Eminem likes to sue. I heard this somewhere the other day and it looks like it's the truth. You probably have a leg to stand on, but is it worth the money to you. My advice isn't worth much, but take the site down and offer to sell them the domain. Then see where it goes from there.
You had an agreement with the previous management team and were never properly notified of any changes. That has to amount for something. But again, doing some of what they ask won't hurt you.