The U.S. Court of Appeals for the 11th Circuit heard oral arguments in Atlanta, Ga., on Monday in a lawsuit against the City of Guntersville over its City Harbor development project.
This is plaintiff Joel Kennamer’s third attempt at seeking relief in what he described as a “fraudulent, corrupt scheme” to deprive him and other Guntersville taxpayers of land dedicated for public use.
Kennamer first filed suit in 2019 after the City leased a lakefront lot to developer Patrick Lawler. Kennamer argued that the City purchased the property in 2000 for public use for fishing and general recreation. Now, it’s home to multiple restaurants, stores, apartments and a hotel.
Kennamer claimed the City violated Section 94.01 of the Alabama Constitution, which limits how municipalities can use public funds for private entities. He also said the city council violated his right to due process for not holding a public referendum before moving forward with the project.
After Circuit Judge Tim Riley dismissed his 2019 claim, Kennamer appealed to a higher court. In 2024, Judge David Proctor with the U.S. District Court for the Northern District of Alabama dismissed his suit again, with prejudice.
Kennamer is now awaiting the 11th Circuit's ruling on his appeal, arguing that the two lower courts erred in interpreting 94.01.
“The defendants, using lies and deceit, acted willfully, and with fraudulent intent, misapplied the law, causing the court to dismiss a perfectly legitimate claim where the property was in use and a transfer was unlawful,” he wrote in his complaint.
One of the judges said Monday that even if Kennamer was right that the law was misapplied, it is within the state’s purview to interpret its own laws.
Kennamer is asking the court to appoint a commission to determine how to “best correct the injuries to the plaintiff and the public since the development and to assess punitive damages.”
The defendants, which include the City of Guntersville, Mayor Leigh Dollar, Lakeside Investments, Lawler Hotels and Patrick Lawler, argued that the City followed proper procedure throughout the sale and construction of the City Harbor project. They also argued that the courts were right to dismiss Kennamer’s claims on multiple grounds, including exceeding the statute of limitations.
The panel of judges pushed back on the defendants, saying the deal between the City and Lawler raised concerns.
“Mr. Kennamer, to the extent that he is pointing at some common-sense notion that something here just kind of smells, I agree with him. Something here kind of smells,” one judge said.
The judge asked why the City sold the land for the hotel in a separate deal to Lawler in 2023 for $10, when the lot was appraised for over $2 million and had another offer of $650,000 from developer and former State Rep. Wes Long.
“I don’t know,” C. Gregory Burgess, the City's attorney, responded, adding that he was not involved with the City during the negotiations.
“Well, color me skeptical,” the judge responded.
Another judge asked what the "conceivable, rational basis” was for selling the land for $10 when another, higher offer was on the table.
Burgess argued that 94.01 allowed the City to make the deal “as it sees fit” and that it was done to promote commerce and tourism in the City.
Another judge on the panel conceded that the City ordinance that authorized the original lease was “time-barred.”
“But as to the 2023 ordinance that authorized the sale, that seems goofball bonkers town to give up $2.2 million for $10,” he said. “...The ordinance doesn’t set terms for the sale. It’s the terms of the sale that are goofy.”
Burgess argued back that the increase in taxes, commerce and tourism established a rational basis for making the deal and thus satisfied 94.01.
The judge then asked if there were any records or documents explaining the city’s decision.
“Not that I’m aware of,” Burgess responded.
“That’s a good way to run a municipality. Put nothing on the record, potentially help a chrony or an ally, sweep it all under the rug, and say ‘it’s all rational,’ the judge said. “It may not be reversible error, but you understand why there’s some concern on this side of the table, even presented with a rationality argument?”
Jeff McLaughlin, attorney for the Lawler defendants, then addressed the judges to help explain the deal.
He agreed that it would be "egregious" if the City simply handed over the land to Lawler as it might appear, but he said the court should focus on the entire development.
“The City spent no money building this pier, this harbor development, these expensive shops, the restaurants, the access, the marina… Lawler built that out of his own pocket, his own company. The city paid nothing,” McLaughlin said.
He argued that the court was not comparing “apples to apples” since Long’s $650,000 offer did not include any plans as Lawler’s did.
McLaughlin said the city council followed proper procedure, including as it applies to 94.01, and that if Guntersville residents felt wronged by the decision, their best recourse was to vote in a new council during the 2025 municipal election. All but three members of the seven-seat council were replaced in that election.
“The answer, in my opinion, is the ballot box. It should be noted that everyone who was challenged at the last [election] last summer lost, except for the mayor. It was a very close race,” Mclaughlin, who ran to unseat the current mayor in that race, said. “If there was a feeling among the city that the City made a stupid decision or a poor decision that was not best for the city, vote those people out of office.”
In his rebuttal, Kennamer said that Long offered to pay the property's appraised value and to match Lawler’s plans.
“But your honor, that’s unlawful too. If one’s unlawful, the other’s unlawful,” he said. “It was in use by the public. That is the premier standing here.”
The judges are expected to issue a ruling within the next six months.
Kennamer's complaint
City of Guntersville's response as follows:
Lawler's attorney's response as follows:
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