Sounds like a mess for your family. When speaking to the AA personnel in Texas did you have the information for the Canadian Customs? I have had the pleasure of educating airlines over the years on this very subject and it has never been a fun experience. I am guessing that AA saw "single entry" and ran with that as Gospel?
Others on this board will have better technical knowledge of your problem but from the looks of things a civil suit may be you best course of action.
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