Does a contractor have legal recourse if he cashed a check with "Balance Paid in Full" in the memo?

Hi...I wrote a final payment check to contractor1. I deducted $110 because this amount was passed to me to pay from another contractor2, and the reason is due to contractor1 not following my directions about the work to be done (Contractor2 repaired contractor1's mistake). Contractor1 said he will put a lien on my home property. i got a notification to pick up a certified letter, and it is not from an atty's office but instead it is from the contractor1. I have not picked up the letter. I called contractor1 and left a msg to call me, but he won't return my call. Is my debt settled?.