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Karen, the RedGard over plywood or dimension wood in a wet area is not approved by the manufacturer. That entire niche should have first been covered with a CBU, the bottom CBU being sloped to drain, the joints finished per the CBU manufacturer's instructions, then coated with your waterproofing membrane at least twice per the manufacturer's instructions, and then tiled.
How they fix the obvious deficiencies is their problem, not yours. If it involves doing the entire wall over, or even the entire shower, so be it. You're paying for a new shower, properly constructed, and that's what you should get.
"Properly" constructed means following all manufacturer's instructions, all tile industry standards, and best building practices.
My opinion; worth price charged.
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