Super, that is good.
It is good because you appear to be in a position of power here. You have his money. He does not have a completed floor. I would NOT give him any money in settlement (for him to fix the floor) unless it is in full and final settlement of all claims - IN WRITING, such that is releases you from any further obligation. That prevents him from being able to successfully sue you for MORE money, or otherwise brow beat you into paying more, "lest he sue you". I'd give him my offer, explain that this is the last of it, if he accepts it, it must be in writing as full and final settlement, releasing you of all claims. If he doesn't accept it, fine. You will await his service upon you of complaint and summons, so a court can decide if his amount demanded is actual damages, vs. what you have proposed.
You have NO obligation to agree to his demand. When two parties can't agree, who ever feels they are "out" the money they legally are entitled to has to SUE the other one so an objective court can decide what amount is appropriate as real damages (not bonus moneys!). You are not the one that needs to SUE for anything. You are not out anything. You are in the sweet spot. He is coming from behind the 8 ball because he is out his X dollars. You have offered X amount to compensate him for his actual losses. He wants that PLUS your hide, apparently.
I'd not be surprised if, once he realizes you are done with him and have made your final offer (and I'd not communicate with him after that), he decides he will accept it. Is it really worth him learning how to take it to court for a measley $700 that no court will award him? Unlikely, unless he is stupid.
Anyway, I'm sorry this all happened, but I think you have tried to bend over backwards to make a customer with a bad experience, happy. He is just not that kind of customer, it seems. You can't win them all. But you don't have to bend to his whims either.
I hope this helps! My goal is to provide you with excellent and accurate service – if you feel you have gotten anything less, please reply back, I am happy to address follow-up questions. Kindly rate me "excellent" when you are done. I look forward to assisting you in the future, should you have legal questions.
Sincerely, Alexia Esq.