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Fight them tooth and nail on everything. Ask your independent shop for a statement as to what caused the issue, and escalate it with the warranty company. Don't threaten just yet, just state the facts and be persistent. IF that doesn't work then you need to step it up on the forums, and send a letter to consumerist.com and other customer service blogs you can find. Lawyer up to negotiate a settlement and drop a 996 engine in that badboy.
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