Threating to sue me

On september 28 we sold a 1989 4X4 truck for $3000.00. We had just put in a rebuilt motor and transmission before selling it.
Approximately 6 weeks after we sold it, the new owners called us and were having problems with it. We told them what we thought could be the problem. They called again last night and informed us that they don't believe it was ever rebuilt and that the transmission blew up. It's been 2 full months since they bought it as is. We live in MI. They are saying they are taking us to small claims for their money back. Do they have a case?

Surely you have copy of repair bill and cancelled checks. Send them copies. Perhaps the repairs are warranted for a year by the shop.