I believe he is full of you know what. It is a lot easier for him to just dump a load of topsoil on that, smooth it out and put sod down. Gas and electric lines have to be buried at a specific depth, depending on where you live. Check with your town/state to find out what code is, I bet it is way below a depth that a tiller would reach. Also there is only one spot these lines are located, unless it runs the length of the wall which is doubtful, and he should know where they are located. If he just puts topsoil down on top of what that pic shows, over time it will settle out that way, and the grass will not do as well in the compacted areas. Your contractor should remove the large rocks, lightly till and regrade the soil, roll it, add the topsoil, grade and roll it, then lay the sod. He works for you, don't let him tell you what he is going to be doing, unless you signed a contract that specifically says he is going to just dump top soil on top of that mess.