I see the side wall of the rim blew right off the rest of it. That would release the bead of the tire, and the tire would then expand sideways from the pressure in the tube. That's probably what caused the wheel to stop rotating... the tire no longer fit through the space between the chainstays or seatstays anymore.
Unless there was a rock stuck in your brake pad that had cut a groove into that side of your rim to weaken it so it broke like that, I would tend to think "factory defect" too.