ML20072J158
| ML20072J158 | |
| Person / Time | |
|---|---|
| Site: | Three Mile Island  |
| Issue date: | 06/23/1981 |
| From: | Charnoff G SHAW, PITTMAN, POTTS & TROWBRIDGE |
| To: | |
| References | |
| TASK-*, TASK-GB NUDOCS 8306290972 | |
| Download: ML20072J158 (64) | |
Text
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N GENERAL PUBLIC UTILITIES CORPORATION, :
JERSEY CENTRAL POWER & LIGHT COMPANY, METROPOLITAN EDISON COMPANY and 8 PENNSYLVANIA ELECTRIC COMPANY, Plaintiffs,
-against-THE BABCOCK & WILCOX COMPANY and
- J. RAY McDERMOTT & CO., INC., - 8 Defendants.
-s __________________________________________x Continued deposition of GERALD CHARNOFF, l taken by defendants pursuant to adjournment, at the offices of Davis, Polk & Wardell, Esqs.,
1575 I Street N.W., Washington, D.C. 20005, on Tuesday, June 23, 1981, at 9:25 o clock in the forenoon, before Nancy A. Rudolph, a Notary Public within and for the State of New l
York.
\
s' DOYLE REPORTING. INC.
CERTIFIED STENCTYPE REPCRTERS 369 Lt 2IN GTO N AvtNut New Ye a <. N.Y. Icot7 8306290972 810623 PDR ADOCK 0500029 T TctrpwoNE 212 = $67 822Q i
e I 1 127 O
%/ -
2 Appe a r'a n c e s:
3 KAYE SCHOLER FIERMAN HAYS & HANDLER, ESQS.
i
, Attorneys for Plaintiff 4 425 Park Avenue
, New York, New York By: DAVID KLINGSBERG, ESQ.
6 -and-JOEL KATCOFF, ESQ.,
7 of Counsel
! 8 DAVIS, POLK & WARDWELL, ESQS.
l 9 Attorneys for Defendants One Chase Manhattan Plaza 10 New York, New York (
11 By: ROBERT F. WISE, ESQ.
t
. -and-12 RICHARD PU, ESQ.,
!' ['T - of Counsel
() 13 14 * *
- i t
15 i
16 17 GERALD CHARNOFF, having been 18 previuosly duly sworn, resumed and testified 7
i 19 further as follows:
20 EXAMINATION Ccontinued) 7 21 BY MR. WISE:
l N t 22 Q Mr. Charnoff, yesterday we went through a 23 number of documents, including several drafts of the 24 contract. I have put before you this. morning 25 Plaintiffs' Exhibit 178, which is the proposal that l
1 Charnoff 128 0 2 B&W submitted to Metropolitan Edisons B&W Exhibit 88, 3 which is a December 1966 draft of the contract which 4 I believe you testified you prepared; B&W Exhibit 89, which is a letter of December 29, 1966 with an
( 5 6 attached draft of the contract, which I believe you I
7 also testified you prepared. The draft is dated 8 December 27, 1966. B&W E-xhibit 91, which is a draft 9 of the contract dated January 27, 1967, and includes 10 various underlinings and bracketings w th respect to 11 material that was added or deleted. I believe you 12 also testified you prepared that. Next is B&W Exhibit 13 92, a copy of the draft with the initi'als GFT on the 14 first page, and a notation "B&W Redraft 2/14/67."
15 Next, Plaintiffs' Exhibit 192, a draft dated March
~
16 24, 1967. And I believe that is all we discussed 17 yesterday. .
18 I think we should also, to m'ake things 19 complete, give you a copy of the final contract as l
20 executed, Plaintiffs' Exhibit 193, and then you will 21 have, I think, a full set.
22 THE WITNESS: Off the record.
23 (Discussion of f the record.)
j MR. WISE: We have now given the witness
) 24 25 a copy of Exhibit 193, which has been identified
< l
, 1 Charnoff 429 2 in previous depositions as the execution copy 3 of the contract and it bears signatures at the B
4 end. We will also put before the witness
( 5 Plaintiffs' Exhibit 190, which was a file 6 memorandum prepared by B&W, dated April 12, 1967, 7 concerning the negotiations.
8 Q The first thin ~g I would like you to look 9 at this morning, Mr. Charnoff, is in Plaintiffs' 10 Exhibit 178, and if you would turn to page 15-12.
11 MR. KLINGSBERG: What exhibit is it?
12 MR. WISE: This is Exhibit 178, and we have 13 removed from the exhibit the general conditions 14 section which is numbered 15.0, and in specific
, 15 I am asking the witness to look at page 15-12 16 of that section and I would like him to look 17 at the paragraph numbered 15.24.4,,which is.
18 entitled " Contamination."
19 Q If you would also, Mr. Charnoff, open i 20 Exhibit 88, which is the December 1966 draft, to the
, 21 page No. W 00087, which is Article V B (2) , and in km 22 specific on that page I would like.you to look at the 23 subparagraph noted (e).
() 24 would you compare 15.24.4 in the B&W 25 proposal with subparagraph (e) in your first draft
p
- 1. Charnoff 130
,-m -
2 of December 1966 and tell us whether that refreshes 3 your recollection in any way as to the source of 4 subparagraph (e) in your first draft?
( 5 MR. KLINGSBERG:- Take your time and look 6 -at whatever you want to look at.
7 A I am having trouble reading the top three lines 8 of 00088. Could you read your copy to me?
9 Q Yes. Beginning at the top, " area necessary 10 to facilitate such repair or replacement and shall 11 reduce the radiation levels in such areas and from 12 such parts to permissible levelk."
13 A I am sorry, what was your question?
14 Q Comparing the two, can you tell us the 15 derivation of subparagraph (e) in your first draft?
16 A well, as I testified yesterday, when I prepared
< 17 this first draft, the first thing I did was look at r
r
~
18 the proposed general conditions in section 15.0.
19 I also looked at various types of conditions or 20 parallel conditions, if you will, that were involved l
l .
21 in the other proposals. I believe I looked at the 1( 22 Oyster Creek contract between General Electric and 1
23 Jersey Central Power & Light Company, which is a
(} 24 sister company of Metropolitan Edison, and based upon 25 all of that, I organized the contract structure, and
f 1 Charnoff 131
- 2 specifically in looking at these warranty provisions 3 to which I gave a lot of attention, I looked at the f
4 conditions of the warranties, and I am sure that an g 5 input into paragraph or subparagraph (e) on page 00087 6 had*as part of its input paragraph 15.24.4 of the B&W 7 proposal.
8 The only other thing that I should mention 9 is that in t'he course of the negotiations with B&W, 10 I know we focused on this type of issue and I don't 11 remember whether we did that before or af ter I talked 12 about the -- before or after I prepared this first
.(-)
(_ 13 draft. I don't recall whether we did'it in the 14 preaward discussions or -- and after the' drafting of i
15 the contract or only after the drafting of the contract.
16 Q What do you recall of those specific 17 discussions? .
18 A I think I mentioned yesterday that 'we had, 19 if my memory is correct, repeated discussions with 20 nsW with respect to making the warranty more meaningful 21 by placing on B&W a greater obligation than simply ,
22 the repair or replacement of the defective part, 23 but also to pick up some of the costs associated with the breach of warranty.
l
) 24 25 Q What was the result of those discussions?
_ , . _ . . . _ _ _ __. _ , _,_,__m,, , , _ _ _ _ _ _ . . _ _ . . , , _ _ _ _ , . _
1 Charnoff 132 2 A Well, the result of the discussions is whatever 3 appears in the final contract.
4 Q Let's go forward'then comparing the language.
{ 5 After comparing the B&W proposal, Plaintiffs' 6 Exhibit 178, with B&W Exhibit 88, subparagraph (e) 7 on page W 00087, do you have any recollection of where 8 the first sentence of subparagraph (e) came from?
9 And I note, just comparing it, that it is not the same 10 as the first sentence in the B&W proposal.
11 A I can't give you a specific derivation for it.
i 12 It might have been just my own stylistic rewrite of n\/ 13 the B&W proposal for purposes of this first draft, and i 14 it may have been from some other proposal. I just 15 don't know.
i 16 Q Did you have any objection to the language 17 proposed by B&W in 15.24.4 in the first' sentence?-
18 A Did I have any?
[
7 19 Q If you can recall now. ,
i 20 A At the time I drafted this first draft?
21 Q Yes.
22 A I have no recollection.
23 Q You have no recollection of the reason why j () 24 that language was not used rather than the language 25 that you used in the first sentence?
1 Charnoff 133 2 A I can't recall a specific reason for that, no.
r 3 Q Do you agree with-me that the remainder 4 of the paragraph, with the exception of the last l 5 five or six words, is identical with the remainder of 6 15.24.4 in the B&W proposal?
7 A Well, if you want me to read it word by word 8 with you, I am sure -- I don't want to quarrel or 9 disagree or agree with you. I am satisfied that if
, 10 you think it is the same, that is fine *, and if you 11 would like me to read it word for word, I would be 12 glad to do that.
