Legal Question in Civil Litigation in California

What's the question?

I assume your question is what should you do. Most cases settle. In addition, as plaintiff you have the "burden of proof" of your claims. Unless the defendant is a corporation or LLC, he/she cannot be represented in court by an attorney. You may be wise to contact an attorney to discuss the claim(s), your proof/evidence, what the settlement offer is and have the matter analyzed to determine if it is potential malicious prosecution matter: Most aren't since it is very hard to win those cases. An attorney acting on your behalf (not IN court since you cannot be represented by an attorney in Sm. Claims Court) negotiating a settlement on your behalf with the defendant's attorney may get you a better result as opposed to trying to negotiate with him/her yourself since it appears they are trying to strong-arm you with the threat of malicious prosecution. Also, if they have made a settlement offer, that is good because it shows they want the case resolved and may be willing to pay more than initially offered. Call an attorney to discuss. You can find contact info for attorneys on the Avvo.com website. Many of us offer a free initial phone consultation.

I don't understand what you question is, but a small claims case cannot be the basis of a future malicious prosecution action. (Pace v.Hillcrest Motor Co. (1980) 101 Cal.App.3d 476, 479; Cooper v. Pirelli Cable Corp. (1884) 10 Cal.App.3d 294, 299.)

So??

Sounds like he was educating you about the reality of life and litigation.