I'm sorry that they are so ... so .... I can't even think of an appropriate adjective. Disrespectful? Vindictive?
They have a lawyer who wants to mitigate damages by suing YOU for defamation of character, damage to the company's "good name", probable loss of income due to adverse publicity, yada, yada, yada. It's a move to deflect blame.
If you win, they lose automatically.
Regarding the depreciation of your "property" ... that's kinda outrageous. Your "property" APPRECIATES in value, not depreciates. Aside from the emotional investment, there is significant monetary investment due to upkeep and maintenance.
Unfortunately, I know of no state that allows a pet to be anything other than chattel, a "possession", a THING. To allow anything else opens an ENORMOUS can of legal worms.
I wish you the very best of luck. The butthole kennel owners need to be jerked up hard and short. I hope your lawyer is up to the task - their lawyer is probably paid for by their insurance.