I'd definitely take the work down if it hasnt already.. and if legal action is your next step, use every opportunity to document this relationship (follow all emails up with recorded mail that he has to sign for etc)
I agree with this poster. Better to not give them any opportunity to countersue no matter how ridiculous a countersuit it would be. http://freelanceswitch.com/clients/what-to-do-when-a-client-...