PLATTEVILLE — One week ago, the City of Platteville planned on bidding on seven properties owned by Darrel L. Kallembach, the Platteville landlord who owes the city $309,804 in fines and court costs.
The sheriff’s sale of seven of his properties Sept. 25 stopped before it began, however, when a notice arrived that Kallembach had filed for Chapter 13 bankruptcy that day.
Kallembach, 53, Argyle, has been in the Grant County Jail since June 27, when he was taken into custody after he was found in contempt of court for violating a judge’s order issued in Grant County Circuit Court Oct. 31. He is scheduled to remain in jail until Nov. 4 or he pays the city the accumulated fines and interest, whichever comes first.
The city planned to bid on Kallembach’s properties at 222 N. Elm St., 605 Southwest Road, 390 W. Pine St., 160 E. Mineral St., 420 and 440 Southwest Road, and 310 W. Gridley Ave.
Those seven properties are assessed at a combined $566,900 in value, but have an estimated fair market value of $280,650, according to city records.
“That was our way of collecting” the $309,804.84 plus interest Kallembach owes the city,” said City Manager Larry Bierke. “We’d bid on the properties, then we’d figure out what to do. We’re still not sure if the bankruptcy hurts the city or helps the city, because Mr. Kallembach has to reveal all his assets.”
A creditors’ meeting is scheduled for Nov. 7 in the U.S. Bankruptcy Trustee’s office in Madison.
“We’re at the very, very early stages of this,” said J.D. Haas, Kallembach’s bankruptcy attorney. “In addition to the bankruptcy, there’s other litigation going on. [It’s] a really fluid situation.”
Even had the sheriff’s sale taken place and the city had been successful, that doesn’t mean the city would have immediately taken over the properties. State law requires a 15-month redemption period before a sheriff’s sale can be closed.
There are two kinds of personal bankruptcies.
Haas said Chapter 13 is “an opportunity for people to pay off their debts in a structured manner that might not be able to otherwise pay off their debt.”
In the creditor meeting, he said, “the creditors have the opportunity to ask questions of the debtor to find out if there are certain wrinkles that aren’t covered in the debtor’s [repayment] plan. The attorney creates the repayment plan, and the creditors have the opportunity to make some comments about the plan.”
Chapter 7 bankruptcies, in which unsecured debt can be liquidated, can be filed “if you make at or below median income,” when it would be “mathematically impossible to pay off debt,” said Haas.
In addition to the seven properties that were to be sold at the sheriff’s sale, Kallembach also owns properties at 235 Third St.; 230 Elm St.; 605 and 605½ Southwest Road; 260 and 430 Chestnut St.; 85 Water St.; 375 Irene St.; 255, 335 and 465 Division St.; 565 Cedar St.; 530 and 540 Mineral St.; and 185 Center St., according to city records.
“The city has real issues with 0these houses,” said Bierke. “We’re not allowed to go in and inspect them. We wanted rental licenses so city inspectors can go in and inspect to make sure students are in a safe environment. The city has no idea what the insides of these houses are.”
Kallembach’s first citations from the City of Platteville came in January 2008, when he pleaded no contest to five citations for failing to remove furniture from the exterior of a building. From then until July 30, 2010, Kallembach was issued more than 100 citations for allowing occupancy without a valid rental license, allowing occupancy of more than four unrelated persons, and second- and third-offense citations for allowing occupancy without a valid rental license.
The city won a judgment against Kallembach for a total of $309,804.84 in March 2011. On Oct. 31, Dane County Circuit Judge David Flanagan issued an order prohibiting Kallembach from leasing or renting any of his 21 properties until he obtained a city rental license. Flanagan also ordered Kallembach to provide a copy of all of his existing leases to the city and to have his properties inspected. Kallembach also was ordered to provide notice of violations within 10 days of a citation’s being issued.
Kallembach claimed in a letter to The Platteville Journal in February that the city had no authority to cite him “unless my refusal to permit inspections and obtain rental licenses resulted in substantial interference with the comfortable enjoyment of life, health, or safety of others.” Kallembach’s claim was based on a 1981 state Supreme Court decision that defined a public nuisance as “an unreasonable activity or use of property that interferes substantially with the comfortable enjoyment of life, health, or safety of others.”
