So what? "Happy Holidays" was a standard greeting at this time of year long before people like you decided to be offended by it. 

A courtesy like saying "Merry Christmas" or "Happy Holidays" is a kind of gift. One accepts a gift as given. What you did was insult the giver by, in effect, saying, "Your gift doesn't suit me. Give me something else."

Your friend's intention was to wish you well. Your's was to make a statement at their expense. You were rude. They weren't. Deal with it and move on.

Merry Christmas.