Tenants want to sue me over security deposit

[Taz Patel]

My tenants have moved out in March 2017.

I meet them at the property during move out inspection and we found damages but have no written report. 

Tenant had subleased the apartment to someone else (found out in the last week of tenancy )

They did not provide me any forwarding address and was no response when I asked them.

30 days later they are threatening to sue me using an attorney (That's what they told me over the phone)

I did send a notice to deduct security deposit  but to my own condo (last known address). 

Tenant says my notice is invalid because I did not itemize the deductions 

Help, I am loosing sleep over this.

They are demanding me to return the deposit else they will file in court for security deposit and lawyers fees . What do you recommend I do ?