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May 30, 1997


The opinion of the court was delivered by: CURTIN



 A. Prior Proceedings

 In 1979, plaintiffs State of New York and the United States brought suit against defendant Hooker Chemicals & Plastics Corporation ("Hooker"). In 1982, Hooker became Occidental Chemical Corporation ("OCC"). Throughout the decisions relevant to this case, "Hooker" is used to describe the company during the events in question and "OCC" is used to refer to the current defendant. United States v. Hooker Chemicals & Plastics Corp., 850 F. Supp. 993 (W.D.N.Y. 1994). The suit was initiated to recover the costs of cleaning up and insuring the safety of the Love Canal area pursuant to CERCLA § 107(a), 42 U.S.C. § 9607(a) and the New York common law of public nuisance. Id.

 The case was bifurcated into two phases: Phase I to determine the liability of all parties and the principles of contribution or indemnification, and Phase II, if necessary, to determine the nature and amount of remedies in any unsettled claims. Prior to trial on the Phase I issues, the court granted summary judgment against the defendant for joint and several liability under both CERCLA § 107 and the common-law public nuisance claim. United States v. Hooker Chemicals & Plastics Corp., 680 F. Supp. 546 (W.D.N.Y. 1988) (Supplemental Order No. 20); United States v. Hooker Chemicals and Plastics Corp., 722 F. Supp. 960 (W.D.N.Y. 1989) (Supplemental Order No. 41).

 The trial on the Phase I issues against defendant and the trial on the various third-party claims and counterclaims began on October 24, 1990, and continued until June 25, 1991. In this court's decision of March 17, 1994, United States v. Hooker Chemicals & Plastics Corp., 850 F. Supp. 993 (W.D.N.Y. 1994), the court dismissed the claim of New York State against the OCC for punitive damages and reserved decision on the remaining issues. Following that decision, New York and OCC settled the nuisance claim of the State against OCC on July 1, 1994 (Item 1352). Modifications followed (Item 1370). Eventually, final judgment was entered against the State as to all claims between the State and OCC (Item 1355). That left the issue of third-party claims and the claim of the United States against OCC. On March 18, 1996, a partial consent decree was entered between the United States and OCC, with OCC agreeing to pay for federal remediation efforts at the site, and the federal government agreed to drop its suit against OCC. Item 1361.

 The only claims remaining in the case are the claims and crossclaims between the City of Niagara Falls and Occidental. In this order, the court will address liability only. Amount and apportionment of damages will await a Phase II trial, if necessary.

 B. Facts

 OCC purchased the Love Canal property in 1947, using it for the disposal of some 40 million pounds of chemical wastes until it sold the property to the City of Niagara Falls Board of Education for one dollar in 1953. The deed conveying the Love Canal property to the Board contained the following provision:

Prior to the delivery of this instrument of conveyance, the grantee herein has been advised by the grantor that the premises above described have been filled, in whole or in part, to the present grade level thereof with waste products resulting from the manufacturing of chemicals by the grantor at its plant in the City of Niagara Falls, New York, and the grantee assumes all risk and liability incident to the use thereof. It is, therefore, understood and agreed that, as a part of the consideration for this conveyance and as a condition thereof, no claim, suit, action or demand of any nature whatsoever shall ever be made by the grantee, its successors or assigns, against the grantor, its successors or assigns, for injury to a person or persons, including death resulting therefrom, or loss of or damage to property caused by, in connection with or by reason of the presence of said industrial wastes. It is further agreed as a condition hereof that each subsequent conveyance of the aforesaid lands shall be made subject to the foregoing provisions and conditions.

 Item 311, Ex. 4; United States v. Hooker Chemicals and Plastics Corp., 722 F. Supp. 960, 962 (W.D.N.Y. 1989) (Supplemental Order No. 41).

 The deed was reviewed for the Board by City of Niagara Falls Deputy Corporation Counsel Ralph A. Boniello. In a letter dated May 5, 1953, Boniello warned the Board that it was accepting "the risk and possible liability to persons and/or property injured or damaged as a result thereof arising out of the presence and existence of the waste products and chemicals upon the said lands . . . ." Ex. 162. As a condition of the transfer, Hooker continued to dump waste on the property, and Boniello also warned the Board about possible liability arising from that continued dumping. Id.; United States v. Hooker Chemicals & Plastics Corp., 850 F. Supp. 993, 1027 (W.D.N.Y. 1994).

 Hooker did not provide specific data about the chemicals in the landfill. This court concluded that given the technology available at the time, such an analysis would have been unreasonably costly and difficult. Nevertheless, the court concluded that Hooker did know with some precision the composition and dangers of certain chemicals buried in the Canal, and that it could have made a more diligent effort to communicate its knowledge to the Board. Id. at 1028-1030.

 At some point in 1958, the Board offered a portion of the property to the City in order to develop recreational facilities. At first, the City refused to take the land "because of the tremendous holes being created due to the chemical reaction in the land." Ex. 531.

 However, when the Board offered the land again in May 1959, the Council recommended that the City Manager look into the possibility of a transfer. Ex. 531A. A number of City officials, along with a representative of Hooker, inspected the property to determine whether it was suitable as a recreation area. Ex. 3626, No.37.

 In 1960, the Board conveyed title to the northern section of the property to the City. The northern section of the property is the portion extending south from the northern boundary along Colvin Boulevard to Reed Avenue. Appendix A-1, Ex. 1433; Hooker Chemicals & Plastics Corp., 850 F. Supp. 993, 1005 (W.D.N.Y. 1994). The conveyance was expressly made "subject to the terms [and] conditions" of the Hooker deed to the Board. Ex. 3626, No. 41.

 Also prior to the conveyance, the City constructed Wheatfield Avenue and the Wheatfield Avenue sanitary sewer across and through the Love Canal landfill. Ex. 3626, Nos. 31, 32. The City excavated the landfill to construct the street and sewer, and backfilled the sewer lines with excavated soil. Id., No. 33. There was testimony at trial that the City encountered hazardous wastes during the excavation, and that the sewer system transmitted chemicals away from the site. OCC Proposed Findings of Fact, p. 16.

 In about 1959, the City constructed Read Avenue between 97th and 99th Streets and installed a storm drain as part of the project. Ex. 3626, No. 35. Read Avenue was constructed across the Love Canal disposal area, and the City excavated the property in the process. Id., No. 36. Evidence was offered at trial that the City uncovered drums during the construction, and that the storm drain conducted chemicals offsite. OCC Proposed Findings of Fact, pp. 16-17.

 In 1962, the Board conveyed the southern portion of the site to Mr. Ralph Capone. Item 311, Ex. 44. The State of New York thereafter acquired a portion of Capone's property through the exercise of its eminent domain power to build the LaSalle Expressway. Id. at 41.

 By the mid-1970s, complaints about surface exposure to chemical wastes had increased significantly. These complaints were eventually accompanied by reports from neighboring residents of chemicals seeping into their homes. Their reports led a series of governmental agencies to investigate the site, establish an interagency task force, and decide on a course of remedial action. Hooker Plastics & Chemicals Corp., 850 F. Supp. at 1039.

 The City prepared and presented a preliminary program for addressing the conditions at Love Canal on January 13, 1977. The City participated in the formation of the Love Canal Study Group, which ultimately included Hooker and other local governments. The City also contracted with a number of companies to investigate leachate movement, vacuum ...

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