Most mobile phones have a water sensitive sticker in them that changes colour when exposed to water. I'm not sure if the Serenata has this.... but most phones do.
Could it be that it was at some stage exposed to water before you bought the phone? If so then I guess the warranty is void.
At that price they want to charge you for repair you could buy a new one on ebay or even from a dealer as they have some half price deals etc.