09 Kodiak 350 rear differential seals blew

Hi,

I'm new to the board and am pretty new to ATV's in general, I do have a decent amount of car knowledge but my ATV knowledge is very limited.  So onto my question.  

We recently bought 2 ATV's an 09 Yamaha Kodiak 350 and an arctic cat 500.  The Kodiak has about 200km on it and it went in for a service.  After we got it back we went out riding for 15 or 20km and then on the way back all of a sudden a giant cloud of black smoke was coming out of the back end.  Smelled like burning oil and the ATV lost power greatly.  Got it back to the house and looked under it and it looked like there was oil coming from the rear dif.

So we proceeded to load it on the truck and take it back to the dealer where it was serviced.  Got a call from them saying that the seals on the dif had blown and replacement parts would be about $20 and then it would be about 1 hour of labor to fix it, so we said alright but ask how it could have happened.

They call back saying that the problem was caused by whoever was riding had kept the rear brake on for the entire ride and because of that it had caused heat in the rear dif which then caused the oil to basically boil and blow the seals on the dif but also caused $700 in damage to the dif and parts around it.

So after my long winded explanation my question is, is this actually possible?  Could the rear break being on cause all this damage?  Next question is, could they have done something wrong during the service to cause the problem?  Lastly I know that my wife didn't have the brake on while she was riding it and I was on mine behind her and I know the brake lights weren't on so is there a way that the brakes were on without being pushed and the brake light not being lit up?

Thanks so much for any help on this matter it's great having a resource such as this community to ask such questions.  

it does have a wet break in the back. I can see that happening. but the question is how. she might have been stepping on the break when you were going for a ride and you just didn't notice the light on cause it was on the whole time and wasen't going on and off.