I completely agree with everything said above. Dogs can get ear infections repeatedly and they hurt. They also often smell so you can do the nose check but I agree the first thing is to see your Vet.
The dog who is incorrigable is rare. It is very likely that CoCo and your family just need more training help. Do you do any activities with him to keep his mind busy? Smart dogs need to be occupied. Something like agility or rally classes might give him some exercise and mental stimulation at the same time.
Really, I can't see being sued without first being asked to pay for a Vet bill IF, if, big if I think, there really was injury done to the other dog. Did the other dog owner even ask if CoCo was vaccinated for Rabies? If not then I can't see how you have a worry that way. CoCo is vaccinated though, isn't he?