Nissan Repair: Engine knocking, nissan altima, engine warranties

Question
I have a '03 Nissan Altima, (25,000 miles, 14 mos. old). Twelve days ago the engine stalled while I was driving it. The dealership failed to identify the cause. Two days ago the car developed a knock. The dealership is claiming there is bearing material in the oil pan and that excessive oil sludge clogged the oil pick-up screen. They're saying I need a new engine and that my warranty will not cover the replacement. I'm finding all of this difficult to belive. Is it possible for so much sludge to build up in an brand new engine that the engine is ruined?

Answer
If the car is that new it is still possible for sludge to build up.  I hope you have oil change receipts that show the oil was changed at the proper intervals?  If not you have bought yourself an engine.  Warranties are very specific about changing oil.  Change oil every three-thousand miles if you are really into that sort of thing.  I think the manual calls for an extended interval of seven-thousanf five-hundred miles between changes for normal driving.  The three-thousand mile changeout if for severe duty which most of us drive since the manufacturer considers stop and go driving severe.  So, if you live in the city and drive in traffic you need the three-thousand mile change of oil.  So, if you have not changed the oil you are fighting a loosing battle.  I would go to an independent garage and find a late model Altima engine from a wrecked car.  A new engine from Nissan is going to cost a bundle.