POOLE, Circuit Judge:
In August 1981 the Monterey Regulatory Water Pollution Control Agency (the Agency) contracted with Engineering-Science Inc. (ESI) for the design of an ocean sewer outfall pipeline (the Master Agreement). The pipeline consisted of a concrete pipe covered with "armor rock" which extended from the shore of Monterey Bay into the Pacific Ocean. ESI was insured against liability for professional negligence through an errors and omissions policy with...
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