I wouldn't even worry about the getting sued thing...LOLOLOLOLOL
Next... i know she seems like a looney to you , but you have to remember you will both be living there and looney or not it would be horrible to start everyday waiting to see what happens next. I would just be the be the bigger person and smile and be nice and probably even say something friendly and see how it goes. Plus if they are going to let the darn lab out anyways without a leash , you might as well have it and your dogs friendly so no incidents happen. It's really not the labs fault. the lady can choose to be friendly or ignore you or whatever.. It's hten on her head!
