We are doing sewer repairs for this customers home we started with small repair and problems arose with more work needed to be done moved on two a second phase and is now completed. Third phase is scheduled for next week and customer now wants to cancel we have cleared the schedule and ordered materials what can we do. Customer lawyer is requesting to stop project even thought we have a signed bonded contract
Ultimately, the best place to start would be to review the contract. If there are any cancellation or termination provisions there, they'll be highly instructive in how a termination should be handled, including how the costs should be apportioned.
If the contract doesn't specify how the agreement can be terminated, then the customer may be in breach of the agreement by requesting a termination. If that's the case, then damages may be in order - especially when materials and bonds have been secured to perform the work.
Ultimately, it's hard to draw many conclusions without first reviewing the contract, reviewing other relevant documents, and without more intimate knowledge of the situation. For that, it sounds like consulting with a California construction lawyer would be wise - particularly because the other side is already represented by a lawyer. If you need help reviewing the contract or with finding a lawyer to assist with the dispute, Levelset' Legal Guard or its directory of California Construction Lawyers could be useful.
For discussion on breach of contract, here's a good article: Construction Contracts | A Deep Dive on Breach of Contract.