@Bob Prisco yes lets hope karma prevails on this one.
@John Chapman I couldn't agree more with you that this is an insane lawsuit. Unfortunately, we were foolishly hoping for a quick resolution to this mess by going to small claims court. They claimed that we didn't leave the house in "broom swept condition" per the contract and took a picture of underneath the washer and dryer that we left them. We've had a cleaning lady come once a month for the last 3 years and even she never swept under the washer and dryer. We had 3 witnesses ready to testify in small claims court to the condition of the house, but unfortunately they wouldn't hear our case. At this point, we're concerned that they may go after us for more than the deposit, which doesn't seem out of the question giving the events up to now.
@Matt Clark
I believe Small Claims court is just a more informal court where lawyers are not present, and yes, apart of General District court. If the defendant wants to be represented by an attorney, 'before the judge decides the case, the defendant has the right to remove the case to the general district court by completing the Removal to General District Court form on the back of the civil warrant and giving it to the clerk or judge.'
The house was sold "As-Is". Taking this as a big lesson learned. Never rent back! Going to use this as motivation to fail forward.
Thanks for all the responses.