I have known of tenants deliberately turning on the water to hurt the landlord. 

I finally decided to take the plunge after several years of deliberation as to whether to answer the real estate investing call or not. 

I am convinced that this is deliberate action by Sherman Bridge to earn the $1,500 monthly interest as long as they can procrastinate and put my refinance off; and now having read other posts in this forum and learning that it's the normal way they do business with so many other customers I can see that they sell this hard money to permanent financing loan combination as a dangling carrot really since it's oh so clear Sherman Bridge never intended to process the refinance in a timely manner to begin with.

Is the thought that they were deliberately deceptive?

Based just on what you have posted I can't see what your legal argument would be unless you are claiming fraud and deliberate deception.  

Clean the place up, bump it up to market rate, and be more deliberate when screening in the future.

@Danny Mestas After much deliberation I’m keeping my house with just about that cash flow I was going to sell and reinvest to double cash flow but realized it would turn a paid for asset with $850 cash flow to about $400,000 in mortgage for a $1,700 cash flow and I decided that was stupid.

There could be major problems with it or they deliberately priced it low to get a bidding war going. 

There's a bit more deliberation that went into it (no W2 = no loans so you need to have investors willing to sign on the dotted line.

I wish I could remember who said something like "Use your profit, but never spend it"- take a shorter, and much more deliberate vacation.