Open Question: Is this even a case???? What should we do???

A friend let us stay with him while we were going through a tough time. There was never a verbal or written contract. He said that we could move in. Neither of us had a job at the time once we had jobs (it was a month and half before we got jobs) we told him we'd give him $400 a month. He said "whatever that's fine." We bought all the groceries as well. Then a month before we moved out we told me that we planned to do so. There was no arguement. Everything was fine. He was using some of our baby stuff the day we moved out instead of demanding that he stop using it we said we'd come back later for it. Now he's saying he wants more money and is withholding our baby items. And is now threatening to sue us for what he feels he's owed. We have witnesses that would say that there was no agreement and that we were paying him. So does he even have a case? What should we do?

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