you need to file the suit in the county that the 
transaction took place, which would be the county 
where the person that you are suing is located.  
before going to court you'll need to fill out a 
claim form, which you can do actually at the 
courthouse, or to save some time you can print 
one from here:

http://www.courts.michiga
n.gov/scao/courtforms/smallclaims/dc84.pdf

he can deny the claim once he is served the 
papers, but in order for it to be valid he has to 
present himself at the courthouse and give 
evidence that he has completed the transaction, 
which, obviously, he can't.  i hope that helps, 
and good luck!

haruna