That is really a lot of shrinkage for one piece of fabric. Bummers. Can you imagine how your quilt would have looked if you hadn't washed it before you quilted it? Oh my, I'm picturing a very small scrunched up quilt that now will fit a twin size bed. LOL (of course it wouldn't be funny if it did happen)
However, it does sound like fabric.com gave you excellent customer service in trying to rectify the problem. As they say "stuff happens."
It used to really frustrate me when I would buy fabric from JoAnn's. I would often buy fabric on speculation (for my ever growing stash pile) and would put it away. When It came time to use it, I would wash it in hot water/hot dryer and I started noticing that my yard of fabric was no longer a yard -- it would be anywhere from 2-4" shorter. Since I buy fabric from other quilt stores and fabric stores, I didn't catch on to where it was coming from. One day I found a stash of fabric still in the bags from JoAnn's (most of it was Christmas fabric, probably from the season before) and since I was working on Christmas gifts I washed most of it and used it all right away.
That's when I found out which fabric store had the fabric that shrunk so much. I measured the fabric and some pieces only measured 35 1/2". For quite a while there, I noticed that when they measured out the fabric they would actually stretch the fabric a bit. And then when they clipped it, they would sometimes would change hands, put their thumbs back where it was supposedly at the yard mark - then they would put the fabric back down and cut the yard in that divit they have on the cutting board. Also, depending on how busy the store was, they would do this really fast and were a little sloppy with their cutting. For instance, if they were really going fast, when they opened the fabric bolt to measure it, sometimes they wouldn't notice that they piece they were cutting was shorter on the top portion of the fabric, even though the bottom of the fabric measured the full 36".
A lot of fabric stores give you a skosh more than the yard you are buying to help with the natural shrinking of washing. Not JoAnn's. After that I started watching them very closely. They have seemed to relax their grip on cutting the fabric, however, once in a while I come across an old-timer with that tight grip on the fabric. If I am not sure that I got a full cut, (since I fold all of my own faric for them anyway) I will measure it out right in front of them. I am not shy about that at all. If it doesn't measure up, I will ask them to remeasure and cut me a new piece when they find that it is shy of amount asked for. After all these years I have had to do it at least a dozen times, and not all of it happened at JoAnn's. I just say "buyer beware." If your pattern calls for a yard and you only get 35 1/2", that can really screw everything up. Especially if you are on a quilting retreat up in the mountains and the closest quilt store is 15 miles away down the windie mountain road - in the rain - Yes that really happened to me. It was a white knuckle trip...