Contractor does a poor job and has to be replaced; how do you fire contractor 1 without him filing a lien?

[Sharon Klein]

Almost finished with a rehab project. Contract was overdue almost 2 months. Part of the job was some major excavating in the rear yard which involved removing a collapsed pool and patio, regrading the yard and seeding. It was known that the yard had drainage issues. The excavator the contractor hired did not address the drainage issue (presumably by order of GC) and also did such a horrible job that the yard can't be mowed from ruts, rocks and bumps. The drainage issue still remains. The job was not done properly. I'm getting bids from other excavators and narratives about how poorly the job was done. Contractor 1 is about 65% paid. I want to subtract the amount for what it would take to get the job done properly and pay him the difference. Can he file a lien demanding full payment if the job was done so poorly that the yard is not usable?