Hmmmm... this is probably a little more sticky that it seems.
AutoGeek being the seller should have some responsibility. In context they are an agent of Lake Country by offering the Lake Country product. At the very least they should replace the defective unit. If your air compressor broke, would you not go to where you bought it and complain?
Has AutoGeek offered to replace the defective unit?
At the same time Lake Country has a responsiblity to provide a product that will work as advertised. If there is risk, they should add a disclaimer to the product sheet. There is always some risk with power tools, and not having some sort of warning on the label is suprising.
Did Lake Countryt ask for the defective peice back so they could test it?
You as the user have a responsiblity to install the product correctly and to ensure that it is working correctly. I wasn't there, but it would seem that there would be some warning that things were not going right. One poster said that his PC was shaking when his started to loosen, did yours?
Did you tighten it correctly? Was a wrench used? I understand that physics should dictate that it tightens, and not loosens, but... A PC does a lot of shaking, and who knows... loose fit, shakey tool, not feeling it come loose and bam it's on the paint.
It sounds like you can reproduce the problem, but Lake Country can't. Can you videotape the process and send it to them? Then if they see that it can be done, they should ( I would hope) ask to have you send it to them for testing. t's just a threaded rod, so whats to say that the die that threaded the stock was not out of tolerance. Dies wear out. Maybe the threads are out of tolerance and are more prone to loosening.
Sounds like everyone could have done better in this situation. Hopefully they can work it out for you. I would bet that you can find a good PDR guy to get rid of the dent and feather in new paint for a lot less than $500.