O 13 Q I don't think it is necessary to read it 14 word for word. What I would like to do is help 15 refresh your recollection as to how we can put 'this 16 together and where various things came from.
17 A I don't have any doubt that one of the documents 18 was part 15 of the proposal, a very significant input 19 document.
20 Q Now, if you would look at Exhibit 89, 21 leaving Exhibit 88 open to that section, and in Exhibit 22 89, which is your draft of December 29, 1966, if you 23 would look at page 24 of the draft. I believe, again,
( 24 without having you read it word for word, that 25 subparagraph (e) in Exhibit 89 is identical word for
1 Charnoff
, 434
/~N 2 word with subparagraph (e) in B&W Exhibit 88.
3 I take it you dcn't recall any changes or 4 any discussions with anyone between drafding Exhibit 5 88 and drafting Exhibit B&W 89 concerning subparagraph
((
6 (e ) ?
7 A I don't recall any discussion a t one particular 8 point in time or another, no.
9 Q Let me next ask you to look at the January 10 27, 1967 draft, B&W Exhibit 91, and if',you would turn 11 to page 25 of the draft and look at subparagraph (e),
12 you will note that in that subparagraph certain
(~)
\' 13 language has been added and underscored; other 4
- 14 language has been bracketed, presumably to note its 1
15 proposed deletion.
, 16 Let me first say that having compared 17 subparagraph (a) in the January 27th draft to 18 subparagraph le) in the December 29th draft, I can i 19 state for you that the under11nings and bracketings 20 accurately reflect the changes from the December 29th l
21 draft to the January 27th draft.
I 22 A That is not true.
23 Q All right, where do you find a difference?
() 24 A The term "shall" on the first line of (e) in I
25 Exhibit 91 should not have been underscored.
1
l 1
1 Charnoff 135 I (A) v.
2 Q With the exception of the underscoring 3 of the word "shall," the underlinings and bracketings 4 accurately reflect the changes from the December 29th
( 5 draft. -
6 Do you recall the reasons and any of the 7 discussions that surrounded the change from the 8 December 29th draft in subparagraph (e) to the January 9 27th draft?
10 A Yes. I don't know that I could ' relate it 11 specifically to the drafts, but I think I can. I
_ 12 prepared these drafts and spent some time after
(_) 13 preparing them discussing them with Jim Pickard, and 14 I know that we either did that in a large meeting with 15 everybody present or we did it at a number of private
- 16 meetings here in Washington where we talked about 17 making warranties more meaningful, and I know that 18 this concept came out of my discussions with Jim 19 Pickard. I cannot tell you whether I raised it or 20 he raised it, but I know that he and I together were 21 the ones who developed this concept.
22 Q Do you recall whether this concept was 23 discussed with B&W prior to it being inserted in the (s
(_) 24 draft? And by "this concept," we are referring to 25 the addition of a clause which states: " Met Ed shall l
l 1 Charnoff 136 7'N
'd 2 share equally with B&W the cost of decontaminating..."
3 MR. KLINGSBERG: That is a very complicated 4 question. I want to hear the question back.
5 (Question read. )
. l{
6 A The answer is no.
7 Q You don't recall one way or the other?
8 A That's correct.
9 Q Would you look next at Exhibit 92, which 10 is the copy of the draft marked B&W Redraft, February 11 14, 1967, and turn to page W 00297. On that page the 12 language of subparagraph (e) appears in the original
> 13 typewritten form exactly as it appeared on the 14 January 27, 1967 draft, Exhibit 91, except certain 15 portions have been typed over, and following that it 16 appears that someone has in pencil or pen marked out 17 various sections. .
~
l 18 Are you familiar with who did the marking 19 on subparagraph (e)?
20 A The typing or the handwritten marking?
21 Q Either, as opposed to the underlying
! 22 typewritten form which is identical to Exhibit 91, 23 your January 27, 1967 draft.
( 24 A All the typewritten changes of deletions and I
25 changes were B&W's.
L
1 Charnoff 137 g-)s (m
2 Q Which deletions did B&W make on 3 subparagraph (e) in Exhibit 927 4 A They deleted the insert that we had put in 5
({ in Exhibit 91 on line 1 and line 2, I guess.
6 Q And had they added anything?
7 A Yes.
8 Q What did they add?
9 A They went back to their original proposal.
10 Q Which was what? t 11 A To insert the terms "at Met Ed's own expense."
- 12 Q Did that also require the change in
\
(/
\- 13 subparagraph (3) (c) on the following page, W 00298?
14 A I am sorry, what reference was that?
1' 5 Yes, that looks like a consequential change 16 to follow the change on W 00297 that we were discussing.
17 Q That eliminated the phrase "and its 18 share of the cost of the related decontamination" from 19 subparagraph (c); is that correct?
20 A It appears to be.
21 Q Would you next look at Plaintiffs' Exhibit 22 192, which is the March 24, 1967 draft, and look at 23 page 28 and 29 of that draft and tell us if you agree
(- 24 with my reading that subparagraph (e) on pages 28 25 and 29 appears to be a retyped version of subparagraph
1 -
Charnoff 138 2 (e) in the February 14, 1967 draft incorporating the 3 handwritten and typed changes that appear on the face 4 of Exhibit 92?
(' 5 A It certainly appears to be correct.
6 Q Now, after having gone through this 7 evolution of this clause, can you recollect any of the 8 specific conversations you had with anybody from B&W 9 concerning the proposal for a sharing of decontamination 10 costs and the elimination of that prop'osal and 11 reversion back to the original language?
12 MR. KLINGSBERG: I object to the form of i
O 13 the question.
14 MR. WISE: You may go ahead and answer it.
15 A The question was, can I recall any conversations?
16 Q You had earlier testified that you and
- 17 Mr. Pickard met and that you had made certain attempts 18 to make the warranty, I believe you used the words 19 more meaningful. What I would like to know now is, 20 aside from that general comment, does looking at this 21 evolution in these various drafts enable you to tell
! 22 us about any specific conversations you had regarding l!
23 these specific changes that we have?
t 24 A Specific conversations with B&W7
- 25 Q Yes.
I 2
. . . . . , ,w, - - . . - - , . . . . , , , . -, - -.-,,,-,n,m,._ - . , , , . . - - , .+,-,_.---.-.,,,,,-....----,ne.
1 Charnoff j .
439 2 A Yes, I can remember confronting Mr. Beisel and 3 Mr. Favret on this issue, and they dug their heels
, 4 in and said they didn't want to do it.
5 Is that the extent of your recollection
(( Q 6 of that. conversation?
e 7 A I know that it was a much more extended 8 conversation, but I can't Escall words that either 9 party said.
10 Q Do you remember in general what they said, 11 other than they wouldn't go along with what you had i
12 proposed?
13 A No, I don't think so.
14 Q Did they insist that Met Ed bear the full I
15 decontamination cost under the warranty?
16 A Yes, that was their position, that under the 17 warranty they felt they should only have ,to do what 18 they were proposing to do in the way of r'epair or 19 replacement.
20 Q Now, let me refer you back to the February 1
21 14th draft which is Exhibit 92. If you would look 22 at the performance warranty, and in particular at 23 the remedy section whiyh occurs at pages 22 and 23 of that draft. On that page there is a subparagraph
( 24 25 (b) and next to it, just to the left, is an asterisk
,,,,_......_,--.-,..,,.m...,-._-,,c,c..-,_.1 -. - - - , . -
. - - - . . - . . . . . . . , - . , . . . - . . , , . . _ _ . . . - . . , _ . . - - . , , , . .,,,.,-,~...c ,,mm...
1 Charnoff 440 2 which someone has crossed out, and looking down at the 3 asterisk --
4 A 00293, am I on the next page?
( 5 Q No, the next page, 00294, and you see 6 subparagraph -(b) there.
7 A Yes.
8 Q And immediately to the left of the (b) 9 is an asterisk which someone has in hardwriting 10- marked out, and the asterisk, the footnote at the 11 bottom of the page, says: "B&W Addition," and that 12 is underscored.
O 13 A Yes.
14 Q Do you recall B&W requesting the addition 15 of subparagraph (b) to the performance warranty?
16 A I have no recollection of that one way or the 17 other. -
18 Q If you would look at the next exhibit, 19 which is Plaintiffs' Exhibit 192, the March 24th j 20 draft, and specifically again refer to the performance f 21 warranties and the remedy provisions with respect to I
Q 22 them which appears at page 26, carries over onto 23 page 27 of the draft, will you agree with me that the
/'N addition on the February 14, 1967 draft was I
(_) , 24 l 25 incorporated into the March 24, 1967 draft, Plaintiffs'
1 Charnoff 141 U(D . 2 Exhibit 1927 3 A If that was an addition, and I assume it was, 4 it appears to be the same paragraph, yes.
() 5 Q Do you recall any discussions as to why 6 that addition was made?
7 A No. The issues would be the same, but I don't 8 know why it was made. I don't know why it was not 9 even in the earlier drafts, if it was not.
10 Q Well, we can help you on that one. If 11 you would look at B&W 91, which is the January 27th 12 draft, and again to the remedy section with respect
' (\" ~) 13 to the performance warranties which appears at pages 14 22 and 23, I believe you will find that there is no 15 decontamination provision'under the remedy section.
