This is your fatal flaw. They likely have some documentation saying install an x gallon water heater. A claim that you were an uninformed consumer that was taken advantage of will be fruitless. You had a GC. If it went to court, you would likely lose and be responsible for the $5000 plus attorneys cost.
What size water heater was installed?
The fact of the matter is that I think the plumber and builder have moved on. Iām not sure how the plumber has a contract claim, when they didnāt have a contract with you.
The plumber may or may not have had a contract with the builder. So, the plumberās only potential ācontract claimā IMO, as of today, is likely against the builder, since the plumberās lien rights on your property have expired.
You donāt have a contract with the plumber and, as a consumer, you relied on the expertise of the builder and plumber to spec the right equipment for job. That type of language has been in my past construction contracts.
At any rate, Iād wait for 12 months or so. Then petition the court to remove the expired lien.
Contracts do not have to be in writing. Think of all the ācontractsā you make on a daily basis. You go get your hair cut and agree to pay. Someone cuts your hair and you pay later (even if it is 30 minutes later). If you fail to pay, thatās a broken contract.
You accepted the services, but I do think if they sue you a defense would be that you paid the contractor. One of their arguments could be that you had started paying the subs directly, setting up an expectation that you were taking over as the general.
It seems you arenāt going to pay, so there is nothing you can do until you are sued or until you sell the house and the title needs to be cleared.
No, my defense is that the work isnāt complete. It isnāt. I canāt pay the final payment when the job is not done. The judgement will be $5000 minus the cost of completing the job. I am fine with that.
In CA, a written contract is required for all home improvement projects over $500. Not sure about the law in OPās state.
I have no idea.
So the exhaust pipe from your water heater is too long and this causes what? The water heater stops working? Iām very confused.
What does the length of the exhaust pipe have to do with the capacity for hot water? Something isnāt adding up.
My limited knowledge is that itās a safety concern, since the water heater vent pipe vents exhaust gases and moisture away to the outdoors. If the vent pipe run is too long, then the gases and moisture could backdraft and be sent back to the water heater, which could then possibly explode.
What @sushiritto said. If it canāt vent, the system shuts down for safety.
So, if I understand this correctly, your boiler is not undersized but is improperly installed so is shutting down every time when the demand for DHW requires it to work for longer than a certain period of time - ?
ETA: if there is no easy remedy to move the pipe, Iād hire a mechanic to look into if it would be possible to install a DHW holding tank so your boiler does not have to work like crazy when your DHW demand spikes.
This pipe issue etc. is why one needs a trained mechanic to install boilers, not just any run of the mill plumber.
Have you had an inspector look at the vent and fail it? Supposedly it should have needed to pass inspection when you built the house. In glancing at the codes, I see a minimum hight but not a maximum.
I also looked at a random installation manual it does have a maximum length, but it is dependent upon the number of 90 degree elbows. The shortest length is 90 feet with 6 elbows.
OK, this is where I have had experience and recently too. Do NOT count on your building inspector to catch mistakes made by your contractor(s).
Good point. Unfortunately, city inspectors are notoriously bad at spotting such stuff and can easily final something that is not to code (BTDW - we had to call the city to come back and unfinal some stuff, lol).
Improper boiler venting is apparently a major problem discussed on forums devoted to boilers (I browsed those extensively back in the day when we needed a new boiler).
Yes, the manufacturer and the plumber had a pow wow. The plumber tried to fix it 4 times. I said we have to call it lemon. The manufacturer wanted to see it for themselves before replacing the unit. Thatās when it came out. The plumbing company was total a** throughout all this dragging their feet as much as possible and threatening me with a lawsuit when I didnāt agree to their half baked repair plan. Had they been pleasant, Iād have taken an easy way out and pay them something.
This is so true. They delegate a lot to trades people.
Just recently, I saw an building inspector come out to final a house with one item that required correction.
The building inspector went through the entire house, BUT MISSED THE ONE ITEM THAT WAS CALLED OUT FOR CORRECTION. 
And that was not some isolated occurrence. Some inspectors are good BTW, but a lot of them are older and either nearing retirement age or have already retired. IME.
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If you are being sued, I highly suggest not posting anything about the lawsuit online. Also, consider hiring competent legal help. Good luck.
It was in a small claims court. Not a real lawsuit in a way. Not that much at stake. I represented myself and I lost. I donāt think I will appeal. The process was not very interesting. I couldnāt help tuning them out. I knew I shouldnāt but.