My question involves labor and employment law for the state of: Michigan

I resigned from from an employer in July of last year (2007). When I left, I was told that I owed them money for un-earned vacation pay that I received. I assumed it would have been taken from my last check, however it was not. Today, I was served; the company is suing me in small claims court in Michigan for repayment ($2300). Can they win this even though they did not take the money before they paid me?

Further, I have lived in Iowa since August of 2007. Can they sue me in Michigan? Any advice would be greatly appreciated.