Seller Wants Mediation After I Backed From Deal Due To Failed Sewer Line Inspection.

Location: Alaska

So, long story short I was under contract on a 4plex a couple months ago when my plumbing company found out the sewer line was bad. The seller agreed to fix the line and we came to an agreement. He initially replaced the line and then he found out by the Municipality he put in the wrong kind of pipe and had to re do it. I said no problem. Few weeks later he said the line was finished and I had my plumbing company inspect the work. Upon inspection they found that they did not replace near enough pipe, there was a belly in the line, and there was a lip in the line showing they had installed incorrectly. Again, I said no problem. So he started fixing the line again when my plumbing company just so happened to be swinging by the property and said he was already installing the line incorrectly. He was using a coupling prohibited for long term sewer line use. I then decided to use my legal right to terminate the contract and take my earnest money as this process was getting dragged out further than I wanted. Not only that I found out later by my plumbing company that the tenants had stated there have been issues with the line before and has been pumped in the past. So he lied on the property disclosure and said he never had problems with the line.

The seller then started accusing my plumbing company of “fishing” for problems and that the line wasn’t as corroded as they said it was. First he threatened legal action but now wants to go to mediation. I told my real estate broker there is nothing to mediate. I want my earnest money released and he can sue if he wants. So my 2 questions would be do I have to go to mediation? and does the seller have any chance to win a lawsuit? I feel like lying on a property disclosure is a big deal.