Vh-123: I am sorry about the problems you are having with the new Owner.
1. What exactly caused the sink hole ?
2. Was the cause of under ground leak Water main breakage ?
3. Do you have pictures of DVD from video inspection ?
4. Was there 2nd and 3rd opinion by another licensed plumber to confirm the analysis of the first plumber ?
5. How far is the main house from the curb ?
New Owner should have call you when the problem occurred and give you the opportunity to correct the "problem". You should also be there while the Video Inspection was being conducted so you can see for yourself what the problem is, if any. It is very convenient to contact you now, after all work was completed, and ask you to share the cost.
Even if the new sewer work developed a leak due to bad workmanship, it would most likely not create a sinkhole with repair costs of $17,000. You would probably not even notice that there was a leak. Location of Clean Out - whether sticking 2" above the ground or 2" below the grade - has nothing to do with it.
Clean outs below the grade with cover over them are up to UPC (Section 406, paragraph "F" ), provided you put cover plate over them. Your "metal plate" you've installed acts as a cover plate. Of course, the vertical pipe still has to have sealed plug on top of it.
Sewer drains by gravity. Even you would have large break in the sewer pipe, earth would be able to absorb the sewage w/o problem. Sewage drains slowly and flows even over possible cracks in the pipe. Remember, how septic systems and leach fields work. They drain into your front / back yard.
Sink holes usually happen with pressurized leaks, like water main pipe leaking under ground. You write there was "..a leak at the water meter...". Reading details in your second post, I suspect that the sink hole was caused by a leak in pressurized water main. Furthermore, I suspect the plumber came, noticed there was a new clean out close by and used it to create more work for himself worth $17,000. I highly doubt that clean out had anything to do with the sink hole. I would question the integrity of the attending plumber.
Moreover, they should not charge you for breaking electrical line or even shutting off main water. In my area, we have "1-800-DIG ALERT" system that every contractor has to call before they excavate. Otherwise, contractor is FULLY responsible for repair to any underground utilities they damage. See if you have such a service in your area...
Our Code mandates shoring trenches deeper then 5'.
Not every back hoe operator is skilled enough to excavate sewer lines without breaking them. Are you sure they didn't break your pipes trying to expose existing sewer ?
I fully agree with Tom as stated above: new Owner got lead into doing the work by dishonest plumber. Now, new Owner is trying to use scare tactics and to make you to pay 1/2 of his costs. It seems to me like you are not getting whole story from new Owner...
Talk to the new Owners. They should understand Sewer Clean out plug under ground has most-likely nothing to do with the sink hole. Also, you should find a knowledgeable, licensed, plumber in your area you can trust to help you to challenge the other plumbers' "professional" opinions. I cannot imagine they want to take you to court over it.
Please, let us know how it went. Good luck... Milo