A cascading failure is a failure of interconnected parts in which the failure of a single part can trigger the failure of successive parts. Such a failure may happen in many types of systems, including power transmission (you may recall reading in the news that many early blackouts were caused by a power cascade from a single blown transformer), computers, home heating and cooling... any system of multiple parts could suffer a cascade failure.
Was there an unprotected power surge that destroyed the machine? I find it unusual that Apple wouldn't make an allowances for a machine as near to still having a warranty as you state. Have you tried escalating the claim with Apple?
If you had a home power issue your homeowners insurance may cover part of your repair.
I had a cascade failure of my home heating and cooling systems this spring due to a nearby lightening strike in a thunderstorm. No other appliances were damaged but apparently the wet grass allowed current to enter the outdoor AC unit, blow up it, the furnace and the thermostat... without causing any bangs, fires or smell of burning materials.
The first clue I had that anything was wrong occurred two days after the storm when I went to turn on my AC and nothing happed.
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