Originally Posted by
escarpment
This happens when the high limit of the rear derailleur isnt set right. The limit screws are what control how far in/out the derailleur will shift on the bike. If it is not adjusted right you can shift your rear derailleur right into the wheel.
Ive seen it happen and its not pretty. At the least you are looking at a new rear derailleur or at least lower cage of the derailleur, New chain, new derailleur hanger, and again hopefully the wheel can be saved.
Whoever set up the rear derailleur did not do it properly. Good luck with the warranty.
I can see how the chain being driven into the wheel could cause this, but there are two problems with that scenario. First, I'm sure the rear derailleur was set up properly. I've been keeping my own bikes in alignment for decades without a problem and this bike had 400 trouble free miles on the clock, and had been shifting perfectly. But more importantly, I was in third or fourth gear when I shifted from high to low range up front. This is a new one for me.