Quantitative Methods Case study

# Quantitative Methods Case study - Case Problem Lawsuit...

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Case Problem: Lawsuit DefenseStrategy Part 1. Problem Formulation John Campbell, an employee of BigDreams Construction Company, claims to have injured his back as a result of a fall while repairing the roof at one of the Vertex apartment buildings. He filed a lawsuit against Doug Reynolds, the owner of Vertex Apartments, asking for damages of \$1,500,000. John claims that the roof had rotten sections and that his fall could have been prevented if Mr. Reynolds had told BigDreams Construction about the problem. Mr. Reynolds notified his insurance company, Allied Insurance, of the lawsuit. Allied must defend Mr. Reynolds and decide what action to take regarding the lawsuit. Some depositions and a series of discussions took place between both sides. As a result, John Campbell offered to accept a settlement of \$750,000. Thus, one option is for Allied to pay John \$750,000 to settle the claim. Allied is also considering making John a counteroffer of \$400,000 in the hope that he will accept a lesser amount to avoid the time and cost of going to trial. Allied's preliminary investigation shows that John's case is strong; Allied is concerned that John may reject its counteroffer and request a jury trial. Allied's lawyers spent some time exploring John's likely reaction if they make a counteroffer of \$400,000.

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