While being at the dealer (Bloomfield Hills, MI) to have them check a noise which appears underhood towards the left hand side of it (noise comes on only when steering), the technician said he can not duplicate the noise. But while checking the car he noticed an opening at the air filter housing (3/8" by 2 inches). The technician said that air + dust entered through this opening in the engine messing up the Air Mass Sensor which they replaced (warranty). I have thought that the same dealer while servicing the car in the past did not properly installed the air filter in place. When I confronted the technician he said that they did not changed the air filter. For the two A services and one B Service, the dealer replaced the oil+oil filter and the dust filter (inside the vehicle). The air filter, he said should be changed at 60,000 miles only.

So this is briefly what happened earlier this week. I am concerned that if air filter has never been touched by the dealer that means it came improperly installed from Stuttgart, Germany where the plant is.

The advise I am seeking is:
Is DaimlerChrysler liable for selling a vehicle which has been driven 49,000 miles without a proper air filter?
The technician tried to reassure me that no dust or sand reached the engine. That only the air mass sensor has been damaged. What do you think?

well, if dust and dirt reached the air mass sensor, it certainly reached the engine, too! Where else would it go? The air mass sensor is not an air filter, and is downstream of the air filter. Once dirt gets past the air filter, its going into the engine. It seems an impossibility to argue that enough dirt got into the system to destroy the air mass sensor, but somehow NONE got into the engine. Your dealer is feeding you BS, IMO.

(whether it was enough to significantly wear or affect your engine is another issue, but its BS for him to say "no dust or sand reached the engine." I'd ask him to explain where it went, then!)