in the excess policy render the
excess policy ambiguous, and therefore we need not consider
the extrinsic evidence presented by the parties. See Fraley v.
Allstate Ins. Co., 97 Cal. Rptr. 2d 386, 390 (Ct. App. 2000)
(“Extrinsic evidence may be admitted to aid in the interpreta-
tion of an insurance policy only where the terms are ambigu-
ous.”).

                       CONCLUSION

   We reverse the district court’s summary judgment in favor
of Northrop. We remand for consideration of Northrop’s
argument that California’s efficient proximate cause doctrine
demands coverage of the water damage notwithstanding the
language of the contract. See, e.g., Julian v. Hartford Under-
writers Ins. Co., 110 P.3d 903, 904 (Cal. 2005). Though the
parties briefed the issue on appeal, we decline to consider it
in the first instance because it involves factual considerations.

  Reversed and Remanded.
