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No one is suing anyone. GFY lawsuits never happen as it's typically never over the small claims limits.
I don't know either side, but if the deal isn't working and no work has begun, just return the money and never speak to the person again. Claiming "breach of contract" and other excuses to keep the money from the guy seems like someone desperate for money of their own. If someone paid me to do a job and I hadn't started, I'd just return the money and tell them to fuck off.
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