16 A Right.
17 Q So just let me make sure we have got the 18 record clear.
! 19 After looking at the January 27th draft, 20 _the February 14th draft, and the March 24th draft, 21 you are not able to tell us of any conversations or 22 any recollections that you have of discussions 23 concerning the insertion into the February 14th draft O,,)
s 24 by B&W of a decontamination clause in connection with 25 the performance warranty?
s ,_a- =. - -.a H
1 Charnoff 142 2 A I assume there were, but I don't have any
, 3 recollection.
4 Q Was it your understanding at the time that l 5 these negotiations occurred that the contract as 6 finally negotiated provided that in the event of any 7 breach of warranty, Met Ed would bear the expense of 8 decontamination?
9 MR. KLINGSBERG: Could I have that back, 10 please. (
11 (Question read. )
12 A I have no recollection of that at all. As
'" 13 a matter of fact, I am curious as to whether the final i 14 contract contains the provisions that we looked at.
i j 15 It may or may not, but I really don't have any 16 independent recollection of that.
17 Q Well, let me show you Plaintiffs' Exhibit 18 193. We can at least satisfy your curiosity on that 19 point. First looking at the performance warranties 20 and the remedy sections therefor, if you will turn to 21 page 26 of the executed contract, you will see 22 subparagraph Lb ) . If you like, you may compare that 23 with subparagraph (b) in the March 24, 1967 draft.
() 24 I believe you will find they are identical.
25 A 0.K.
_ _ _ _ _ _ _ --. - _ _____. __. . _ _ __ _ _ - ~ _ . _ . . _ _ . _ - , _ _
1 Charnoff 143 h
v
^
2 Q With respect to the design, workmanship 3 and materials warranty, you may turn to page 28 and 4 it carries over onto page 29. You will find
( 5 subparagraph (e), which I believe is also identical 6 to the March 24, 1967 draft.
7 A Thank you. ,
8 Q So after looking at the final executed 9 contract, does that in any way help you to answer 10 my earlier question, whether you had any understanding 11 at the time this was negotiated and executed as to 12 whether for breach of warranty Met Ed was required to
[ -
\' 13 bear the expense of any decontamination?
14 A I really have no generalized recollection other 15 than what I see in this final executed document, and 16 that tells me that for those specific warranties, 17 those clauses apply. ,
18 Q Were there any other warranties in this 19 contract other than those contained in Ar'ticle V7 20 A I would have to 1cok at them. I doubt it, but 21 I don't remember.
22 Q Well, I don't think you need to take the l 23 time now. You have no recollection of any such t
() 24 warranties?
l 25 A That's correct.
i
1 Charnoff 144 b 2 MR. KLINGSBERG: You are talking about 3 expressed warr'anties?
4 MR. WISE: I am talking about warranties.
5 MR. KLINGSBERG:- I object to that question.
((
6 MR. WISE: The question has been answered.
7 MR. KLINGSBERG: What?
8 MR. WISE: I said the question has been 9 answered. You may have your objection.
10 MR. KLINGSBERG: I assume you are not 11 having any difficulty with the fact that my 12 objection and the answer came more or less at
'- 13 the same time so it was registered a second
- 14 later.
15 Q Let me ask you to look at Exhibit 89 now, e
16 which is your December 29, 1966 draft, and in particular 17 I would like you to look again at the remedy section 18 under the design, workmanship and materi[1s warranty 19 section at page 26, subparagraph (c) .
20 Do you recall putting that section in your 21 draft?
22 A I have no recollection of putting it in.
I 23 Do you have any recollection as to what Q
i (J)
~
24 you meant by the first sentence of that subparagraph 25 (c) ?
1 Charnoff 145 2 A I have no recollection as to what I meant at 3- the time I did whatever I did.
4 Q Do you have any recollection of any 5 convgrsations with anyone concerning the first sentence
(
6 of subparagraph (c) ?
7 A No.
8 Q Would you look now at the final executed 9 contract, Plaintiffs' Exhibit 193, and tdrn to page 10 30. I believe that is the same subparagraph (c)
- 11 that appears in your December 29, 1966 draft, although
, 12 there are some changes to the second half of that O 13 clause. Would you look just at the first sentence 4
14 of it and tell us if it is not identical to what you
- 15 drafted on December 29, 1966. '
16 A It is not --
17 MR. KLINGSBERG: Wait, wai[..
4 18 MR. WISE: If you are worried about who 19 drafted what, I mean, I can change the question.
20 MR. KLINGLBERG: Would you do that.
- 21 Q Would you tell us whether or not the 22 provision in Plaintiffs' Exhibit 193, the final 23 executed copy, is not the same as the first sentence l
) 24 in B&W Exhibit 89, the December 29, 1966 draft?
25 A The two sentences appear to be identical except
1 Charnoff 146 A -
V 2 that in one case the term Babcock & Wilcox is spelled 3 out, and in the other it is B&W.
4 Q Would you next look at -- I put before you
() 5 Plaintiffs' Exhibit 178, which is the B&W proposal, 6 and I would like to refer you to part 15.14 which 7 appears at page 15-6 of the portion of Plaintiffs' 8 Exhibit 178 you have before you. That section is 9 entitled " Loss or Damage to Property and Injury to 10 Persons." 4 11 Would you put next to it' Defendants' 12 Exhibit 88 and specifically page W 00093, Defendants' 13 Exhibit 88 being your draft of December 1966, first 14 draft of December 1966 --
15 MR. KLINGSBERG: What page is that?
l 16 MR. WISE: W 00093.
I 17 Q Now, looking at subparagraph'4 that appears 18 on page W 00093 of your December first draft and 19 comparing it to the second paragraph of section 15.14 20 in the B&W proposal, is it correct that with the 21 exception of changing the words " purchaser and 22 company" into " Metropolitan Edison and Babcock &
23 Wilcox," respectively, the typewritten portion of your (D
V 24 December 1st draft is identical to the B&W proposal?
25 MR. KLINGSBERG: I might say that on all
1 Charnoff 147
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N.J 2 of these that in order to save time, we are not 3 stonping to actually do proofreading, but more or 4 less are accepting what you say, subject,
( 5 obviously, to checking it later on if there is 6 some error.
7 MR. WISE: That is acceptable.
8 A It appears to be the same, yes.
9 Q Did you understand what was meant by the 10 second paragraph in the B&W proposal,tsection 15.14?
11 A I hope I.did.
12 Q What did you understand it meant?
r's) v
'/
'- . 13 A I have no idea. You are asking me'now what 14 I understood it meant 14 years ago?
15 Q Yes.
4 16 A I have no idea.
17 Q Now, on Exhibit 88, your December first 18 draft, the last four and a half lines have been 19 stricken in hand and a handwritten insert' ion has been 20 made. I believe we went over yesterday what that read.
21 I think you read it into the record. * '
22 Do you recall your reason for striking 23 the last four and a half lines and making the
() 24 insertaion you did?
25 A Yes. I am sure I do recall it. Could we go 1
s 1 Charnoff 148 2 through those words again -- I can't read it terribly 3 well -- I have on this copy again.
4 Q If you would look at Exhibit 89, which is
( . 5 your December 29, 1966 draft, the next in order, and 6 turn to page 31, you will find the same subparagraph 7 4, I believe, which appears to be identical with that 8 subparagraph as it appears in the first December draft 9 s except for the concluding lines which, upon my 10 comparison, appear to incorporate the pandwritten 11 changes that appeared on the first December draft.
12- A O.K.4 I think I did testify to you testerday --
1 13 MR. KLINGSBERG: That was asked and 14 answered yesterday.
15 A Yes. I could repeat it.
4 16 I was intent on, when I reviewed thic first 17 draft that I prepared, to be sure that I was 18 discussing matters or limiting these kinds of 19 exculpatory e.2 auses, that I was limiting them to 20 matters relating to or arising out of this scope of
, 21 work that*B&W was providing under this particular k
22 contract, not under any other contract or independent 23 of these contracts.
m lj 24 Q' Did you have any understanding at the 25 time that you struck the last several lines from the
1 Charnoff 149 2 B&W proposal as to the effect upon Met Ed's right to 3 recover in the event of a nuclear incident?
4 A You are talking about the deletion, not the
( 5 insertion? -
6 MR. KLINGSBERG: There is no question yet.
7 THE WITNESS: Yes, he did. He asked a 8 question.
9 Q I am talking about looking at the B&W 10 proposal which contains language begidning "or 11 regardless of negligence when resulting in whole or 12 part, directly or indirectly, from nuclear reaction, C) ,
- 13 nuclear radiation or radioactivity, contamination, ,
9 14 whether controlled or uncontrolled." That language 15 was eliminated in your first December 1966 draft 16 in handwriting.
~
17 A Yes. .
18 Q And it appears to be out of the December 19 29, 4966 draft as well; correct?
20 A Correct.
21 Q And my question is: did you have any 22 understanding at the time as to what the elimination 23 of that language from the draft would do in the event r's I of a nuclear incident?
