Yes, anybody can sue for almost anything. Getting paid is another story. Claims under $5,000 go to smalls claims court to help avoid the courts be over loaded. There, a judge will say who gets paid or not. (Then comes the problem of collecting the judgement.) Sounds like you have no choice but to go to smalls claims court and give your side of the story. If you don't go, that's another problem I don't think you want. The judge will just rule against you.