website developer conflict

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Question

Country: United States of America
State: All States/Provinces

I'm a college student and I do computer work for side money. I developed a website for a person I know, for their new business. He wanted to avoid large startup costs and yearly/monthly fees, so we chose to use a free, open-source e-commerce store and customize it to his needs. I worked over 400 hours on the project and only billed him $2,000. He took delivery almost 3 months ago, but has not paid yet. Now he says there are flaws (which happen to be in the original of commerce software, not the work which I did) and he says he needs to get a new site, and doesn't want to pay me. I told him if he didn't pay that I would have to take his site down. He then responded with an email full of legal jargon stating if I did, they'd sue me for thousands of dollars.
I'm obviously no lawyer, but most of this seems baseless. Can he possibly sue me for any such damages he claims? Can I get into any trouble in this position? Doesn't the DA only get involved in criminal cases (which I assume this is not)?
As it stands, he's using my work and making profit and he hasn't paid for it. He's saying that since the original store software has bugs, he's not going to pay me for all of my work I did (which does function as expected). Since he hasn't paid, I would assume it's still my intellectual property and I could take down the site if I felt like it. And he's also using my web hosting space, which he hasn't compensated me for. There's a whole lot more to this situation, but I think I've given a good background. Any help would be appreciated.

Answer

He either has to pay at least something or you may remove it; you may also sue him in small claims for the price of the work you did.