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Brian T.I've got to admit that I am of the same opinion as the others. In my mind, you should only have to refund his money if he was able to return the graded card in the condition in which he received it. I am reminded of a common store policy, "You break it, you buy it." In this case, perhaps "you break it open, you own it." is more appropriate.
I would politely state that you cannot be expected to repurchase a card that has been broken out of the slab since you now have no assurance that you are even getting back the same card - let alone in the same condition. What proof could be offered that he did not damage the card breaking it out, trim it prior to submitting it, or even swap it out? In short, not returning in the same condition (inside sealed SGC 40 slab) = no refund, IMHO.
Brian T.