24 25 MR. KLINGSBERG: Wait a second. You are
. - - _ ~ _ _ . _ - _ - . . .- .. . _ _- . _. ._- - - = _ . . - - -
1 Charnoff 150 i .
2 now talking about the striking of the language
.3 in Exhibit 178, regardless of negligence 4 resulting in whole'or in part, et cetera, as l{ 5 distinguished from what we were talking about 6 earlier, which was the substitution of some
. 7 different language about performance of the 8 contract, et cetera.
9 MR. MISE: That's correct. I am not i 10 interested in the handwritten insertion. I am 11 interested in the handwritten deletion.
12 MR. KLINGSBERG: What was stricken out, i -O 13 o.K. .
i 14 Q Did you have any under understanding at 15 the time as to what the striking of that clause, what
. 16 change that would make in the operation of this l 17 contract? .
18 A Yes.
19 Q What was your understanding?
20 A I believe I struck it because I thought that 21 that was covered by the Price-Anderson Indemnification 22 Act and that it was unnecessary.
23 Q Now, if you would look at Exhibit 91,
() 24 B&W Exhibit 91, and turn to -- the next in order, 25 that is the January 1967 draft. Turn to page 31 of l
- . . . - _ . - . . - ~ - . , . - - . . - , , . - - , - . . - . - , - . - _ , -
1- Charnoff 151 0 2 that draft. I believe you will agree that with the 3 exception of the description or wording used to describe 3 4 the facilities which apparently changed slightly,
({ 5 that the paragraph is otherwise identical to the 6 December 29, 1966 draft. ,,, ,
7 A Generally that is correct.
8 Q Now, if you would look at B&W Exhibit 92, 9 turn to page 31, B&W Exhibit 92 being the February 10 14, 1967 draft which contained B&W's c'omments on the 11 January 27th draft.
12 A Page what?
13 Q Page 31.
14 MR. KLINGSBERG: This is 92. Is there 15 a W number?
16 MR. WISE: Yes, it is W 00303. Up at the 17 top it is page 31. .
18 A The W again, means what?
19 MR. KLINGSBERG: It means it comes from
/
20 your files.
21 THE WITNESS: Now, what am I supposed 22 to be examining? ,
23 Q If you would look at subparagraph (4) on
) 24 that page and compare it to subparagraph (4) on the 25 earlier draft, the Canuary 27th draft, and tell us
- Charnoff 452 0 2 if the language which appears at the bottom of that 3
subparagraph and is double underscored, if you recall 4
where that language came from.
( 5 which?
. K SBERG , Compare page 31 with 6
7 MR. WISE: Compare page 31 of the February g 14th draft with page 31 of the January 27th g draft.
10 MR. KLINGSBERG: What exhibit is that?
gg MR. WISE: The January 27th draft is Exhibit 12 91, B&W Exhibit 9-1. The February 14th draft 13 is B&W Exhibit 92.
74 MR. KLINGSBERG: What page?
15 THE WITNESS: What page on Exhibit 917 16 MR. WISE: On Exhibit 91 it is page 31.
g On Exhibit 92 it is also page 31. ,It makes.it
~
18 easy.
gg A What was your question? '-
Q Have you had a chance to compare those?
A The paragraphs?
Q Yes.
g A Yes.
Q You will note that on Exhibit 92, the February 14th draft, someone has added four lines and
'l Charnoff 353
- - 2 they are each double underscored.
3 My question is: do you have any 4 recollection of who added those lines?
5 A
( I don't have a specific recollection. My 6 understanding is these were added by B&W in the course 7 of their comments on my draft.
8- Q Do you recognize the handwriting 1
9 immediately to the left of the addition?
10 A Yes, that is mine. t 11 g What does it say?
12 A " Delete because of NELIA and P-A and this is so O- 13 broad it would apply to fuel fab at.B&W site." And 14 that confirms what I recalled just a moment ago, that 15 the reason I had deleted this language from the 16 original B&W proposal is that I thought it was 17 unnecessary because of the third-party liability
) 18 insurance that is covered by the Price-Adderson 19 Indemnification Act, and NELIA stands for'the Nuclear 1
20 Energy Liability Insurance Association third-party 21 liability insurance that provided the first cover of, l (.
i 22 I think, at the time $60 million. And then it was i
23 followed by Price-Anderson above that until $560
'( 24 million. That is the comment on the left.
, 25 The second part of that comment which
~
i t
1 Charnoff 354 O , 2 says "this is so broad it would apply to fuel 1
3 fabrication at a B&W site" meant to say this would 4 apply even to negligence or happenstance involving
(> 5 a nuclear release at a Babcock & Wilcox site. And 6 you will notice that there is a handwritten insert 7 on the next to the last line of that paragraph which 8 appears to be in Fox Trowbridge's handwriting which 9 was intended to reply to my concern about the fact that 10 this was so broad as to cover fuel fabrication .
11 incidents at a B&W site.
12 Fox apparently suggested inserting the 13 term "resulting from incidents at the site."
14 Q Let me ask you first with respect to your 15 comment about the clause being so broad it would 16 apply to fuel fab situations at a B&W site. Did you 17 have in mind damage to property that belonged to l .
18 B&W at that site?
t 19 A I don't honestly know. Again, as I think I 20 told you, I was trying to limit all of these kinds of 21 clauses to activities provided or services provided C.
22 by Babcock & Wilcox in connection with this particular 23 contract, and so I was concerned -- and I am sure my
() 24 memory is correct on this -- that the way this would
- 25 have read is there would have been some sort of l
.4
_L _ .-. -- . . _ - - .- - - = - - - - - -
1 Charnoff 155 2 indemnification and hold harmless by Met Ed for, 3 I guess, any liability B&W would have to anybody else,
- I guess, for an incident at its own site, whether or
( 5 not that was related indeed to fuel fabbication for 6 this particular plant, and I felt that that was too 7 broad. That was the general approach I had.
8 Q Isn't it correct that at the time you 9 understood that under Price-Anderson Met Ed would be 10 protected by insurance and indemnification and a cap 11 from liability to third parties?
12 A Met Ed would be protected -- let me say that I 13 don't know that I can say. I don't know what I 14 thought at that time on that.
l 15 (Record read.)
16 A I know that I knew Price-Anderson and what it 17 provided for, and I know that I knew that Met Ed wasn't 18 protected by Price-Anderson for incidents at its site 19 or in the course of transportation to and Erom that 20 site. I also know that I knew that Met Ed was not 21 protected under Price-Anderson for an incident at a 22 fuel fabrication site, whether or not it included or 23 involved Met Ed fuel.
l
() 24 Q Do you have any recollection as to why 25 you crossed out your handwritten notation.at the 1
1
1 Charnoff 156
,a ~.
2 left margin?
3 A I can't tell you that I crossed it out.
4 Q Do you have any information as to who
( 5 crossed it out or as to why?
6 .A I have no knowledge as to who crossed it out.
I can't identify that X.
8 Q With respect to the handwritten notation 9 in the right-hand margin which reads " hold for INS 10 decision" --
t 11 A To me it says " discussion" and that is probably 12 Fox Trowbridge's handwriting.
/~'% .
i )
\/ 13 g Do you have any information as to what 14 that notation refers to?
15 A Yes. At one point or another, I don't know 16 whether Mr. Mestres was at whatever meeting this was 17 discussed at, but I do recall that 3&W wanted to have
~3 a discussion on all insurance and liability questions 19 later when Mr. Mestres was able to be prepared to deal 20 with these matters, and so we took some of these
- 21 matters and said we will discuss them later.
k 22 Q Do you recall whether that discussion ever 23 took place?
()
<~
24 A I am not sure.
25 g would you look now --
1 Charnoff 157 1
fm ~
(> ~ 2 A I believe it did.
3 Q You believe it did?
4 A' Yes. I can remember going up to Reading for
. 1( 5 a meeting on that issue. -
6 Q Do you recall who was there?
7 A No, but I am sure Mr. Mestres must have'been 8 there, but I can't recall.
9 Q Do you recall what happened during the 10 meeting?' t 11 A No.
12 Q Do you recall what was said?
13 A No.
14 Q Do you recall what subjects were discussed?
15 A I don't have any specific recollection of what
- 16 was discussed, no.
17 Q Just so that we complete the. chronology, l
18 would you look at Plaintiffs' Exhibit 192, which is l
19 the March 24th draft. Would you take a look at page 20 34.
21 A Wait a minute. I am not with you. 1927
!- hs 22 Q That's right. Take a look at page 34, -
23 subparagraph 04) which carries over onto page 35,
( 24 and again subject to Mr. Klingsberg checking up on 25 me,.would you agree that the language in the March l
\
1 Charnoff
, 158 m
U 2 24th draft is the same as that that appears in the 3 February 14th draft, incorporating the deletions 4 and additions that are marked on the February 14th
( 5 draft, including Mr. Trowbridge's handwritten comment, 6 "resulting from incidents at the site"?
