Seeing stuff like this happen just kills me. I own an engine and machine shop and have for nearly 25 years. I deal with a lot of engine builders, locally and regionally. Believe me, I see a lot of stuff go wrong and sometimes it's just best to make a clean break and find a new set of eyes to have work on your stuff.
I have a particular customer that does a lot of work for racers who run Comp, Top Dragster and Top Sportsman. He sees engines originally built by many "top name" engine shops in the country. I could write a book on some of the things we have had to repair, and the things that led up to it.
Most of the end users, in these cases, have moved away from their original builders for a number of reasons, mostly because of unsolved problems, bad customer service and blatant overcharging for poor results.
As far as trying to sue...I hate to say it, but the judges often don't understand the nuances of the industry. Many shops will hide behind the "no warranty on race parts" clause. Often times the legal and court costs will eat up anything recovered, if you actually get someone to pay on a judgement.
On a side note; the pictures posted of that piston to vale clearance problem may not have been detected by the original builder for a number of reasons...
Most importantly, many guys "clay up" and rotate the engine to check piston to valve. The clay pushes the piston to rock away from the valve, measuring only the furthest clearance. It does not adequately represent a hot piston, rod stretch, and "loft", which is the piston skirt flexing and allowing the piston to rock further in the bore than you can represent while assembling.
In a nutshell; you need to rock the piston from underneath, during piston to valve interference timing events, while rotating it through the range if you are going to get a correct clay impression.
It's a common mistake, I just had to recut valve reliefs on pistons for a 655 wedge for this reason....the original builder missed it and the pistons even hit the heads enough to pinch the ring lands.