Yes. The Supreme Judicial Court held that a commercial lease clause forbidding a restaurant tenant from pledging its liquor license as loan collateral is enforceable, and that lying under oath to licensing regulators about the lease was a willful violation of the consumer protection law. This is a published decision of the Supreme Judicial Court and is binding statewide.
What happened
In 1996 a landlord leased a downtown Boston commercial property to a restaurant tenant. As part of the deal, the landlord sold the tenant its liquor license for one dollar. The lease barred the tenant from pledging the license without the landlord’s written consent, made any pledge a default, and required the tenant to sell the license back for one dollar when the lease ended. The licensing board and the Alcoholic Beverages Control Commission approved the transfer with a copy of the lease in front of them. In 2018 the tenant’s new manager lent the tenant $445,000 and took a pledge of the license as collateral. In the application to regulators, he swore the pledge did not violate or default any other agreement, even though his own lawyer had told him it would default the lease. When the landlord learned of the pledge, it terminated the lease and sued.
What the court decided
In Nicosia v. Burn, LLC, No. SJC-13755 (Mass. December 16, 2025), the court affirmed the judgment for the landlord in most respects, but reversed on one claim.
The anti-pledge clause is enforceable. The liquor licensing statute allows a licensee to pledge a license for a loan if the local board and the commission approve. G.L. c. 138, § 23. The tenant argued that a lease clause taking away that option violates public policy. The court disagreed. Freedom of contract is the general rule, and a court will refuse to enforce a contract term only when a public policy is clear in statutes or case law. The statute is silent on anti-pledge clauses. Its core purpose is regulatory oversight, and a clause that blocks a pledge prevents unapproved transfers rather than causing them. The court distinguished Beacon Hill Civic Ass’n v. Ristorante Toscano, Inc., 422 Mass. 318 (1996), where a private promise not to seek a license was struck down because it interfered with public participation in licensing. Nothing like that was at stake here.
Lying to regulators violated c. 93A. A breach of contract alone is not an unfair or deceptive act. But here the record supported a finding that the manager knowingly lied under oath to the licensing board and the commission. That was unfair and deceptive conduct under G.L. c. 93A, § 11, and it was willful and knowing, which supports multiple damages. The tenant could not rely on the regulators’ approval as a defense, because that approval was based on the false statement.
No conversion. The trial judge also found the defendants liable for converting the license when the tenant refused to help sell it back. The court reversed that part. Conversion requires that the plaintiff possessed the property, or had a right to immediate possession, when it was taken. The landlord had only a contract right to get the license back after regulatory steps that were outside the tenant’s control. That is a breach of contract claim, not conversion. Laurin v. DeCarolis Constr. Co., 372 Mass. 688 (1977). The reversal did not change the total damages, because the conversion award duplicated the others.
Fees. The court upheld an award of $394,427 in attorney’s fees plus costs, and said the landlord may apply for its appellate fees.
What this means for you
If you are a restaurant or bar tenant, read the liquor license terms in your lease closely. A clause limiting what you can do with the license, including using it to borrow money, can be enforced as written. Breaking it can cost you the lease.
Be truthful in every filing with the licensing board and the commission. A false sworn statement can turn a contract dispute into a c. 93A claim with multiple damages and fee shifting.
For landlords and tenants alike, the case also shows that the right claim matters. A promise to transfer a license in the future is enforced through contract law, not conversion.
What to do now
- Pull your lease and any side agreements and find every clause about the liquor license.
- Before pledging, selling or transferring a license, get written consent if the lease requires it.
- Have a lawyer review any regulatory application before you sign under oath.
- If you receive a default or termination notice, act right away. Gather the notice, the lease, and your license records.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. These cases move on short deadlines.
Prior results do not guarantee a similar outcome.