7 A That appears to be correct.
8 Q And to finish it out, if you would briefly 9 look at Plaintiffs' Exhibit 193, which is the executed 10 contract, and again subject to Mr. K11ngsberg having
. an' opportunity to proofread one against the other,
.2 would you agree that the language of subparagraph (4) x- 13 appearing on pager34, carrying over onto page 35, 14 is identical to the March 24, 1967 draft?
v 15 A It appears to be.
4 16 (whereupon, a recess was taken.)
17 BY MR. WISE: ,
18 Q Mr. Charnoff, looking at Exhibit 92, 19 which was the February 14th draft with B&E's comments, 20 and specifically looking at the B&W addition of the
< 21 final four lines that are underscored, just so the k
22 record is clear, do you recall any discussions with 23 anybody at B&W concerning why they wished to insert D 24 that language?
25 A I can remember saying that I thought it
1 Charnoff 159 (T
~ ^
2 superfluous, and I remember, because of the Price-3 Anderson Act provisions, and I can remember people 4 from B&W apparently wanting it, and my feeling, if
(' 5 you insist on it, fine.
6 There were also some discussions about 7 concern with regard to the Price-Anderson Act not 8 being renewed because the Price-Anderson Act was 9 originally enacted in '57 for a ten-year period. Then 10 it was renewed again in '65 or '66 for another ten-11 year period, and some people in the industry, including 12 B&W people that were at those meetings, raised h
(~J
\- 13 questions of "what happens if Price-Anderson is not 14 renewed?" And I pointed out to them that in the 15 early 1960's there was an amendment to Price-Anderson 16 that assured utilities and vendors that if they had
~
17 received a construction permit, and a part or a 18 condition of the construction permit was the Price-19 Anderson agreement, which was provided by law and 20 regulation, that that went for the life of the plant 21 even if Price-Anderson was not later renewed. I
\.-m 22 remember having that discussion with Favrot and 23 Beisel, and I think with Mestres.
24 Nevertheless, I think they were
[JD 25 uncomfortable with the possibility of Price-Anderson
1 Charnoff 160
(\ .
(_). 2 not being renewed or some legislative change, so it 3 was in that concept that they kept changing. I 4 recall my attitudes it was no skin off my backs it
( 5 is just unnecessary. - ,
6 Q Do you have any recollection of anyone 7 from B&W indicating that they thought the language 8 was broader than Price-Anderson?
9 A No, I don't think so.
10 Q Do you have any recollection of any 11 discussion of subparagraph (4) in any of the forms 12 as it appears in any of the contracts we looked at 13 this morning with B&W concerning whether the clause 14 as a whole covered things beyond the Price-Anderson 15 Act?
16 A Oh, I think we would agree that the first part
~
17 is not -- does not relate to Price-Anderson. I think 18 we had no problem for that. That was for other than 19 nuclear risks. It was the latter part th'a't I 20 understood, and I think they understood, to be
< 21 concerned with third party liability Price-Anderson
(
22 type problems. So that the clause taken as a whole, 23 and it does go beyond Price-Anderson insofar as it
() 24 goes to non-nuclear risks, as you might call them.
25 Incidentally, as I look at this X on my
- - - - , - - . *m, r- .-,rr.-v----r-, -
,m . - , - - ,,.v-, , - ~ - , .--,.,,.4,-,-w----
1 Charnoff 161 I
2 handwritten note and the arrow there, as I told you, l 4
3 I can't recall who X'd it out, but I am sure it was 4 X'd out so that it wouldn't be typed in as a result
( 5 of that arrow there when the thing was retyped; i
6 or, I am pretty sure that is what it must have been 7 as to why it was X'd.
8 Q But 'goin'g back now to the language of the 9 paragraph as a whole, subparagraph (4), do you recall 10 any discussion as to whether or not the paragraph j
\
11 related to things other than third-party liability?
12 MR. KLINGSBERG: Wait a second. Could
(~~' ,
4 13 I have that question read ba'ck.
14 (Question read. )
15 MR. KLINGSBERG: I think that was just 16 answered. If you want it again --
17 THE WITNESS: No, no, it was.a different 18 question before.
19 A The answer to your question is no.
20 Q Still looking at B&W Exhibit 92, t
21 subparagraph (4 ) , looking down at the fifth line down 22 from the top, the phrase beginning " loss of or damage 23 to any property located on or off the site whenever
() 24 or wherever occurring," and it continues, did you 25 understand the words "any property" as used in that
1 charnoff 162
,OT 2 Ph rase to refer only to third-party property?
A I just don't recall any discussion of that 3
4 subject and I am having a hard time understanding what
( 5 I thought at the time of those particular words.
Q Did y u understand the words "on or off 6
7 the site" at the time it was incorporated in this g draft?
g A I am sure I understood the words at the time.
'J Q But you have no recollection of it now?
31 A I have no recollection of discussions on it.
12 I am thinking of it. I can certainly give you a
,O (l 13 judgment now as to what it might have heant, but I 14 can't give you any recollection today of what I 15 thought then.
16 Q I would like you to look at your December g7 .29, 1966 draft, Exhibit 89, and turn, if you will, ,
gg to page 29 of the draft attached to the e'x h i b i t . At gg the top of that page is the heading for Article VII which is entitled " Indemnity and Insurance," and 20 g beneath that, part A. entitled " Metropolitan Edison."
W uld you look at subparagraph (1) and 22 tell us what your recollection is of that that was 23
/^\ ,,4 intended to cover.
V -
MR. KLINGSBERG: You are asking for his
1 Charnoff 163
. (~\ -
U 2 recollection of his understanding?
3 MR. WISE: Yes, a recollection of his 4 understanding.
, ( 5 A I can't give you a recollection of my 6 understanding.
7 Q Do you have any recollection as to 8 whether or not the insurance to be provided under that 9 subparagraph was to cover' Met Ed property?
10 A I am having trouble having a recollection.
11 I am being affected really by a review of the words 1
12 as distinguished from having any recollection of 13 discussion.
I 14 Q Putting aside recollection of discusnion, 15 all I want to do is find out whether you can remember 16 anything about paragraph (1 ) , subparagraph (1) under I 17 - Article VII, and specifically whether that claus e- was 18 designed to require insurance under cert in 19 '
circumstances from Met Ed property; that is all I 20 want to know.
21 A The reason I am having trouble with that, I am 22 influenced by the words "until the equipment is 23 finally accepted" and I don't have any recollection l
- () 24 as to whether that meant Met Ed property or property
- j. 25 of the supplier prior to it becoming Met Ed property, l
[
4
- 1 Charnoff 164 v 2 and I have no recollection of that.
3 Q Do you have any recollection of the 4 ' considerations that went into drafting this particular
( 5 subparagraph? -
6 A All I remember in connection with this is a l 7 meeting or meetings where Ray Wirtz, I think his name 8 was, was the insurance manager, came down to talk to 9 me about conventional insurance, and I remember 10 discussions with him and I think with B,&W, but I 11 can't relate it specifically to this particular 12 paragraph as distinguished from this general section.
(~N
~
13 Q Was this paragraph intended to cover 14 property on site?
15 MR. KLINGSBERG: Again, when you say C " intended," this comes from, if you trace it i
- ? back, I believe, to the B&W draft and B&W 18 language, so when you ask, "was this intended," i 19 I assume you are saying his understanding.
20 MR. WISE: He also included it in his 21 first and second draft and these are drafts 22 that didn't even go to B&W, 23 A Your question was: was it intended to apply
( ) 24 to property on site?' was that your question?
25 Q Yes.
1 Charnoff 165 d 2 A I really have no recollection of that because 3 I don't remember whether risk of loss passed when the 4 property arrived on site or sooner. I really have no (l 5 recollection of that.
6 Q Would you look at page'17 of the contract 7 draft that you prepared, the December 29th draft, 8 Exhibit 89. On that page I believe there is a 9 subsection titled "B. Risk of Loss." Would you look 10 at subparagraph (1) which reads: " Title to the 11 equipment and systems supplied by Babcock & Wilcox, 12 and risk of loss thereof shall pass to Metropolitan M Edison upon delivery of such equipment and systems 14 in an undamaged condition to the unloading point 15 at the Three Mile Island site or offshore near the 16 plant site if an offshore unloading point is designated 17 by Metropolitan Edison for barge delivery.." There is l 18 a final sentence which I don't believe is relevant.
l _
l 19 Does that help refresh your recollection 20 as to when the risk of loss was to pass to Metropolitan 21 Edison under the draft that you prepared?
22 A Yes, and I remember it now that I look at that.
l 23 I remember trying to relate insurance obligations to
[)
. %.)
24 passage of title and if this says what it says, then 25 all I can do is give you a current interpretation of
l 1
Charnoff 166 O 2 that as it applies to page --
3 Q Page 297 4 A Page 29. '
( 5 Q The opening lines of subparagraph (1) 6 on page 29 concerning insurance are: "From the date 7 that risk of loss of or damage to the equipment and 8 systems furnished hereunder passes to Metropolitan 9 Edison..." and then the paragraph continues.
10 So again, are you able to 'tell us whether 11 or not subparagraph (1) was intended to cover Met Ed 12 property on site?
13 A I can give you a current interpretation, but 14 I can't go beyond what I just told you in terms of 15 recollections.
s.
