VEX Battery accident

[Mschmeh144]

Hello

Recently, we had a incident with a vex 7.2 battery that powers the remote.
The incident is as follows
Unplugged battery from charge station
Turned on vex robot
Connected battery to the controller
-Everything is fine until the battery in the controller is connected.-
Battery starts smoking. I immediately unplugged the battery from the controller and as soon as it was removed it began glowing red hot on the internal contacts.
Placed it in the sink, and put it out with water ( I know your not supposed to put out electrical fires with water but I had to stop the smoke to prevent the alarms from triggering ) as of now it is leaking battery acid in the sink. It has cooled off and has a cup over top of it to prevent a fire.

First question is, why did this happen? It wasn't a error on my part, at least I don't think so.
Secondly, how do I dispose of this battery, and make sure it doses catch on fire?
Please help.