So looks like the dealer is paying part of it. I probably wouldn’t have accepted that.
I had a similar problem with a dealer but it was the transmission. I learned a few things,but it mostly falls on your state laws. In Montana, the repair man is on the hook for about a 100 miles for things such as oil change. Meaning, if I get a oil change and the filter comes off in 20 miles (ruining the engine), as long as I could prove the mileage and their negligence then it’s their baby. Not that it goes that way, dealers don’t own up unless they know you are going to fight it.
Back to what I did, dealer didn’t put the transmission cooling lines, causing the transmission fluid to bleed out in 15 miles. Dealer didn’t want to help, I went to a lawyer. The lawyer drafted a demand letter stating I would sue them. The next day the manager called, and everything was fixed and 75,000 mile contract that guarantees I wouldn’t have problems with the transmission and if I did they would cover it completely.
My situation is different, but if you want to fight it, I’d get your neighbor to sign a statement they didn’t have oil in it. Then go to a competent lawyer in litigation and have them draft a demand letter for the dealer to cover it. BUT that all depends on being able to prove the timeline, meaning miles from repair to break down. Also getting a real mechanic to look at it could help. If they can see the dealer neglected their responsibilities, get a signed statement for it and have the attorney state that in the letter.
Cost me about 100 for the letter but in the end I had the dealer pay me back for it and towing because they forced me to pursue this tactic because they didn’t want to be honest about their mistake.
I learned that it’s better to get a real mechanic than pay the dealer a mechanics wage for a kid that is inexperienced.
Good luck! I think its worth fixing regardless of the outcome. Just my .02
Mk