OPINION AND ORDER

GARR M. KING, United States District Judge

Before the court is the motion to dismiss for lack of subject matter jurisdiction (#24) by defendant Gonzales Boring Tunneling ("Gonzales"). For the reasons set forth below, I deny the motion.

FACTS

This case arises out of the construction of the City of Sherwood Bull Run Water Supply System Connection Project (the "Project"). The City of Sherwood ("Sherwood") contracted with Aurora Engineering ("Aurora") for Aurora to be the general contractor on the Project. Star Insurance ("Star") provided a performance and payment bond for Aurora. Aurora subcontracted with Gonzales to drill bores and install pipes in the bores.

Disputes arose between Sherwood and Aurora. Sherwood eventually removed Aurora from the Project. Aurora then brought a state court action against Sherwood (which filed a third-party complaint against Star). Star brought a separate state court action against Sherwood and Gonzales. Both state court actions were removed to this court with subject matter jurisdiction based on diversity. No party alleged then, or alleges now, that diversity jurisdiction was lacking at the time the actions were removed to this court.

The two cases were subsequently consolidated. After consolidation, all parties except Gonzales settled their claims, leaving only claims against Gonzales for its bore work. In the settlement, Aurora and Star assigned to Sherwood their claims against Gonzales, agreed that Sherwood would be substituted as plaintiff to pursue those claims, and agreed that one action (in which Gonzales was not a party) would be dismissed because the claims therein had been resolved.

Consistent with the settlement agreement, Sherwood moved to be substituted as plaintiff in the remaining action (i.e., this case), pursuant to Fed.R.Civ.P. 25(c), and simultaneously moved for leave to amend the complaint to state its claims against Gonzales (that were assigned to it by Star and Aurora). I granted both motions on July 23, 2001.

Based on these developments, the only remaining parties are Sherwood as plaintiff and Gonzales as defendant. Gonzales now contends that, because Sherwood and Gonzales are both Oregon entities, diversity of citizenship does not exist and this court lacks subject matter jurisdiction.

DISCUSSION

Both parties acknowledge the general rule that the existence of diversity jurisdiction is assessed at the time an action is filed and, once acquired, is not defeated by subsequent events. Freeport-McMoRan, Inc., K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 860 (1991). On this basis, Sherwood asserts that, because it is undisputed that diversity jurisdiction existed when this action commenced, it makes no difference that an Oregon entity has now been substituted as plaintiff.

Gonzales, on the other hand, points to the fact that Sherwood and Gonzales have never had diversity between them in this case (or the related case) and that Sherwood never could have commenced this action in federal court against Gonzales.

I find that Sherwood has the better argument, as illustrated by the Supreme Court's holding in Freeport. In Freeport, a company (McMoRan Oil and Gas Company or "McMoRan") and its parent company sued, in federal court, a defendant for breach of contract. At the time the suit was commenced, diversity jurisdiction existed. After the suit was filed, McMoRan transferred its interest in the contract at issue to another entity and then sought leave to amend its complaint to substitute the new entity as plaintiff, pursuant to Fed.R.Civ.P. 25(c).

The district court allowed McMoRan and its parent company to add the new entity as a plaintiff, but also kept the existing plaintiffs in the case. Importantly, there was no diversity of citizenship between the new entity and the defendant.

After a bench trial in favor of the plaintiffs, the case was appealed. The Tenth Circuit held that the addition of the new entity as a plaintiff destroyed federal diversity jurisdiction. The Supreme Court reversed, holding that "[d]iversity jurisdiction, once established, is not defeated by the addition of a nondiverse party to the action." Id. at 860. As such, Freeport can be fairly read to stand for the proposition that, if diversity of citizenship existed when a lawsuit commenced, the fact that a party later assigned its cause of action to a nondiverse party does not divest the court of jurisdiction once it properly attached. Thus, the fact that Sherwood is now proceeding with the claims assigned to it by Aurora and Star does not destroy diversity subject matter jurisdiction.

Sherwood points out that, while there was previously an asserted claim by Star against Gonzales (later assigned to Sherwood), there was never a claim asserted in this or the related case by Aurora against Gonzales. While Sherwood maintains that the above analysis allows Sherwood to proceed on Aurora's previously unasserted claims against Gonzales, it also argues that those claims can be adjudicated by this court under its supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a). In other words, given that there is no question that this court has jurisdiction over the claims assigned to Sherwood by Star, and that the claims assigned to Sherwood by Aurora are closely related and part of the same case or controversy, this court can adjudicate any claims now asserted by Sherwood as Aurora's assignee. I agree and conclude that this court has subject matter jurisdiction over all claims asserted in Sherwood's First Amended Complaint.

CONCLUSION

Based on the foregoing, the motion to dismiss for lack of subject matter jurisdiction (#24) by defendant Gonzales Boring Tunneling is DENIED.

IT IS SO ORDERED.