Automatic Transmission Torque Converter problems of the 1997 Toyota Corolla

I had transmission flush on 1997 Corolla on Dec 31, 2008. On Jan 17, 2009, while driving, car suddenly stopped after strong vibrations. Fortunately, this did not happen on highway. The first repair shop said transmission torque converter locking up. Transmission is needed?. The second repair shop opened the transmission and found ?transfer case has no oil inside?, with broken bearing that cause damage to the transmission and need total rebuild. Both shops said it could be the results of the transmission flush job. I contacted the shop that performed the transmission flush and they denied of any possible mistake. If they had accidentally emptied the differential unit, the car should have seized immediately, not a few weeks afterwards. They said that with age, the seal between the transmission and the differential case could have been damaged and the oil in the differential unit (transfer case) to leak and eventually dried up and cause the failure. I did some research on Toyota recall and service bulletin. Nothing of this nature came up for this model year but found similar description for 1997 Toyota previa defect recall date apr04, 1997 with defect consequence: ?oil leakage will result in a sufficiently low oil supply to cause bearing damage to the front differential unit leading to eventual seizure of the unit increasing the risk of a crash. So could it be a defect similar to the 1997 Toyota previa or could it be the shops mistake to unknowingly drain the differential compartment which can lead to the same symptom eventually (not necessarily immediately as they claimed).