Unpaid Balance on Contract / Contractor

I am a licensed electrical contractor who has completed several jobs for this one large data company. All of the jobs done for this company were on a "Time and Material" basis. The last job that I completed for this firm had a number of complacitions. The job also took a little longer than they expected. The firm was informed everyday as to the status of the job and had no complaints. A letter was even sent to this firm naming the problems and telling them that the problems were not due to us. The company had nothing but compliments for our work. We even worked the last 48 hours straight so we would not hold up the next phase of the job. About a week after the job was completed I called to check on the payment due to my company, I was told that there was a problem with some of the cabling and it needed to be taken care of. I said "no problem and told them I would take care of it the next day, because it was already 3:30pm (California time). they had no problems with that time frame. About 1 hour latter they called back to tell me they were not to me fix the problem and they were sending someone else. I told them that this was not legal and it was not exceptable since they have to give me a chance to see what they are talking about and to fix my own work. They basicly said they can do what they want and subtract the cost off my bill. They subtracted money from my (invoice) and treatened me, not to take any legal action.
I quess I don't have to tell you that I want to take them to court and sue for the 5,000.00 they still owe me. I have sent formal requests for the money certified mail.I have copies of the letters and other proof of my claim.
My questions are pertaining to the location of the Law dealing with Non payment of contracts and the law stating that they have to let me warranty my own work or not subtract money from my bill. Also do you see any problem with using the Small Claims Courts in Califonia for this case?

Thank You
Jlblabate

It sounds like the small claims court would be the appropriate procedure for this claim, as long as you stay within the claim limit for California (I believe that your $5k is within the limit).

You are going to need to file in the county where the work was done, unless your contract says that another jurisdiction would apply.

In the future, I would suggest that you formalize a work contract with your clients, spelling out what work will be done, the schedule, payments, your right to first repair in the event of a claim and even include that any disputes will be resolved in whatever jurisdiction is most convenient to you.