16 Q You have no recollection one way or the 17 other? .
18 A I think I have told you. All that comes to mind l . .
19 as I look at this is,I remember trying to relate risk 20 of loss and insurance provisions and obligations
~
21 and then we can read these paragraphs and see what 22 they say, but I have no other recollection as such, 23 no.
O
'() 24 Q Let me ask you to turn to the letter, i
25 the cover letter that accompanied your December 29, I
1 Charnoff 167 2 1966 draft. The cover letter is from you to Mr.
3 Neidig, and if you would look at the second page of 4 your cover letter and the final paragraph at the
( 5 bottom which is numbered 6, entitled " Insurance,"
6 would you read the first paragraph under 6 and tell 7 us if that helps to refresh your recollection as to 8 what you had in mind with respect to subparagraph 9 01 ) under Article VII-A7 10 MR. KLINGSBERG: Can I have the question 11 back after he is finished reading it.
12 (Record read.)
O d 13 MR. KLINGSBERG: That is at page 29 of the 14 same exhibit?
15 MR. WISE: That's correct.
16 A The memory it invokes was, and it is triggered 17 by the sentence "We have limited this to. insurable 18 risks," was some effort on my part to perceive what it 19 was B&W was striving for and to commit us only to 20 getting that kind of insurance that we could get, and 21 if I recall correctly, I remember thinking that if 22 B&W had;.no title or equity insurance interest of 23 some sort in the property, I didn't know how B&W could
() 24 be a named insured. That is the memory that it 25 invokes.
. .. . .- _. . . ~ - . . .
~
1 charnoff 168
\
2 Q Does it help invoke any memory as to what 3 this insurance was going to cover in general, even in 4 the broadest sense?
( 5 A Well, it was to cover. damage to the equipment 6 being provided by B&W, I think. I believe that's 7 right.
8 Q Now, looking at the letter and taking the g last sentence of the carryover paragraph on the third 10 page of the letter, the sentence which-(reads :
11 " Depending upon Met. Ed. policy, however, Met. Ed.
12 might wish to simply hold B&W and its suppliers 13 harmless and to obtain waivers of subrogation from the 14 insurers for the benefit of B&W and it suppliers."
15 Do you have any recollection of what you 16 had in mind concerning the possibility of Met Ed 17 holding B&W and its suppliers harmless as a substitute 18 for the insurance that is mentioned in the subparagraph
~'
19 (3 ) , Article VII-A?
20 MR. KLINGSBERG: I object to the form of 21 the question.
22 A I am not sure I do. Could you restate it?
23 Q What were you suggesting in that sentence hJ 24 of your letter?
25 MR. KLINGSBERG: Are you suggesting that he
. - . . . . . - - ~ _ - . . .
1 Charnoff 369 m
2 was suggesting something other than what the 3 sentence said?
4 THE WITNESS: I'm sorry?
i c MR. KLINGSBERG:
{ I said he is suggesting
} 6 that the sentence suggests something other than 7 what the sentence says.
8 MR. WISE: I am asking him to explain what i
i g it was he was suggesting.
10 MR. KLINGSBERG: Whether he recollects.
11 A The only recollection I have is I was trying to 12 find some way to meet the problem of this business of
~
km,s) 13 having B&W being a named insured with respect to some 14 of the equipment that it was supplying, but I can't s
15, recall anything more than that.
76 Q Were you suggesting the use of a hold 17 harmless device of some sort? .
18 A I take it that is what the letter says. I
~~
19 don't have a recollection of that.
20 Q Did you have an understanding atothe time ni as to what was meant by a hold harmless agreement?
k.
22 A *I hope I did.
23 Q Did y u understand that such an agreement 24 might be used to cover the equipment and systems that
(~]'s
\_
25 were being furnished to Met Ed even after title had
1 Charnoff 370 0- 2 passed to Met Ed?
3 A Would you repeat that'again?
4 Q Did you understand that a hold harmless
( 5 agreenent could be used to cover equipment and systems 6 that belonged to Met Ed?
7 A I'm sorry. That is a different question than 8 what you said before.
I 9 MR. WISE: Could you read it back, please.
10 (Record read. ) t i 11- A Yes, for the period.of time while there was a 12 B&W obligation with respect to that equipment, that is, O 13 prior to acceptance, I was looking at that particular 14 point in time when property was moving from one party
, 15 to the other and B&W nevertheless continued certain 16 obligations that it had with regard to it.
17 Q And you understood that the wordg " hold s .
18 harmless" could refer to Met Ed property as well as 19 property belonging to other persons?
20 A I don't know that I used these terms in the
< 21 letter to Mr. Neidig as any words of art or anything N.
22 else, so I really can't tell you what I was thinking 23 specifically when I wrote this specific letter. I 24 can't tell you that today.
i 25 Q Would.you look at the following paragraph
t I charnoff . 4 74 -
0 2 in your lette.r which reads: "We have also limited the 3 hold harmless agreement proposed by B&W to harm 4 caused by the negligence of Met. Ed." And there is
( 5 a reference to subparagraph- (4 ) of VII-A, which I 6 believe is the clause that we have been discussing at 7 some length this morning, involving Met Ed's 8 indemnification under certain circumstances with B&W.
9 Did you mean anything different by the 10 words " hold harmless" as they appear l'n the paragraph 11 referring to subsection (4) that I just read to you
_ 12 from your letter than you meant by the words " hold
'~'
13 harmless" appearing just a few lines above it in the 14 carryover paragraph in your letter?
15 A I really have no idea whether I meant to use 16 that term in an identical way or in a parallel way.
17 Q Did you have any understanding that the 18 words " hold harmless" were a term of art that was l 19 restricted to only liability to third parties?
l 20 A I have to assume I did, but I don't know whether 21 I did.
22 Q You don't remember one way or the other?
23 A That's correct.
! /g
( (_j 24 Q You don't remember why you used the words l
l 25 " hold harmless" in the carryover paragraph?
f i , - . ._ _ .__ _ _. . .. . . _ . . _ . - - . , - - - . - - - - , - - . - --
1 Charnoff 172 l O 2 A ,The carryover paragraph being --
3 Q The one in subsection (1) concerning 4 insuranco for equipment and systems prior to final l 5 acceptance. -
6 A I'm sorry, are you talking about the carryover 7 paragraph in the letter to Mr. Neidig?
8 Q Yes.
9 A The first paragraph of item 67 10 Q Yes. t 11 A I cannot tell you today why I used that term in 12 that paragraph at that time.
O.
13 Q Did you ever consider in the drafting work 14 that was done on subparagraph (4) of Article VII-A 15 whether the words " indemnifies and holds harmless" 16 would cover more than liability to third parties?
~
17 A I don't recall that either. ,
18 Q Do you recall having any discussions with
~
j 19 any person concerning that question?
20 A No.
21 Q Do you recall any writings other than those 22 we have shown you today and yesterday concerning the 23 meaning of the words " indemnifies and holds harmless" 24 as they appear in subsection (4) of Article VII-A-?
. \_
[ )h 25 A I don't remember that we spent any time at all
1 Charnoff 173 i
X (Q 2 on the meaning of those words.
3 Q Looking at B&W Exhibit 92, page 31 of 4 the draft -- this is the February 14, 1967 draft that
( 5 contains B&W comments -- and looking at the language 6 inserted by Mr. Trowbridge, "resulting from incidents 7 at the site," do you have any understanding as to 8 what Mr. Trowbridge's insertion was to mean?
9 A I can only understand that in terms of my 10 comment on the left-hand side of the p)ge -- are 11 we looking at 31? I'm sorry.
e 12 Q Page 31, yes.
13 MR. KLINGSBERG: Which exhibit is this?
14 MR. WISE: Exhibit 92.
15 A Yes, I understand that as his response to the 16 second part of my marginal note on the left-hand side 17 with regard to my concern relating to an. incident i 18 involving a B&W fuel fabrication program, I think.
i 19 Q Well, I guess my question is directed at 20 your understanding of the words " incidents at the I
. 21 site." Does that mean, for instance, an event such i m 22 as the accident at Three Mile Island, as you understood i
23 it at the time?
i O)
(, 24 A Yes. I understood that whole added clause that 25 B&W had initially deleted and then put back in as l
L
1
. Charnoff 174 4
r3 '
O 2 relating to a large nuclear incident of the type 3 covered by Price-Anderson. That would apply to an J 4 incident such as recently occurred at Three Mile
( 5 Island. -
6 Q Now, would you look at Plaintiffs' Exhibit --
7 A You will notice, i'f you look at page 31A 8 of the same draft, that I made a similar type of 9 comment in the left-hand side of the margin, and the 10 Trowbridge insert seems to apply to that type of 11 concern.
12 i
r-Q Could you read your comment on that page?
, k-)N 13 A It says "What .about an accident at B&W's plant 14 involving Met Ed owned fuel?"
15 g What were you concerned about there?
16 A It is a parallel type of observation that I made 17 on the previous page, and I must have been concerned 18 there about loss or damage 'n Met Ed owned fuel, 19 and it was really the breadth of this lan'uage g that 20 was the parallel observation to the one made previously.
