I've seen this type of failure several times, on a variety of MB's. Don't ask me how it happens, but the master cylinder can fail in such a way as to cause exactly the problem you've experienced. In each of the cases I've seen, it was the rear brakes which were affected, and the problem began after several miles of driving. A few years back I learned this the hard way. Replace the master cylinder, brake hoses, calipers, rotors, and parking brake shoes/hardware. While you've got eveything apart, make sure the the cables aren't binding. The heat generated can cause damage elsewhere, so look over everything carefully!