Mario Nicosia, individually and as trustee of N&M Trust VII, & another v. Burn, LLC, & others

Summary

The Massachusetts Supreme Judicial Court held that a lease provision prohibiting the pledge of an alcoholic-beverage license as loan collateral was enforceable and did not violate G. L. c. 138, § 23, or public policy. The court affirmed liability under G. L. c. 93A and the award of attorney's fees and costs, concluding that the defendants knowingly made false representations to licensing authorities. It reversed the conversion judgment because the plaintiffs neither possessed nor had an immediate right to possess the license when the defendants refused to cooperate in its transfer.

Holdings

1. A contractual provision prohibiting the pledge of a liquor license as collateral for a loan is enforceable; it is neither prohibited by Mass. Gen. Laws c. 138, § 23, nor manifestly injurious to the public interest and welfare.
2. The record supported a finding that Lesser, acting individually and on behalf of the defendants, willfully and knowingly engaged in unfair or deceptive conduct by falsely affirming under oath to the Boston licensing board and ABCC that the pledge agreement did not violate or constitute a default under any other agreement.
3. Burn's refusal to cooperate in selling the liquor license back to N&M constituted breach of contract, not conversion, because N&M neither possessed nor was entitled to immediate possession of the license when the alleged conversion occurred.
4. The trial judge did not abuse her discretion in awarding the plaintiffs attorney's fees and costs.
5. Denial of the defendants' motion to amend their pleading under Mass. R. Civ. P. 15(b) was not reversible error, and the chapter 93A safe harbor did not apply because regulatory approval was obtained through a false statement that concealed the unfair and deceptive conduct.

Questions Presented

1. Whether a contractual provision prohibiting the pledge of a liquor license as collateral for a loan is unenforceable because it violates Mass. Gen. Laws c. 138, § 23, or public policy.
2. Whether the defendants' conduct in obtaining regulatory approval for the pledge through a false representation constituted willful and knowing unfair or deceptive conduct under Mass. Gen. Laws c. 93A, § 11.
3. Whether Burn's refusal to cooperate in selling the liquor license back to N&M constituted conversion.
4. Whether the trial judge abused her discretion in awarding attorney's fees and costs.
5. Whether denial of the defendants' motion to amend their pleading to assert the chapter 93A safe-harbor defense was reversible error.

Disposition

other