Future of Top Insignia Brokers a Question in CB Merger
By DANNY KING
In announcing the $415 million merger of CB Richard Ellis and Insignia Financial Group Inc., Insignia Chairman and Chief Executive Andrew Farkas sold the deal as “a winning transaction for Insignia’s shareholders, clients and employees.”
Whether the brokers who started Insignia’s West L.A. office feel the same way remains to be seen.
Hunt Barnett, Rick Buckley and Chris Houge, three senior managing directors of Insignia’s real estate brokerage subsidiary, Insignia/ESG Inc., started the office in 1999 after an acrimonious departure from CB.
The three sued CB in August 2000 in L.A. Superior Court, alleging that the company withheld commissions, a CB officer libeled them, and another engaged in “dishonest practices.” The suit was settled in August 2001 for an undisclosed sum, although a source familiar with the case said it was in excess of $1 million.
The three are considered among the top brokers on the Westside, and it is not clear where they will land when the merger closes in June.
“There’s still an inability to answer questions about what (the merger) means,” said Barnett, who would not comment on whether he’s spoken with any other firms about employment. “I’m no different than anyone else.”
Houge would not comment on the lawsuit or his plans. Buckley could not be reached.
For his part, Lew Horne, executive managing director at CB, said the firm would welcome the trio back.
“We had some disagreements, but we settled those and there are no hard feelings on either side,” he said. “We are enthused about bringing those people back.”
Given the nature of the dispute, however, others weren’t so sure the re-engagement would work. “I don’t know if it’s feasible to stay long term,” said one former CB broker who worked with the three. “It got pretty ugly.”
Barnett, Buckley and Houge, who had worked for CB for 19, 10 and 16 years respectively, were among the dozen or so brokers hired by Insignia between 1998 and 2000 to open its downtown, West L.A. and South Bay offices. Some of the brokers received seven-figure bonuses to join the New York-based firm.
At stake for CB are three brokers considered the most productive landlord and tenant representatives in the Westside. Last year, Barnett was one of Northrop Grumman Corp.’s representatives in its 300,000-square-foot-plus lease at the Candle Corp. building in El Segundo. He also represented Alschuler Grossman Stein & Kahan LLP in its $30 million sublease deal at Santa Monica’s Water Garden.
Houge represented both sides of last year’s $13.7 million sale of 11175 Santa Monica Blvd. And Buckley, who has represented landlords of both L.A.’s Wilshire Courtyard and Santa Monica’s Arboretum Courtyard, is representing Bear Stearns in its search for 70,000 square feet of space on the Westside.
The three are the leasing agents for Kilroy Realty Corp.’s 468,000-square-foot Westside Media Center, along with other landlord and tenant clients.
Their departure from CB in 1999 was bitter, according to the former colleague. “When you leave a company to go to a competitor, emotions run high when you’re a solid producer,” said the broker. “CB lost three in one fell swoop.”
Ten months later, Barnett, Buckley and Houge filed suit.
The three alleged that CB President Brett White libeled them in an e-mail that the filing said was sent to Insignia, claiming Barnett downloaded proprietary information from CB computers before his departure.
The suit said CB withheld compensation in excess of $550,000 due the three.
It also said that Houge and Buckley were partners in an entity called Millennium Partners, described as “a business unit of CB.” The other partners were CB Senior Vice President Jeff Pion and Dana Perel, a CB vice president. The suit accused Pion of “convert(ing) a commission that was the property of the Millennium Partners and CB into a personal equity position in the building to which the commission related.”
Pion and White could not be reached for comment.
“The suit settled on terms that were significantly greater than (CB) offered immediately prior to the trial,” said Dominic Surprenant, a partner at Quinn Emanuel Urquhart Oliver & Hedges LLP representing the three Insignia brokers. He would not disclose terms of the settlement due to confidentiality agreements.
“We felt it was in best interest for both parties to settle,” said Horne, who declined comment on the allegations filed in the suit or the specific of the settlement. “Nobody likes to litigate.”
Some industry insiders said the three former CB brokers might have few options other than to stay with the new, larger firm.
CB will leapfrog Grubb & Ellis Co. to become the largest brokerage in L.A. County after the merger. And with other large firms Julien J. Studley Inc., CRESA Partners and Travers Realty Corp. specializing in tenant representation, Cushman & Wakefield Inc. and Grubb & Ellis are the only brokerages other than CB with a significant Westside practice representing both landlord and tenants.
Meanwhile, amid a slow leasing market, CB may try to hold on to the three veterans.
“These guys are big producers and will continue to be,” said the ex-CB broker. “If CB looked at it purely from a business standpoint, they’d want to keep them.”