What can I do if I am being sued over a dog bite?

The incident occurred in a store two months ago. My wife had our 20 pound terrier on a leash when the plaintiff walked up behind them, startling our dog who nipped him on the leg. The man became angry and I apologized, but evidently not to his satisfaction because after leaving the store he came back saying he wanted the store manager to call the cops. I then spoke to the man, apologized again for what happened and gave him my name and number saying I would pay for any medical problems he had as a result of the bite. I looked at his leg and saw nothing. The man said he accepted my apology and said he wasn't the sort to make a big deal out of things. I should have stayed to talk to the police myself but thinking the matter otherwise settled I went home. Later that afternoon an animal control officer came to my door to tell me that she responded to the incident. She said that she will submit an incident report, but since the bite didn't break the skin she would not submit a bite report and that the dog would not have to be quarantined. Now last week I received a letter from the man's attorney saying I am being sued for damages and suffering and asking if I have homeowner’s or renter’s insurance (I don’t). I called the attorney and he said that his client is claiming he received puncture wounds from the bite and that he's waiting to get back medical records before determining what he will offer in terms of a settlement. I didn't tell him that I had earlier spoken to the animal control officer and she confirmed that a bite report was not submitted because there was no puncture wound or skin break. Reviewing her notes, she said she saw in her words “a very minor red spot” on the man’s leg and no hematoma. I asked if the man requested medical attention and she said he hadn’t. She also informed me that her office hadn’t received a bite report from any medical facility which is required by law when someone seeks medical attention for a dog bite.