Should I sue the people I leased my horse to?

I did a free lease on my 5yearold Thoroughbred in Febuary because I had no other horses at the time and not enough time for him and I didnt want him to be wasted or depressed and alone. He was in showing condition and completely well behaved. I checked on him about 2 months later and he was good. I talk to the girl every week on email and she said he was great, wonderful, etc. I asked for pics and she said shed always sent them but I never recieved them.. I began to get a little suspicious and she told me she was moving out of her grandmothers farm (which is where he was) but she would still be there everyday and her grandmother would take care of him when she could not. About a week ago she said she was being Given a new horse and if I could take him back. Mind you I never charged her anything and she signed a contract saying she would keep him in showing condition or the condition he was in at the beginning of the lease. I went to pick him up yesterday and could not believe my eyes. He was about 300 pounds underweight severly sunbleached and fungus all over him. His withers, hip bones and entire back was protruding and he had a open sore on his withers where someone had obviously been riding him in that condition!!!!!!!!!!!!!!!!!!!!!! Thats not all oh no no..His long BEAUTIFUL tail was barely a stub, nothing left!!!! Apparently their dog pulled it OUT!!!!!!!!!!!!! WTF!!!!!!!!!!!!!! Oh and his feet looked like saucers hadnt been done in clearly 3 months!!! OMG I will never do this again.. All I asked was for $250 and theyre are complaining saying she hadnt been there in 2 weeks and he was fine when she saw him last. First of all that of malnourishment doesnt happen in 2 weeks and second she signed a contract saying SHE would take care of him.. What should I do? I have a vet coming out on Saturday to evaluate him and take pictures..