21 Q And you were concerned that this language 22 might well prevent Met Ed from recovering damages 23 as to its' fuel?
f~)
s_-
24 MR. KLINGSBERG: I object to the question.
l i
25 We are now.in clause B.
i e- - - yw-i- 9 ,--r, ,,q- w- -yy ,we,- r-y--ww5- w 9 -, -% w w r+ y- --m, -wwy
s 1 Charnoff 175 2 MR. WISE: What is the basis of the 3 objection?
4 MR. XLINGSBERG: The basis of the objection
( 5 is it wasn't clear that we are now talking about 6 a different clause.
7 MR. WISE: It is new clear that we are ,
8 talking about a different clause.
9 Q could you answer the question.
10 A What was the question? t 11 (Record read.)
12 A I believe so.
p k- 13 Q Would you now turn to Plaintiffs' Exhibit 14 178 and look at section 4 5.10 whi ch appears at page 15 15-3.
16 A What paragraph?
17 Q We are on 15.10 of 15-3 of Plaintiffs' 18 Exhibit 178 which is the B&W proposal.
19 A I'm sorry.
20 Q Plaintiff's Exhibit 178, the B&W proposal.
< 21 Now, if we would all turn to page 15-3
(
22 of that exhibit, and on that page there is section 23 15.10 which is titled " company Liability."
( ) 24 Now, if you would next take B&W Exhibit 88, 25 which is the first December 1966 draft, and turn to
k 1 Charnoff
, 176 7
2 page w 00101. ,
3 Has everybody found that? \
4 If you would look.atthatpage[,on
[%
5 Article XII titled " Consequential Damages.'"
6 Have you got that?
< e b-s 7 A Yep. - '
, .s 8 Q \ Not, if you would compare Arti'cle.XII-x s,
~, '
9 in your first' December draft to .qection 15.10 in the B&Wproposalanbtell us whether the language in your 10 11 Decomber draft as originally typed before any - s
,' , , s.
12 handwritten cha'nges were made was identical to the g x -
V 13 language prdpose~d by B&W in Exhibit 1787 i ,'1 14 A It certainly appears to be, with the exception s ,
15 of identifying'"the company" which appears in the w 3 16 proposal as Babcock c( ilcox in thi' draft contract.
17 Q ,
idf[you' understand the meaning of Article 18 XII when you incorporated it into your' draft of N 3 19 Decembe'r'1966?' .
20 A I hope I,did. , ,
, 21 Q 1 Do'you,have any' recollection of your 5( ,
22 understanding of it today?
23 A No. '
4 s.
.\
,or rath b, do you have today an
[]
v 24 Q s 25 understanding of your -- what you meant? -
\ %
- t. %
. . , . . . . , . - , , . . - - -- - ~~ -*" - * ~ ' ' ~'* ' ' ^ ^ ~ ' ' ' ~ ~
)
1 .
Charnoff 177 b
o 2 A I have no recollection today of a specific 3 understanding with regard to these specific words.
4 I mean, that is, this clause as distinguished from
( 5 similar clauses, that I might have 'seen other 6 arrangements generally in the same basic time frame, 7 but I have no specific recollection of what I thought
- t- 8 these words might or might not have meant.
9 Q Now, looking at B&W Exhibit 88, you will 10 note that in handwriting someone has crossed out the 11 last four typewritten words which read "from any 12 cause whatsoever" and penciled or penned in the words
'-) 13 "out of the performance of this contra t."
14 I believe yesterday you testified that 15 that was your handwritingi is that correct?
16 A That is correct.
17 12 Do you have any recollection.of any 18- discussions with anyone concerning that change?
j 19 A Yes, I do recall an explanation of this kind of 20 change with Favret and Beisel. I can't tell you that 21 it is specifically this one rather than some of the 3 km 22 others, but as I said, any clause that limited our
? 23 rights against B&W or purported to limit those rights,
.(-)
24 I wanted those related to the. services or equipment 25 performed by B&W under this contract as distinguished i ?
N 1 Charnoff 178 2 from other activities by B&W independent of the -
3 contract or other activities by B&W under any other 4 contracts.
{ 5 Q Let's look at your December 29, 1966 6 draft, Exhibit 89. If you would turn to page 40, you 7 will note that on that page Article XII appears, and 8 I believe, without having you read word for word, that 9 Article XII in the December 29th draft is identical 10 with Article XII in your first December draft but 11 incorporating the handwritten deletion and addition.
12 A That appears to be correct.
g
/
13 Q Would you next look at the January 27th 14 draft which is B&W Exhibit 91, and take a look at 15 page 40 again, which also contains Article XII, 16 the consequential damages clause, and with the 17 exception of the shorten 3ng of Babcock &,Wilcox to 18 "B&W," would you agree that there are no differences 19 between the December 29th draft and the January 27th 20 draft?
21 A That appears to be correct.
22 Q Next, would you look at B&W Exhibit 92, 23 which is the February 44, 1967 draft. Again turn to
,m 24 page 40, which also contains Article XII titled
( -)
25 " consequential Damages." You will note that on that
1 Charnoff 179
~
(~ .
( 2 page the last seven words "out of the performance of 3 this contract" have been typewritten over and dashed 4 out. Do you know who took that material out?
5 A well, I assume the typewritten deletion was a
({
6 B&W proposal, accompanied by the B&W proposal to go 7 back to the original language.
8 Q They had typed in the words "from any 9 cause whatsoever"?
10 A Yes. t 11 Q And double underscored that?
12 A That's right.
13 Q Now, someone has crossed those words out 14 and handwritten in some additional material. Do 15 you know whose handwriting that is?
16 A That appears to be Trowbridge's handwriting.
17 Q Can you read it? ,
18 A "Out of the construction or operation of the 19 Three Mile Island nuclear station."
20 Q Did you have any discussions with Mr.
21 Trowbridge concerning this change?
22 A I don't remember any specific one. I vaguely 23 recall perhaps even being at the meeting when we
() 24 arrived at this language.
25 Q Do you recall any of the discussions
x 1 Charnoff 380 2 concerning this change?
3 A I think I made the same speech as to what I 4 was trying to do, that I had given you just a few
( 5 minutes ago, and I don't really recall the B&W 6 response.
7 Q Do you recall anything anybody from B&W 8 said as to why they were unhappy with the language 9 as proposed in the January 27, 1967 draft?
10 A No. (
11 Q Did anybody from B&W ever tell you why 12 they were opposed to that language?
\/ 13 A They may have. I don't remember.
14 Q Do you have any recollection'as to 15 anything anybody from B&W said as to why they wanted 16 the language "from any cause whatsoever"?
17 A No. I am sure we talked about it because 18 these things don't just happen, but I can't recall the -
19 specifics of any conversation.
20 Q Just so that we finish this up, do you
, 21 recall any discussion at any time with anyone about 22 the language that appears in Mr. Trowbridge's 23 handwriting?
() 24 A N_o . I vaguely recall a sense that those words 25 are about what I was intending with my change, but
1 '
Charnoff 181
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2 I don't know that we spent a lot of time on it. I 3 do recall a discussion of it because, as I say, you 4 don't move from one proposal to another, to another, 5 without some discussion. I don't remember it being a
(
6 very heated matter.
7 Q Do you remember who proposed these words?
8 A I have a feeling Fox Trowbridge.
9 Q Do you hava a feeling or a recollection?
1 10 A No, a recollected feeling. t 11 Q Did he propose them during the course of 12 a meeting or at some other time?
13 A No, that's why I think I was even at the meeting.
14 My recollection was -- yes, I have a recollected 15 feeling of Fox proposing that and I was saying O.K.
16 and I think it was at that meeting.
17 Q And you don't remember anythi,ng more 18 specific than that?
~
19 A No.
20 Q For the sake of completeness, let me ask 21 you to look at the final contract, Plaintiffs' Exhibit b 22 193. If you would look at page 45, the final -- the 23 Article XII appears on that page, entitled
" Consequential Damages."
( 24 25 Again subject to someone doinc a better
1
. Charnoff 182 t
\_ 2 job of proofreading than I have, can we agree that the 3 final language on this article is identical with the 4 language on the February 14, 1967 draft incorporating 5 the handwritten deletions and additions by Mr.
(
6 Trowbridge?
7 A You have got a good proficiency as a proofreader.
8 I don't quarrel with that.
9 MR. WISE: We vill take a few minutes 10 break. .
11 l (Whereupon, a recess was taken.)
12 BY MR. WISE:
0
\~/ 13 Q Mr. Charnoff, you testified yesterday that 14 you had very minor involvement in the TMI-2 contract, 15 and we covered that. I would like now to ask you 16 whether you were involved in any other contracts 17 aside from the contract for TMI-1 what'we have been 18 discussing this morning and the contract'for TMI-2 19 that we discussed briefly yesterday, between B&W and 20 Met Ed?
21 MR. WISE: Could you read that question 22 back.
23 (Question read.)
I~h 24 A I really wasn't involved in any of those
(
25 other contracts.
