I'm not sure it would be any different if it wasn't a "friend" . I think we get very defensive when it comes to our children. I wouldn't terminate just yet, but I would let her know, maybe in an email or letter, that this is normal behaviour. You do the best you can to supervise the children, but part of daycare is learning to play independantly and problem solve. If she's not comfortable with the way you've been watching or continue to watch the kids then maybe she should look at another solution. I've had children go home with scratches that aren't even violence related. They fell, tripped, was playing nicely and someones long fingernails got in the way ect.

I think the fact that she's a stay at home mom and this is her first child speaks volumes! She might be over protective and nervous about someone else careing for her child. Maybe you should suggest that you speak with the husband, since he was the one upset and maybe the entire reason for the conversation.

You handled it just as I would have.