The Social Development Commission’s main office, 1730 W. North Ave., could face foreclosure. The foreclosure case is one of multiple lawsuits filed against SDC. (Photo by Jonathan Aguilar / Milwaukee Neighborhood News Service / CatchLight Local)
Lawsuits seek a total of at least $4.1 million in judgments as anti-poverty agency struggles to regain footing
By Meredith Melland
This story was originally published by Milwaukee Neighborhood News Service, where you can find other stories reporting on fifteen city neighborhoods in Milwaukee. Visit milwaukeenns.org.
The Social Development Commission, or SDC, is facing lawsuits that seek a total of at least $4.1 million in judgments.
The anti-poverty agency is still trying to get back on its feet after it halted its normal operations in April 2024, lost a stream of government funding and became the subject of several state audits.
Here is what SDC is facing in legal action.
Four lawsuits filed
There are currently four main lawsuits filed against SDC and SD Properties Inc., the tax-exempt property corporation that owns SDC’s buildings.
Forward Community Investments Inc. filed a foreclosure lawsuit against SD Properties, accusing it of defaulting on mortgage payments on its North Avenue buildings and owing $3.1 million in loan obligations and other costs, according to court documents.
In the foreclosure proceedings, SD Properties is the borrower and SDC is the guarantor of the mortgages as well as a tenant in the buildings.
There’s also the wage claims lawsuit on behalf of unpaid employees; a lawsuit filed by three weatherization contractors; and a lawsuit from TriShulla LLC, a Middleton-based company that SDC contracted to build an app and provide other technology services.
William Sulton, SDC’s attorney and legal counsel, said SDC recognizes it owes money to vendors and employees.
“Of all the people that are owed money, certainly the board believes that the employees should be taken care of first,” he said.
But SDC disputes the total sums in the TriShulla and wage claims cases.
More on employee and contractor claims
The lawsuit filed by Affordable Heating and Air Conditioning Inc., Insulation Technologies and DMJ Services LLC, which is doing business under the name Action Heating & Cooling, claims SDC owes the companies a total of $180,000 for weatherization work completed under contract in 2023 and 2024.
This case is scheduled to have a summary judgment hearing, where a judge will make a decision without a full trial, on Sept. 24 in Milwaukee County Circuit Court.
According to the wage claims complaint, an investigation by the Wisconsin Department of Workforce Development found that 97 SDC employees are owed wages and benefits for work completed in spring 2024, including for paid time off.
The Wisconsin Department of Justice, which is representing the state in the case, amended the complaint in July to seek a judgment of nearly $359,500, plus increased wages, as a penalty for SDC’s “wrongful withholding” of the wages.
“There are a couple of employees that are owed less than they are claiming, but we acknowledge that for the majority of people who were working in April in May of 2024, they are owed some money right now,” Sulton said.
The decision on whether penalty wages will be awarded is the discretion of the judge, according to a spokesperson from the Wisconsin Department of Justice.
The total outstanding wages could change as more workers file claims, according to the Department of Workforce Development.
More details on other cases
TriShulla’s lawsuit accuses SDC of breaching a contract and asks for a judgment of about $472,000 in damages, according to court documents.
SDC disputes the total and is mounting a defense, Sulton said, but the case will not be going to trial until 2026.
Some of the lawsuits could also result in judgments that include additional penalties, interest or covering the other party’s costs and attorneys’ fees.
In addition to the four lawsuits, a personal injury lawsuit was also filed against SDC and Great American Insurance Group. It is seeking just under $170,000 to cover medical and other expenses in an alleged incident at SDC’s West Allis location in 2022, according to the summons and complaint.
Sulton said the insurance company is arranging the legal representation in this case, and any judgment requiring payment would likely be covered by SDC’s liability insurance policy at the time.
Aside from the current lawsuits, Amy Rowell, executive director of COA Youth and Family Centers, said during a board meeting in July that SDC owes more than $153,800 in reimbursements related to the Workforce Innovation Grant.
Rowell said COA has requested the funds from the agency multiple times since last August.
“It’s been putting a pretty significant hardship on the organization because we paid the invoice and now we’re just waiting for reimbursement,” she said.
How would SDC pay back employees?
SDC had planned to use a reimbursement of a block grant to help pay employees, but the state has not granted the reimbursement.
“Right now, SDC doesn’t have the ability to pay the employees unless SDC can come up with private funding,” Sulton said.
SDC was expecting to hear from the U.S. Department of Health and Human Services by Thursday, Aug. 7, on whether it will provide SDC with direct financial assistance, which could also help it repay employees.
Earlier this summer, SDC requested a federal review of the state’s decision to remove the agency’s community action status, which made it ineligible for block grant funding.
If the Department of Health and Human Services rules in SDC’s favor, it could decide to directly fund SDC or require the state to reverse its decision and provide SDC with block grant funding.
“I do think a lot is riding on this decision,” Sulton said. “I would go so far as to say it’s almost existential.”
Meredith Melland is the neighborhoods reporter for the Milwaukee Neighborhood News Service and a corps member of Report for America, a national service program that places journalists in local newsrooms to report on under-covered issues and communities. Report for America plays no role in editorial decisions in the NNS newsroom.
Jonathan Aguilar is a visual journalist at Milwaukee Neighborhood News Service who is supported through a partnership between CatchLight Local and Report for America.