Kristi and Brad Galbraith were outraged when an employee of the nursery sent them a photograph of their little boy, who had been wrapped in a blanket and bound to a nap mat with silver duct tape.
"He would tell us that when he would go to take a nap, 'Please don't hit me. Please don't hurt me.' Which is incredible to hear from your son"
Shortly after sending the shocking photos, the employee quit his job at the Heart2Heart Montessori Academy in Texas.
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Kristi said: "I felt sick to my stomach [when I saw the photograph].
"I felt extreme guilt for possibly missing signs of what was going on."
The couple have now accused the Heart2Heart Montessori Academy in Texas of fraud and negligence, and are seeking $1 million in damages from the owners.
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Their lawyer Jeff Rasansky said: "This is a parent's worst nightmare."
"Parents take a leap of faith to entrust their children to the care of someone else, and it is extremely upsetting when something like this happens to toddlers, who are too young to speak up for themselves."
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He added: "Kristi and Brad found out this day care centre purposefully withheld water from children in an attempt to limit the number of times diapers had to be changed throughout the day."
The boy's father has claimed that he confronted Pamela Decker, who co-owns the day nursery, and that she confessed to the act.
He said: "Once I told her we had photographs, she broke down at that point and started apologising and admitted to what she'd done."
The Galbraiths have also said that, while their son is too young to talk much, he did tell them he was hit while at the nursery.
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Brad said: "He would tell us that when he would go to take a nap, 'Please don't hit me. Please don't hurt me.' Which is incredible to hear from your son."
Heart2Heart have offered no comment on the lawsuit.
Pictures via Rasansky Law Firm.