It has been my experience with watches that all Apple does is find out what the problem is right down the explanation and send the watch out, because the people at the Apple stores don’t diagnose (that kind of problem) or fix watches. The scratch they saw on the corner of your watch could’ve been from you reaching down between your seat and your console in your car to try and get something that fell... don’t let them tell you what happened, make sure they hear what you have to say. If it was me I would call Apple support and speak with a senior advisor and hopefully with any luck you will get someone that is actually knowledgeable about watches and with that problem. That seems a little absurd to have happened with an series 3 watch.
The face fell off of nieces series one watch yesterday because of a battery expansion. (And it is being replaced for free) So maybe you could start there and add that in there. Good luck.