I see no veiled "full C&D". There is a dispute, but there is no refusal to pay in the letter.
They will either honor the "all call inconvenient", or they will not, but there is no C&D spelled out in the letter.
That being said, it can cause them to sue sooner, which is fine also, that is where you utilize the arbitration method. It gets the issue resolved sooner rather than later, and if you play your cards right, with an OC, it can remove the trade line faster than the 7.5 year wait.