## Facts

- A lease covering two Huntington Beach lots reserved a landowner royalty; the lessee’s interest was later assigned, subject to previously sold royalty interests.
- In 1927, Sutphin received an assignment of a 5% participating royalty interest in gross production from a well on the premises “or any substitute well therefor.”
- Speik later acquired the lessee’s interest, taking subject to Sutphin’s 5% interest.
- After an original producing well was destroyed by fire, Speik drilled a replacement well (No. 3A) and later drilled another well (No. 4) nearby; both produced from the same general reservoir.
- In a first action (filed 1933), Sutphin recovered unpaid royalties; the judgment (final after appeal) found Sutphin had owned since 1927 a 5% interest in total production from the premises and was entitled to that share whether produced from one or more wells.
- Sutphin then filed this second action to recover royalties accruing after the period covered by the first judgment.
- Speik defended by asserting a new theory: that No. 4’s production came from a directional “whipstock” hole allegedly originating from state-owned submerged lands, so Sutphin had no right to royalties on that oil.
- The trial court held Speik precluded from asserting that theory and entered judgment for Sutphin; Speik appealed.

## Issues

1. Whether the prior final judgment establishing Sutphin’s right to 5% of total production from the lots precluded Speik, in a later suit for subsequently accruing royalties, from denying liability by asserting that well No. 4 produced from state land rather than the lots.
2. Whether a party may avoid issue preclusion by presenting a new factual or legal theory aimed at defeating a right previously adjudicated between the same parties.

## Decision

- The Supreme Court of California affirmed the judgment for Sutphin.
- The court held the first judgment conclusively determined Sutphin’s right to 5% of total production from the premises, whether produced from one or more wells.
- Speik’s “whipstock/state-land” contention was treated as an attempt to relitigate the same basic issue by a different theory and was barred by issue preclusion.
- On rehearing, the court clarified it was not adopting a broad rule that every issue that could have been raised in the first suit is barred in a later suit on a different cause of action; preclusion applied because the identical basic issue had been determined previously.

## Legal Principles

- An issue actually litigated and determined by a final judgment is conclusive in a later action between the same parties when the identical issue recurs, even if the later action involves a different cause of action.
- A party may not force relitigation of an adjudicated issue by reframing the dispute with a different legal theory or factual angle intended to change the result on the same issue.
- Issue preclusion in later litigation on a different cause of action does not automatically extend to every argument that could have been raised earlier; it applies to issues actually decided (and necessarily decided) in the first case.

## Conclusion

Because the first final judgment established Sutphin’s entitlement to a 5% share of total production from the leased lots regardless of the number of wells, Speik could not defeat later-accruing royalty claims by asserting a new “whipstock” theory about the subsurface source of oil from well No. 4.


Sutphin v. Speik, 15 Cal. 2d 195, 99 P.2d 652 (Cal. 1940)