How do get contractor to return unused payment for a job not completed?

three years ago, paid a contractor for the first third of work to build a garage (est 25K) - after just breaking ground, he ran into issues with wetlands. We learned it would cost more to change the drainage than to build the garage. We had him stop work immediately. He burned about 2-3K in hours before we stopped work. We have a contract and he owed us a refund of the remainder of our first payment (est. 22K). We tried to get a refund and he claimed he didn't have the $. We've been back and forth with him trying to find a way to have him do work against what he owes. He's been uncooperative and has paid us just one payment of 1K almost two years ago. He took our money, spent it elsewhere and didnt do the work. We're willing to spend some money if we can recoup anything.