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I would document the pothole incident like crazy. Whether or not the two events are causally related is anybody's guess here, but if you have a police report and other people also reported damage from this pothole, and then you had a catastrophic failure within days after the incident, go to your insurance company and see what they say. Your insurance can, in turn, elect to go after the city. Let them try to deny compensation for the comprehensive claim if multiple people reported the road hazard and your issue occurred immediately after the incident. I'm sure your insurance would be all-too-happy to go after the city rather than pay for a new engine out of its own coffers.
We live in a litigious world. CYA. FWIW, I now drive with a dashcam.
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