Um, as long as they don't find any evidence of the mbc, it will be covered. I put my firebird through absolute hell- drag racing every weekend during the summer. I even put a supercharger on it. When the tranny broke the second time and took the rear end with it, the warranty company still had to pay. Thats why I have my MSP now... my dad didn't want me to have to put a third transmission and third clutch after the warranty period was over, so I got a new car.
But no matter how hard you beat on the car, as long as there isn't true evidence of it, they have to fix it. How can they prove that the axle broke racing when it is possible that he got a weak axle from the factory (even though we all know what really happened!)?