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I am sorry to hear this.
Is the home owner involved at all or are all the threats being levied at you?
The correct person for them to sue is actually the home owner.
You acted as agent for the home owner and should not be sued.
At the same time if the home owner is sued he would have to add you to the lawsuit and blame you.
I suggest you send tell this person you will not give in to such lies and you are shocked at such blatant dishonesty and you are happy to have a court decide.
You will be able to testify under oath and also cross-examine this person and the lies will come out. Judges are good at determining credibility.
Why do you have his equipment now?
There is no law that says you cannot agree to give him back this equipment. He is trying to scare you and bully you into paying for things that you never agreed to pay for.