Engine blew up in the shop.

As has been mentioned a used engine is a terrible idea. You're married to it and then ANYTHING that goes wrong in the future will be blamed on you. This is assuming it runs correctly once the swap is completed. These things aren't always plug and play like the text book says they should be.

New rattles, inoperable lights, codes of ANY kind, stereo problems, parasitic draws, grinding, whirring, pulling, wandering.....it'll all be something you did during the engine swap

It's either stand your ground or buy the car and crush it so it can't haunt you.
 
As has been mentioned a used engine is a terrible idea. You're married to it and then ANYTHING that goes wrong in the future will be blamed on you. This is assuming it runs correctly once the swap is completed. These things aren't always plug and play like the text book says they should be.

New rattles, inoperable lights, codes of ANY kind, stereo problems, parasitic draws, grinding, whirring, pulling, wandering.....it'll all be something you did during the engine swap

It's either stand your ground or buy the car and crush it so it can't haunt you.

I thought about how to handle this. Certain unknowns like prior maintenance records, prior repairs, how long has the customer been coming to this shop.

Definitely concur replacing the engine is not a COA that makes any sense. One coa is to refund the customer for the recent work that was performed at Chris’s shop. Another coa is to do nothing, engine failed and the vehicle’s itself is outside of its running window/life expectancy (200k miles).

If the shop is being accurate in what happened, the shop has no liability. Not sure there is any coa that doesn’t result in a angry customer, or a lifetime liability for the shop on a vehicle not admired for its dependability.
 
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Not yet. The shop is going to fix it with a used engine. It's been ordered but has not showed up yet.

It's not worth the negative publicity that could incure if we tried to fight it.
Sucks, but I would be inclined to do the same if I ran a shop. Sometimes in life we just have to eat the censored sandwich.
 
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