Is this right? Is it legal?

Ok, I finally got my Sportsman 850 back from the dealer with a new front diff to replace the one I busted in the snow.

Dealer tells me that Polaris warrantied the part out of "good faith" but would not warranty it again. They said it was "impossible" that it broke the way I said it broke. I don’t know about impossible, but I dang sure know how it broke and it shouldn’t have. (I was cutting donuts on my icy driveway in 2wd and the front diff busted) I can’t explain it either, but that’s how it happened. I don’t know if 4wd had never fully disengaged or what, but it sure has heck broke.

Now, is this dealer full of crap, or would and could Polaris try to pull this stunt, even though I purchased the extended warranty?