I would like to avoid repeating this experience and salvage what I can. I do not believe that you did anything wrong. Twist is a defect that is common in the heart-center portion of the tree. It is nearly impossible to prevent or even control well in drying. The tendency is in the wood.
Twist seems more pronounced in the center portion of a log.
In most states, a product sold must perform as it is intended. Small claims court may indeed be an option. It is unusual in the Rockies to get Douglas fir large enough to produce large timbers and also avoid the heart center region. I'm sorry to hear of your unfortunate situation. It sounds to me, as well, that you handled the wood perfectly, but were simply the recipient of some poor-quality timbers.