Engine sludge

I bought this car with 51,899 miles on it. I paid over $25,000.00 for it after all the warranties and such. The car broke down on me six months later. The dealership does not want to help me at all and states that the warranty wont cover it because there is sludge in the engine. I found out however, that prior to the previous owner trading in the vehicle there was issues with the car ticking loudly when accelerating and making turns. It was reported by a mechanic that he had sludge in the engine and that if he didn't fix the issue it would lock up. From the date he took the vehicle in to get looked at for that issue was only four months later from when I purchased the vehicle. The previous owner is from Fayetteville, NC. I have reason to believe that the car was involved in a flood in 2016 but never reported it. When my dad vacuumed the back of the seat one day he said that a bunch of mud started coming up. I was just wondering if any of you have advice.