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Based on what you've said, it sounds like the countersuit is without merit.
His countersuit raises his defense, i.e. that he was terminated, so that relieved him of his obligations under the contract. However, his claim for $5000 and lawyer's fees is meritless. He has the burden of proof on his claim for his "stress."
He should produce evidence establishing why your actions were sufficiently stressful to entitle him to compensation.
He terminated the contract first, the reason we sent a termination email subsequently is just because we are required by Department of transportation not allow him to operate under our authority. But the contract still require him to return the equipment to the original location. So the court can still make him liable?
Yes. If the contract is specific on that point, he is still bound by it. While the contract dealt with his obligations as a contractor, that does not necessarily mean that when he is no longer a contractor, he is free from all obligations.
Do we need to prepare and write up our response to the court on the trial date?
If he has filed pretrial motions, you need to respond to them in writing before the trial. At the trial, you need to be prepared to put on evidence and call witnesses.
How do I know if pretrial motions is filed?
He would have been required to send you a copy.
If no motions were filed, you should be prepared to present your case on the 11th.
So just present evidences to the judge, right?
Thank you very much
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