Contract – Base Salary vs. Monthly Salary – Employment Agreement

The meaning of the contract‘s ambiguous term “base salary” could not be resolved as a matter of law at the Rule 12(b)(6) stage.

The Court denied the motion to the extent it sought to dismiss Defendant’s claims, or limit Defendant’s damages, on the basis that the term “base salary” means Defendant’s monthly salary.

An action arose out of Defendant’s employment with, and termination from, Plaintiff Kayser-Roth Corporation. Plaintiff alleged that it terminated Defendant for misconduct constituting breaches of fiduciary duty, contract, and agency, and that it did not owe Defendant certain payments under an employment agreement because Defendant’s termination was for cause. Defendant contended that he was due these payments because he was not fired for cause but for retaliatory reasons unrelated to his performance, and that Plaintiff misrepresented the terms of the employment agreement to induce him to sign it.

Among other things, Plaintiff argued that Defendant’s claims must be dismissed, or his damages reduced, to the extent Defendant sought damages beyond those for which the Agreement provides. Specifically, Plaintiff argued the Agreement expressly defines the “base salary” to be used in calculating Defendant’s bonus and severance payments as Defendant’s monthly salary. As Defendant’s damages were calculated using his annual salary, Plaintiff contended his damages should be reduced. To support its argument, Plaintiff asserted that the parties used the words “annual” and “yearly” where they intended to provide for annual terms, and that these words are absent from Section 3 of the Agreement. Defendant argued that the amount of recoverable damages and the meaning of ambiguous contract language cannot be decided at the Rule 12(b)(6) stage. Defendant contended that the Agreement “may be considered ambiguous” because it does not demonstrate a clear intent to define “base salary,” which could be interpreted to denote his monthly or annual salary. In support of his argument, Defendant pointed out that the Agreement does not consistently capitalize “base salary,” place this term in quotation marks, or specify that this term was “defined herein,” as the Agreement does with some of its other defined terms.

The Court agreed with Defendant that the term “base salary” is ambiguous. The term “base salary” is not consistently capitalized throughout the Agreement. The term “base salary” is not set apart with quotation marks and defined, as the Agreement does with some of its other capitalized terms. However, the Agreement does not use the terms “annual” or “yearly” when describing the base salary. Instead, it only uses the word “monthly.” As such, the Court concluded that “base salary” is “fairly and reasonably susceptible to either of the constructions asserted by the parties[,]” and that the meaning of this term cannot be determined as a matter of law.

Granted in part, denied in part.

Kayser-Roth Corporation v. Gallotti (Lawyers’ Weekly No. 020-076-25, 24 pp.) (Michael L. Robinson, J.) 2025 NCBC 76. Tharrington Smith, LLP by F. Hill Allen and Colin A. Shive; and Blank Rome LLP by Francesco Di Pietro, for Plaintiff and Counterclaim Defendant Kayser-Roth Corporation. Brooks, Pierce, McLendon, Humphrey & Leonard LLP by Sarah E. Morehouse, Benjamin R. Norman, and Kearns Davis; and Harris St. Laurent & Wechsler, LLP by Todd Gutfleisch and Megan Dubatowka, for Defendant and Counterclaim Plaintiff Nicola Gallotti. North Carolina Business Court