1 . Charnoff 183 f% -
t )
2 Q Have you had any involvement, for 3 instance, in the 1973 and 1974 master services 4 contract?
{ 5 A No. -
6 Q Any involvement in the 1975 long-term 7 training contract?
8 A No, I didn't evon know it exiated.
9 0 Would that also be true for the 1977 <
10 expanded scope master services contrac.t?
11 A That is correct.
12 Q Mr. Charnoff, were you ever involved in
%.) 13 any of the fuels contracts between B&W and Met Ed?
14 A Yes, absolutely. Yes, I was thinking of 15 Three Mile Island-2 when I answered your questions.
16 I did do extensive work on the TMI-1 fuel contract 17 with Babcock & Wilcox. .
18 Q Do you recall during those negotiations l
19 any discussions concerning insurance and t 20 indemnification?
l 21 A In that broad sense, no. I do recall seeing a 22 letter when I was getting some documents together for 23 you, I guess, between Mr. Bartnoff of, let's see, he i
i [~h
. Q,,1 24 is now President of Jersey Central Power & Light, 25 but I think he was then in the GPU Service Corporation I .-. - - . . . . . . . . - . - . , . --. , , . . .,- - . - - - -, - _ - _ .
1 Charnoff 184
[^'i ~
2 in charge of the Fuels Division or whatever it might 3 have been, and I believe Don Minner, who I think was 4 the principal negotiator for B&W, and there was a 5 letter from Bartnoff to Minner which was based upon
-(
~
6 some indications between me and Bartnoff which related 7 to a change in the clause that paralleled the one we 8 were talking about this morning that d&W was proposing, 9 that I think we' rejected. What's the nunber of that 10 clause?
11 MR. WISE: Off the record.
. 12 (Discussion of f the rccord.) .
(_ 13 Q Article VII-AC4), as it appeared in the --
14 A Nuclear steam supply system contract.
15 Q What did the letter say about that, as 16 best you can reco11 pct it? I don't happen to have a l 17 copy of it here with me. ,
18 A Mr. Minner -- can you give me a pag'e reference
~'
19 to that clause?
l 20 Q Why don't you look at the final contract, 21 Plaintiffs' Exhibit 193, and it appears on page 34 and 22 carries over to page 3 5,.
23 Let me ask you as a preliminary question, I'T 24 with respect to most of the, if you will, commercial
'v/
25 terms and conditions, was the TMI-1 NSSS contract l _ _. __ _ . _ _ . _ . _ _ _ . _ . _ . _ _ _ _ _ _
/
1 Charnoff 185 l'
U) 2 used as the basis for the drafting of the fuels 3 contract for TMI-17 4 A Yes. The understanding was that where there 5 were similar provisions in the nuclear steam supply
(
6 system arrangements, we would not try to renegotiate 7 these again in the fuel contract, and when we looked 8 again at the comments by Mr. Minner, I think it was 1-9 }l. either in the form of a comment or on a draft I hac l .
10 l prepared -- I think I did prepare the fuel :entract --
Il in connectjon with the provision paralleling VIX-A (4) ,
12 Mr. Minner proposed a change in the language that N- 13 related to "when due to the negligence of Met Ed,"
14 and there may have been some other related changes.
t 15 But I recall that, and I think he wanted language 16 like "when other" -- well, I better not speculate about i
17 it. He was substituting some new language on that, and 18 I took exception to that, communicated that to Mr.
I 19, Bartnoff, who in turn communicated it to Mr. Minner.
20 And frankly, I had forgotten about it until I had l
l 21 seen that letter, and I don't even know how it came j (.
22 out in the final fuel contract.
23 Q Do you recall any other discussions or l [) 24 communications concerning the insurance i v l 25 indemnification clauses in the fuels contract?
[
1 Charnoff 186 2 A No.
3 Q And do you recall any discussions or 4 communications regarding the consequential damages
{, 5 clause in the fuels contract?
6 A No.
7 Q And just to clear up -- I am not sure-6 whether I asked you this or not -- but uith respect
-b to tha NS.S contract forJTIII-17 do you recall any 10 discussion with anyone concerning tha meaning or ,
i 11 afJact cf the consequential damages clause? I think l
4 12 I earlier asked you cpecifically about*the language l s_- 13 that Mr. Trowbridge had inserted and the deletions 14 that B&W and you had negotiated. I am now broadening
. 15 my question to any discussions about the meaning or I
16 effect of the clause or any part thereof.
17 . A I don't remember any. That does'not mean that
~
i i
~
18 there weren't any.
l l 19 MR. WISE: I don't believe I have any I
[I 20 more questions at this time.
21 MR. KLINGSBERG: I would like to take 15 22 minutes or so to go over our notes and see 23 whether we have any cross-examination.
f~)
%.)
24 (Whereupon, a recess was taken.)
25 1
l
1 Charnoff 187
'[ -'
2 BY MR. KLINGSBERG:
4 3 Q Mr. charnoff, would you look, please, at 4 Exhibit 178, which is the Babcock & Wilcox proposal.
( 5 Page 15-10, paragraph 15.24.1, the second paragraph 6 reads: "No warranty express or implied not contained 7 in either this article or in the section of this 4
8l proposal entitled '
Performance' shall be applicable." '
l 9 Now, would you lock at your draft which it i ,
10 Exhibit 88. ;
i 11 { MR. WISE: ThaP. ir B&U Exl:ibit 88.
12 MR. KLINGSBSPG: b&W Exhibit 88.
("N '
(_) 13 Q If you can flip through the whole of 14 - Exhibit 88, and in particular focus on the comparable 15 provision which begins at page W 00085 and goes over 16 onto the next page.
17 Am I correct that in preparin,g Exhibit 88 18 you omitted the paragraph in the B&W proposal, e
19 Exhibit 178, which I have just quoted?
20 A That appears to be correct, yes.
21 Q And was that an intentional omission on 22 your part?
23 A Yes.
'~'T 24 Q What was your intent in eliminating that
, -]
25 paragraph from your draft 7
- w. . e.-. - , , . . ~ , . , . , , , -- , , n._. , - . . - - , - , , . - . . ,
1 Charnoff 188
[~'i '
2 A Simply an attempt to broaden whatever we could 3 get from Babcock & Wilcox and to avoid what appeared 4 to be, to me at the time, a narrowing of their 5 obligations.
(
- 6. Q Now, during the course of various' drafts, 7 if Mr. Wise will accept my proofreading of the 8 contracts, that clause from Exhibit 178 never got 9 inserted back ir.to eny of the drafts which we have L
10 ll reviewed or into the final contract. ,
l 11 Oid you have any discussions with LGW i
12 repr e c e r.tative s ebout that paragraph which we have jr'). -
\_s/ 13 quoted into the record?
14 A Yes. I generally remember telling them that I 4
15 deleted it for the purpose I told you, and that if 16 they had any specific implied warranties that they 17 wanted to have that applied to or to specifically.
18 make inapplicable, they could come back t'o me.
19 Q Is that all you recall of the~ discussions?
20 A That is correct. I don't ever recall that they i
21 did come back.
(_ .
22 Q Now, I would like to focus your attention 23 on what has been referred to as the portion of the
[~)
U 24 warranty provision relating to decontamination, about 25 which you were asked a number of questions, both in
1 Charnoff 189
[ >
'u 2 drafts as well as in the final contract, and in Exhibit 3 193 the clause appears on page 26 which is part of 4 Article V, entitled " Plant Warranties," and it
( 5 appears again at page 28, both references under the 6 ' remedy provisions to the warranty clause.
7 My question is: do you recall any 8 discussicna with Babcock & Wticox of the provision 9 relating to decontamination or any discussion of who 10 omars the cost of decontamination, other than in the 11 context of effectuating a repair or replacement of 12 a part under the warranty provisions?
(_>
% 13 A No.
14 Q Do you recall that B&W had any discussion 15 of decontamination provisions or who bears the cost 16 of decontamination in the event of a nuclear accident?
17 A No.
18 MR. KLINGSBERG: I have no further questions.
19 MR. WISE: I have no additional questions.
20 LTime noted: 12:25 p.m.)
km i 22 Gerald Charnoff 23 Subsqribed and sworn to before 24 me this day of 1981.
(}
25 i
~
1 ;
190
, 2 CERTIFICATE STATE OF NEW YORK )
,- 3
- ss.:
COUNTY OF NEW YORK )
4
(, y, NANCY A. RUDOLPH
, a Notary Public of the State of New York, do hereby certify that the continued deposition of GERALD CHARNOFF 8 ~
Was taken before , ,
June 23, 1961 \
9 consisting ,
l of pages through_ 33U l ',
3J6 I further certify that the witness had
^
been previously sworn and that the within
(
't)j transcript is a true record of said testimony;
, 13 That I am not connected by blood or marriage with any of the said parties nor
, interested directly or indirectly in the matter in controversy, nor am I 1n the employ of any of the counsel. '
19 IN WITNESS WHEREOF, I have hereunto set my 20 hand this ~/4 day of Ad; , / ff[ ,
g g/
22
% h Y-k N y A. Rudolph .
b-) 24 '
25
- __ _ _ _ . . ,_, - - , _ _ - . _ -.