Do they have a case???

What is the name of your state? Minnesota

In 2002 I bred a mare to my stallion, using my standard breeding contract which includes a live foal guarantee as well as typical coverage for liability issues. Included in the contract is a "next year only" rebreed if the mare comes up open. WEll apparently the mare did not get pregnant in 2002, I didnt hear from the people, then in 2003 I had planned on selling 2 of the 3 stallions I was standing and getting out of breeding of horses to the public. I called anyone with open contracts including these people and told them to get their mares to me to breed. They were going to do it but never showed up, the stallions were sold, I have one here now, and they call this year and want to bring the mare. Wife called screaming at me over the phone, I couldnt get a word in, and before I could respond told me she was taking me to court if I didnt refund her money in full. I told her the contract was for the next year, which was last year. She was furious, will I lose if she takes me to small claims, I have no idea how these things work. thanks for any advice.

The slide...... the tag........ SAFE!!!

Seems to me you have nothing to worry about.
You need to be confident in the wording of your contract... and you better have a copy of the contract which they have signed. If it clearly sets the relevant dates then they have no case. They had their opportunity, and you were even kind enough to notify them i nadvance before it expired.
They can still take you to court.... but it seems they don't have much to stand on.