The leak is at the valley centerline where the dormer shingles were cut back only 2 inches.
Code Violation (IRC R905.2.8.2 / IBC 1507.2.9.2): Closed-cut valleys require the shingles from the smaller/lower-slope plane (the 5:12 dormer) to be cut minimum 2 inches from the valley centerline only if the slope is 4:12 or greater. However, the nail placement is the critical failure here.
The Failure:
- Nail Zone Violation: Nails are driven 3 inches from centerline. Code (and all manufacturer instructions) requires no nails within 6 inches of the valley centerline on either side. You have nails driven through the water channel.
- Insufficient Cut-Back: While 2 inches meets the minimum for a 5:12 slope, the combination of the steep 8:12 main roof driving high-velocity water across the valley and the nails puncturing the liner 3 inches out guarantees wind-driven rain entry at the cut edge and nail holes.
The Fix (Tear-off required):
- Strip shingles back 3 ft on both sides.
- Install W-valley metal (or 36" wide ice & water shield minimum) centered.
- Shingle main roof (8:12) first; run shingles across valley, nail no closer than 6" from center.
- Shingle dormer (5:12); press into valley, cut back 3" minimum from center (better for differential slope), nail no closer than 6" from center.
- Seal cut edges with asphalt plastic cement (dab under each tab corner).
Bottom line: The crew nailed the water channel. Pull it and redo per manufacturer specs and IRC R905.2.8.2.