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His dues were for the opportunity to participate in the fraternity's events and for any other privileges of association granted to pledges. The extent to which he did or did not make use of that opportunity is his own responsibility. He's trying to blackmail you into initiating him, and someone like that has no business being a part of any GLO.
He can file papers all he wants, but the burden is on him to prove both that he has a cause of action against you and that he's entitled to recover any damages. You might want to keep your advisor/regional official in the loop, just in case, but otherwise call his bluff and tell him he's not entitled to any kind of refund, nor is he going to be initiated. If he does file, you might consider any relevant counter-action against him to at least recover your chapter's costs.
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