Tell him to go ahead and sue you. He made a HUGE MISTAKE by asking for a cash settlement. You can use that against him in a court of law. Just explain that he was basically trying to "shake you down" for some money.
If I were you, I would also contact the local police and file a police...
DJ gave a good answer. You need to deal with the humidity.
Most deer camps employ the used of old, leftover furniture that was headed for the landfill. Often times they will have odors associated with them (mold and mildew) that are close to impossible to get rid of (mildew on the seat...