I'm not surprised that their customer services team have been told to stand down if there is now a legal case moving forward. I'm not trying to defend Audi as their actions are awful prior to this, but it would be entirely expected to not be able to pursue a customer services resolution whilst legal proceedings are in hand. However, I see no reason why this would prevent the warranty works being undertaken. By their own admission there is an extended warranty in place and they are of course throwing the dealership under the bus there for not telling you. I guess really it depends what your objectives are now for a resolution as to how you go forward. They cant deny you the warranty because you have lawyers involved - the warranty is the warranty, but I suspect you will want and need more than just a warranty fix here to resolve this to your satisfaction. If your car remains unrepaired then Hull should undertake this and the Audi email doesnt say they wont. But they wont discuss with you any other remedies, goodwill etc whilst there are legal proceedings. I would talk to AA Legal and see where thats heading to see what your best course for a positive outcome is. My own experience with audi executive relations is that I have generally got to an outcome that I found acceptable, aside from all the very real issues with the continued failures and lack of recall and resolution.