Tim and Elizabeth Stanley removed all the wood flooring and had the subfloor treated in their daughter's playroom, where the powderpost beetle infestation was found.
Exterminators have recommended that the entire house be treated — a job the Stanleys say could cost about $25,000.
The Stanleys have gone to small claims court to get compensation from retailer Atlantic Home Furnishings and manufacturer Mercier Wood Flooring.
But both companies say they've never before heard of such an infestation, and are not responsible for the couple’s plight.
The Stanleys purchased hardwood flooring for their daughter's playroom from Atlantic Home Furnishings in September 2010.
But in April 2014, when Elizabeth Stanley was crawling on the floor and playing with her toddler, she noticed half a dozen small holes, about the size of a pencil tip, surrounded by dust.
"The piles of dust, they look like little volcanoes on your floor," she said.
Exterminators from Orkin Canada identified the pests right away, from this characteristic trademark. Samples sent to entomologists in Ontario were confirmed as true powderpost beetles.
"Orkin said it's like winning the lottery," Elizabeth Stanley said. "Yeah, lucky us."
"[The news] was overwhelming, to be honest. We have a young daughter, and I was pregnant at the time, so there was a lot of stress on our family, and a lot of fear. No one knew a lot about it."
According to Vernard Lewis, a specialist on household and structural pests at University of California, Berkeley, true powderpost beetles feed on starch contained in hardwoods like oak and maple.
He says there are large pores in the end grain, at the ends of hardwood boards, where females lay their eggs.
According to Lewis, larvae can spend up to five years maturing below the surface of hardwood.
Adults then emerge through shot holes, leaving behind piles of frass— dust similar to talcum powder.
Lewis says the pests have passed around parts of the world through trading activities, on pallets or different wood furniture.
But he says infestations can also begin due to sanitation issues where wood is stored.
Legal action launched
The Stanleys approached Atlantic Home Furnishings about the infestation.
"[The beetles] live underneath unfinished wood, and they burrow [up] through; they can't burrow down," Elizabeth Stanley said.
"So they had to be on our flooring when we received it."
The couple says the retailer was apologetic, and indicated it would do whatever it could to help.
But the Stanleys say, when nothing happened, they launched a small claims suit. The action later included manufacturer Mercier Wood Flooring.
"Then it was quickly turned around on us, and that it was our fault," Elizabeth Stanley said.
In court documents, Atlantic Home Furnishings states Mercier had denied the buyers' warranty claim.
"Research completed identifies that items including wooden tools, frames, furniture, books, toys and flooring can be infested with this beetle," the Atlantic Home Furnishings court filing notes.
"This is an isolated incident for Atlantic Home Furnishings; there is no evidence to suggest that this beetle entered the home by the prefinished hardwood purchased through our store."
Atlantic Home Furnishings' lawyer, Denis Barry, told CBC Investigates there has never been an instance of beetle infestation like this before with his client, nor the manufacturer.
He says a significant amount of time has passed since the Stanleys purchased the prepackaged hardwood flooring.
Barry also noted that the pests aren't native to Newfoundland and Labrador, or Quebec.
He says the Stanleys have not provided proof that the infestation was caused by Atlantic Home Furnishings or Mercier.
Manufacturer wants case dropped
In court documents, Mercier stated that any loss or damage wasn't the company's fault, and that the pests must have originated from infested wood in the Stanleys' home.
Mercier spokeswoman Karen Tremblay says the company produces more than 10 million square feet of flooring every year, and this is the first time they've ever heard of a powderpost beetle infestation in their products.
According to Tremblay, Mercier strictly follows a hot treatment process for its wood products.
"We kiln-dry every product for more than 30 days,” she said. “And the [Canadian Food Inspection Agency] recommends six hours. So there's no way that the bug can survive there.”
According to Mercier court filings, the wood is then isolated and kept in a closed warehouse, where it's cured and varnished, to limit possible exposure to pests.
"It's very sad, but it's not from Mercier," Tremblay said.
Mercier has requested that the court drop the claim.
Elizabeth and Tim Stanley say there's no evidence that an infestation started in another flooring source in the house. They say they don't use firewood, and other wood items in the home have never shown any indication of an infestation.
They say there's no way they introduced this insect into their home.
Elizabeth Stanley says she feels frustrated.
"It's the principle of it all.
"That flooring was infested ... and we're the ones being blamed for it? That's really disheartening."
The case is back in small claims court on Jan. 30.