Seller wants to sue paypal : Significantly Not As Described

[screwedbypaypal]

What is the name of your state (only U.S. law)? OREGON

UPDATED: 19AUg09

I sold a laptop computer OUTSIDE ebay.
I sent the laptop to the buyer.
Buyer complained that I sent him a broken electronic (NOT THE LAPTOP).
Buyer filed a SNAD with Paypal, then filed a police report

Paypal didn't listen to me when I said I've sent the laptop
Paypal asked the buyer to return the "item" back to me.

I received the "item" (broken electronic item), NOT my laptop

Paypal took the money and refunded the buyer.
I lost my laptop, and got the BROKEN ITEM!!!

There are 3 CLAIMS for the same item
2 were closed due to SNAD claim not applicable for item outside ebay
1 (latest one) went ahead and was processed with the result against the seller - me.

i was thinking out loud about this.
PAYPAL never saw the item. Yes, I could have sent him a bogus laptop - bricks, or magazines.
And the buyer could have and did send me this broken electronic item - which PAYPAL will never see.
But PAYPAL decides and their decision is final.
I want to fight that and have my PAYPAL account status cleared!!
I did nothing wrong. But then who could prove that?

My paypal balance is "NEGATIVE" and RESTRICTED

Can I sue PAYPAL? what would be the sure way of suing them?
Small claim court?

Why wouldn't I sue the buyer? The main reason was that PAYPAL is in the middle of it and has taken action against me on behalf of the buyer.
So I am going after the middle man - PAYPAL.

Can I file in an OREGON small claim court for 3 times amount of damage (actual damage is less than 1000)?


end of UPDATE, dated 19AUG09

 

[racer72]

You sue the buyer, that is who ripped you off.

 

[divona2000]

I sold a laptop computer OUTSIDE ebay.

Was this a laptop that you had listed for sale on eBay?

 

[ariastar]

Divona, Paypal is so often associated with eBay that I think the OP was clarifying ahead of time that this wasn't an eBay transaction.