Insights

New York – November 16, 2023: Crowell & Moring LLP, in collaboration with Brooklyn Defender Services, filed a lawsuit on behalf of a Brooklyn mother and her son against the NYC Administration for Children’s Services (ACS) in the U.S. District Court for the Eastern District of New York over ACS’s numerous violations of the family’s constitutional rights in its ruthless investigations of baseless reports of abuse and neglect at their home and school. 

In Danziger et al. v. U.S., No. 25-cv-1241 (Fed. Cl. Apr. 10, 2026) (a Crowell & Moring case), the Court of Federal Claims (COFC) denied the government’s motion to dismiss a complaint seeking breach of contract damages for improper terminations in bad faith and/or abuse of discretion. The case involves hundreds of contractors for the U.S. Agency for International Development (USAID), who were terminated in 2025 in connection with the dismantling of USAID. The government sought to dismiss the case for failure to state a claim, arguing that the complaint failed to sufficiently plead bad faith or abuse of discretion. The court rejected these arguments, noting that the complaint was “replete with allegations implicating bad faith,” and specifically rejected the “peculiar notion” “that governmental misconduct is immunized when a contracting officer acts pursuant to directives from higher-ranking officials.” The court also held that the government’s payment of certain termination costs was no defense to the contractors’ breach claim and confirmed that an improper termination for convenience entitles contractors to termination costs as well as breach damages.

In Wake Chapel Church, Inc. v. Church Mutual Insurance Company, the Fourth Circuit affirmed a $1.1 million jury verdict in favor of a policyholder, reaffirming that under North Carolina law insurers cannot defeat all-risk coverage by pointing to a postulated inherent defect or other excluded cause if a covered peril also contributed to the loss.

Because effective Directors & Officers insurance (D&O) is becoming even more important for companies and their leaders, particularly for peace of mind and financial soundness in our highly litigious society, we provide this coverage alert.