Do I have to pay a contractor after he abandoned my bathroom renovation job?

Question Details:

Contract signed, stating completion within 2 eeks. We paid half down. After 2 months, I wrote an e-mail specifying a new completion date, and a $100 per day penalty for going beyond that date. He responded by e-mail saying "that all sounds fine." It's been 2 more months, so the balance has been depleted to zero. He's done more than half the work, but hasn't been out in the last month at all. Meanwhile we've been greatly inconvenienced and our homeowner's insurance is canceling our policy due to the trash pile he left from demoolition. I finally hired someone else. Now the first guy wants to get paid?

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