Enrique Norten’s New York firm, TEN Arquitectos
, has had a Fifth Avenue address since last August. Back then, it was on the verge of merging with a large South Korean company, Heerim Architects & Planners
. “They told me it was important to Asian clients that we have a prestigious address,” Norten says, explaining why he moved to new offices on the third floor of 155 Fifth Ave.
But just weeks after the firm moved into the space, the deal went sour. Now, Norten is suing Heerim for $3 million, claiming fraud and breach of contract. But Heerim, according to its New York lawyer, Jae Lee, scuttled the deal because Norten missed meetings and farmed out work to his Mexico City office without permission. Norten’s subsequent decision to remain in the Fifth Avenue space makes him a “squatter,” Lee says.
The saga began about a year ago, when Heerim—a Seoul-based giant with offices in Dubai, United Arab Emirates; Baku, Azerbaijan; and Hanoi, Vietnam—began looking for a U.S. partner. Heerim executives made a wish list of about a dozen firms and began meeting with their principals, according to Lee. During several meetings in New York and Seoul, Norten made a good impression. “He was very affable and enthusiastic,” says Lee, who adds that it would have been easy to merge with Norten’s firm because “he didn’t have a lot of projects.” (In an e-mail, Norten calls that statement “absolutely not true.”)
Over the summer, the parties signed documents establishing a joint venture called TEN Heerim, owned 49 percent by Norten and 51 percent by Heerim’s CEO, Young Kyoon Jeong. (In New York, only licensed architects are allowed to own architecture firms, which explains why Jeong, who earned an M.Arch. at the University of Pennsylvania and has been licensed in the state of New York since 1994, stood in for Heerim.) Norten would earn $250,000 a year, plus a $100,000 bonus, for his role as managing director of design. And it would guarantee the new venture at least $1 million a year in billings. Norten would continue to run his separate Mexico City–based firm, also called TEN Arquitectos.
According to Norten, in order to satisfy Heerim he arranged for an unpaid leave of absence from the University of Pennsylvania, where he is a professor of architecture, and even declined work that he thought would take time away from the new firm. In August, he moved to the Fifth Avenue space. But on Aug. 17, he received an e-mail in which Jeong said he didn’t want to continue the joint venture. Norten says he was stunned. Less than a month later, he sued Heerim, claiming fraudulent inducement, breach of contract, and breach of fiduciary duty and demanding $3 million in damages.
Norten speculates that troubles in South Korea caused Heerim to walk away. “The stock was dropping, and they were losing projects,” Norten says. “So I think the board told him, ‘You need to focus on the Asian markets. You can’t be everywhere.’?” But in an e-mail, Jeong writes, “There is no truth to Mr. Norten’s allegations that Heerim decided to refocus on Asia.” In fact, Jeong says, Heerim is looking for another U.S. partner.
According to Lee, while the deal was being finalized, as a sign of good faith, Heerim assigned a couple of jobs to Norten, who promised that the work would be done in New York. Instead, “without telling anyone, he had the work done by the Mexico City office,” Lee claims. Not only was the work substandard, Lee says, but “when the client found out, it was a client-relations disaster for Heerim.” He says that Heerim executives flew to New York to discuss the matter, as well as inconsistencies it had found in Norten’s financial statements, but Norten repeatedly stood them up. Overall, Lee says, Heerim executives “were exasperated by his lack of cooperation” and “lost any trust” they’d had in Norten.
But Norten says he never stood up Heerim executives, that Heerim knew about the involvement of the Mexico office, and that it had seen accurate financials months before it withdrew from the deal. Meanwhile, he has remained in the Fifth Avenue office; he claims he has the right to be there, but Heerim says he should leave or pay rent.
Once Norten filed suit, according to Lee, Heerim had no choice but to defend itself. “Now it’s a matter of pride,” says Lee, who wonders why Norten turned to the courts so quickly. Norten might have thought he could extract a settlement from Heerim by threatening to take the dispute public, Lee says, but that option is closed. In Lee’s words, “Norten has already fired all his bullets.” (Norten says in an e-mail that he sued promptly so as not to forfeit his rights.)
That Norten should founder in the pursuit of globalization is somewhat ironic. For years he has been seen as the embodiment of cross-border practice. Born in Mexico, he opened TEN Arquitectos there in 1986; in 2001, he expanded to New York, where he quickly landed several important projects.
Heerim has also been adept at expanding its international practice. Founded in 1970, it quickly became South Korea’s biggest firm, and one of the few architecture firms in the world to be publicly traded. With almost 1,100 employees, Heerim is a huge presence in its homeland, but when it worked with U.S. firms—including projects designed by Kohn Pedersen Fox and HOK (the tallest buildings in South Korea and Vietnam, respectively)—it tended to find itself as the “associate architect.” Bringing a “design architect” such as Norten in-house could have helped Heerim emerge from that status.
Norten says that he has been embarrassed by Heerim’s withdrawal: “Having announced the deal, it’s not good for my reputation.” It was Norten who contacted the press hoping for coverage of the story, which he sees as a warning to other American architects who try to make deals with foreign firms. They should be wary, Norten says, of the “regulatory and legal differences between the United States and other countries.”
As for the Heerim debacle, “It was a blessing that it [the break-up] happened before we started working together,” Norten says. “Imagine if we had become really entangled.”
Editor's Note, Dec. 22, 2010: This article has been edited since it was first published to more accurately reflect the information provided to ARCHITECT by Norten and Heerim.