They denied the warranty without any evidence that the customer neglected the vehicle.

Even if they tear down the engine, they're still not going to be able to prove in court that the customer did anything to cause it. Their best argument is going to be, "The bearing spun as a result of oil starvation."

Even if the court accepts that explanation (which it may not), why was it starved for oil? Was that a mechanical failure like mine, or was there an oil leak that caused the oil to go too low to maintain proper oil pressure? First, how would they prove there had been a leak? Even if they can, the plaintiff can argue that the leak was a defect in workmanship that caused the failure, resulting in a valid warranty claim.

They might try to claim that the two owners didn't have proper maintenance performed. How would they prove that? If they try to say, "Because the bearing spun," that's circular reasoning that usually won't fool a judge or mediator. And even if they somehow proved that maintenance hadn't been completed, they'd still have to show a logical cause-effect relationship between the lack of maintenance and the failure.

Unless they have video footage of him abusing the car or a signed confession, I don't see how Toyota could win if this goes to court or arbitration. They know it too, which is why I doubt it would ever get that far if an attorney sends them a letter.

Warranty law is built around the concept of the "deep pocket" theory. The idea is that the risk and the burden of proof are on the party with the better ability to handle it, the party with the deeper pockets. Corporations are considered to be larger economic entities than individuals and therefore have deeper pockets to handle that risk.

As a result, the consumer usually gets the benefit of the doubt in court, and companies often get screwed in the process. I'm nearly as pro-business as you can get, but I don't really have a problem with that. A good business will take the emotion right out of it and treat it as a business problem. They will simply count on getting screwed at some point, estimate the loss and plan for it as a cost of doing business. If they can reduce that cost they will, but there's no point in crying about it.