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That guy sounds like a jerk, eBay encourages people to resolve their issues with each other before going to extremes, did he even let you know what was going on (or NOT going on) with the UPS insurance before saying you were getting sued? I would talk to UPS about the insurance issue if you haven't already, why are they not paying on the insured item? Or perhaps they did pay him, and the guy is a dunce trying to rip you off.
I wonder what his feedbacks say about him.
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