I am floored at the attitudes defending BMW in this whole thread! OP, stick to your guns! This is nothing more than BMW NA doing "cost mitigation" on a warranty claim as a cost control measure. The policy is "deny" if you can come up with a scenario where you can shift blame onto the consumer.
I see this as an evolution of the "pad slap" policy (by not replacing the rotor) when doing brake jobs under the monopolistic force-bundled maintenance plan...I'm amazed that the government has not gone after BMW with an anti-trust suit relating to the "no cost" maintenance. The behavior mirrors microsoft bundling in "IE" for free during the browser wars of the 90's...or standard oil's behavior 100 years ago. Either way I digress...BMW is denying the warranty claim because it thinks it can get away with it, and BMW can afford to tarnish its image. OP, as you can see there are plenty of people defending their actions on here so obviously they still have lots of good will with people before this practice goes south on them, and hurts bottom line sales (at which point they'll do a 180). BMW has a hot selling brand and they'll continue to deny warranty claims based on dubious excuses...as the horror stories like the OP's add up & hurt sales, their attitude will shift. What they are doing to the OP (and others in similar situations) is a business decision mired in questionable ethics. Its cheaper to deny & fight then fix...nothing but a loss/gain formula.
BMW in general has gone to the extreme in reducing their back end warranty service costs in the last 4-5 years. I've owned BMW's for years and have noticed the emphasis on cost mitigation in the last 5 years...things that were covered no questions asked in the past now get a "no way, bmw won't pay for that anymore" responses from SA's. I can understand why they do this, they lost their a$$ on the last gen 7 series warranty repairs