It's a month-to-month service, so they're asking for a refund on 12 billing cycles. The TOS is clear that there are no refunds for services rendered. I try to be as accommodating as possible, but this just seems absurd.
If their site was up and having visitors, did it change at all in 12 months? Whats the traffic stats like?
Most importantly, is this money worth the risk of possibly losing customers if this guy is loud?