Doesn't look like it could be related to installation. Honestly the weird pattern that the bubbling is in looks like it could have been where the exercise ball contacted the floor. Not sure what would cause that reaction, just something about the two materials in contact. Still the damage is pretty minor, I don't think it justifies replacing the entire floor. Especially because it's in a closet. Just chock it up to wear and tear. I seriously doubt any potential tenant would demand the closet floor be fixed. Also, less cheap flooring may be less likely to be damaged by contact with an exercise ball. Maybe tell him you'll give him $50 for the greater than usual wear and tear. It's no worse than a carpet stain, and that doesn't justify replacing a whole carpet.