Skimmed it, tl;dr
Bought at used car dealership, still under powertrain warranty, bought 3rd party warranty, everyone wants to blame new owner and they think they can get away with it.
Fuck that noise, lemon law it.
This is what the lemon law was designed for.
Don't pay them a dime to look at it, let it sit in their shop and find an attorney. Nobody can 'cancel' a warranty, the terms and conditions are right there in the glovebox.
http://www.dca.ca.gov/acp/
Edit: That's just my perspective, Mav is the play nice route, I have no patience for these things.