I feel like I have been set up by this company but I'm not sure.

Just moved into my first home and the wood floors looked dull also really don't care for the stain on them but wanted them to be really glossy. Several of my neighbors recommended a company to do the floors. Got them to come out told the guy what I wanted and he said to change the stain would have to totally sand the floors. However to do this was too much over my budget. I explained to him that was there anything else we could do since according to the seller of the home the floors had been refinished in the last several years. He said the finish they had put on looked like a satin and that he could screen the floors and put on the gloss I wanted but that would not change the stain. The price was in my budget so I agreed.

The guy seemed really nice and came so highly recommended that I decided to have him come do the floors when I would be out of town.

So he and his crew come over and began the work and hit a problem. He calls and tells me that he has hit a large spot that has started peeling and he can not take it down any further and the floor needs to be sanded.
I tell him to just continue I planned on having an area rug in that spot anyway. He refuses and said the finish would not stick in spots and that my only option is to sand my floors.
So I get back to town and I can't believe what my floors look like. About half my living room floor is so dull looking and then this big patch looks like when someone gets a sunburn and their skin starts peeling.
He comes over and tries to tell me that the only way to fix my floors is to sand them completely down and stain them and put the shiny top on.
Here's what I'm not sure on. Some people at my workplace are like he is just trying to scam you for more money. So I don't know what's appropriate. He did say that to sand, stain and gloss would be an additional charge he quoted me a price of $500.00 more for the additional work. So then my coworkers are telling me to tell him we have a contract and that he has to finish the work for what he quoted.
So I talk to him and tell him this and he tells me if I read my contract that I will see it says that it was written for a screening and that there is something in it about if any problem arises he can then do something else. I can't remember exactly how he said it and I can't find the contract in all this. He told me he has to meet some standards and this was not standard procedure for my floors to be screened at this point but sanded. So I don't know what to believe at this point. He seems convincing like I said he and his company seem very nice. They moved all my furniture for no charge, because I had no way of doing it. They offered to move the furniture back because they could not do the sanding job for another week and would move it back again. So like I said they seem nice but like my sister said this sounds like a bait and switch.

Anyway a coworker told me that she knew a person who does sanding and he was very cheap he is very low priced and will do the sanding only for a very low price. He is unable to stain and gloss the floors.
So I called the original guy who messed up my floors and ask him to finish the floors and he says the company's policy is that they can not stain a floor someone outside their company has sanded. That they needed to do all the work to guarantee it. I told him it seemed to me he messed up the floor and should pay to fix all of it. He then said that we had a contract and that he had not charged me for any of the work he and the employees did and helped me by moving my furniture for free and get this and by stopping the job and not proceeding and was greatly discounting the job by adding only $500. I'm confused by this I don't know who is right or how to proceed do I need to talk to a lawyer? Is this guy allowed to walk away from the job at this point? Please help!

I think he was being more then fair with the price to completely sand and finish the floor. I have run into similar situations, where I was going in to buff and coat only to find out that someone else had put on a coat of poly without properly abrading first so the poly just started to peel off. As refinishers we don't know what was done prior, and unfortunately there is no simple fix. On another buff and coat of a stained floor it appeared the previous owners had stained with a polyshade so when I buffed it took the stain right off with it. In both cases the customer understood that it was beyond my control and had no problem with paying me the additional to sand and refinish completely. As for staining someone work I wouldn't do it either. When staining the sanding is even more critical, and you don't know what the other person did. And that is why they probably charged so little because the didn't do a quality job. Saying they don't have the time to stain or finish is BS because that is the quick part of the job the sanding is what takes the time. Bottom line is you should have just paid the first guy in the beginning because now it will cost you twice as much.

I think the finisher in this case is absolutely right, and being reasonable in his request for an additional $500.00. This would not cover the costs of a resand of even a small living room.
There is no sure way to determine whether a buff and recoat will work without trying first. Our usual contract states that there is no guarantee of adhesion or failure of the new coat, since we generally do not have any background on the original work, nor how it has been maintained.
The fact that the guy you hired, stopped the work rather than proceed is merely a demonstration of his integrity. Had he continued, you would have owed him the entire amount agreed to, but not had a usable finish. Leaving you to start over at a full cost of resand and finish.

The guy sounds legit to me. No one should guarantee a recoat of a floor 100% because you will have one fail if you do enough of them. Ive related this to the time my Dad went in to have a tooth replaced with one of those implants. His body rejected the tooth and he had to have it removed but guess what he had to pay for it anyway and he still had a jacked up tooth. Anyway if the floor blistered like that when it was buffed its likely that it was done cheap to sell the house buy a guy who didnt abrade and or cleaned the floor properly. Really he is the one I would be angry with not the new guy, he is just getting caught up in a mess he realyy didnt have any control over. Yea it sucks to be in your shoes right now but he really is giving you a break here. How much less is it than the original sand bid?