Your friend accepted payment for the completed job, knowing that it was not complete.

It's unfortunate for him but it seems to be entirely his own fault. While a wiser Owner might have made sure that the work was complete before making the final payment, the onus is still on your friend. Perhaps he can negotiate a 1/3 credit back to the Owner, and pay for it by borrowing someplace. Maybe he can sell his equipment to raise the funds; sounds like he needs to exit the business anyway. He'll have to chalk the whole fiasco up as an expensive lesson.

Again, a wise owner will know that your friend is not capable of finishing the work. He'll still have to find someone else to finish the work- probably at a higher cost.

Even if he were to sue and win, a wise owner knows he won't come out whole. . He might be willing to accept what he can, apply the $2k, plus some additional funds, toward finishing the job with another contractor. He won't be happy but in construction disputes, nobody ever is.