Newsletter
Pledge The License, Breach the Lease: Court Upholds Anti-Pledge Provisions
May 26, 2026
Authors
Joel E. Antwi
Associate, Washington, D.C.
jantwi@goulstonstorrs.com+1 617 574 0585
Sydney Cramer
Associate, Boston
scramer@goulstonstorrs.com+1 617 574 0504
Mariana Korsunsky
Director, Boston
mkorsunsky@goulstonstorrs.com+1 617 574 3584
Kevin P. O'Flaherty
Of Counsel, Boston
koflaherty@goulstonstorrs.com+1 617 574 6413
Gary M. Ronan
Director, Boston
gronan@goulstonstorrs.com+1 617 574 3593
Salome Salia
Associate, Boston
ssalia@goulstonstorrs.com+1 617 574 0598
John F. White III
Associate, Boston
jwhite@goulstonstorrs.com+1 617 574 0576Related Expertise
Nicosia v. Burn, LLC involved a dispute arising from a commercial lease agreement under which the landlord transferred a liquor license to the tenant for use in operating a restaurant, subject to an “anti-pledge” provision prohibiting the tenant from using the license as collateral for a loan. The lease further required the tenant to transfer the license back to the landlord upon termination of the lease, subject to regulatory approval.
In 2018, the tenant pledged the liquor license to its principal as collateral for a loan, despite the express prohibition in the lease. In connection with obtaining regulatory approval for the pledge, the principal falsely represented to the Boston Licensing Board and the Alcoholic Beverages Control Commission that the pledge did not violate any agreements. Upon discovering the pledge, the landlord terminated the lease and initiated litigation asserting claims for breach of contract, violation of G.L. c. 93A, and conversion.
Following partial summary judgment in favor of the landlord on the contract claims and a bench trial on the remaining claims, the trial court found that the defendants had knowingly and willfully engaged in unfair or deceptive conduct and awarded treble damages, attorney’s fees, and costs. The defendants appealed, challenging, among other things, the enforceability of the anti-pledge provision and the finding of liability under Chapter 93A.
The Supreme Judicial Court held that the anti-pledge provision was enforceable and did not violate public policy. The Court emphasized Massachusetts’ strong preference for freedom of contract and found that such provisions do not interfere with the regulatory scheme governing liquor licenses, which is primarily concerned with oversight by licensing authorities rather than private financing arrangements.
The Court also distinguished its prior holding in Beacon Hill Civic Association v. Ristorante Toscano, Inc., 422 Mass. 318, 323 (1996), wherein the Court found that a private agreement not to apply for a liquor license was unenforceable as against public policy. Nicosia v. Burn, LLC, 496 Mass. at 799.According to the Court, the agreement in Toscano was unenforceable because it violated Massachusetts’ “public policy of open public participation . . . implicit in the statutory scheme, which requires published notice of license applications and a hearing, and permits taxpayers to petition to modify, suspend, revoke, or cancel a license.”Id. (internal quotations omitted).In contrast, “the anti-pledge provision [in Nicosia did] not interfere in any way with public participation in the licensing process and [was] only a limitation on the licensee’s ability to use the license as collateral to secure a private loan from a potential lender.”Id.
The Court further affirmed the finding of liability under G.L. c. 93A, concluding that the defendants’ conduct, particularly the principal’s false statements to regulators, constituted knowing and willful deceptive acts. The Court rejected the defendants’ argument that regulatory approval of the pledge provided a safe harbor, noting that such approval was obtained through misrepresentation.
However, the Court reversed the judgment on the conversion claim, holding that the landlord could not establish conversion because it neither possessed nor had an immediate right to possess the liquor license at the time of the alleged misconduct, given the contractual and regulatory steps required for transfer.
Nicosia underscores that courts will enforce negotiated restrictions on regulated assets and that deceptive conduct in commercial transactions, particularly involving regulatory bodies, may give rise to substantial liability beyond traditional contract damages.
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