Landlord who doesn't have a clue..?

We moved into a house in January. We found out in March that the house was in foreclosure status before we even rented it. In April, there was an auction sale on the house. The landlord told us that it was none of our business when we asked about it.
When we moved in, she told us not to worry about the utilities for the first month because she knew we already had trouble coming up with rent and deposit. We had all of them switched to our name in February. She was fine with that.
After questioned about the foreclosure, she demanded that we pay to HER the utilities from January. The price she quoted us, however, included past utilities from before we moved in. I confirmed that with the electric and gas companies. We had the actual balances switched to our accounts but not the prior bills. The landlord called us liars and continued to demand it be paid to her directly.
She then told us in June that we could break the lease and move out if we paid her the utilities. We were already paying our utilities, but went ahead and moved out to avoid further stress. The house had been sold and we would have had to move anyway.
Now she is suing us in small claims court for the utilities and the remainder of rent from the lease. How can she do that? I have the emails where she told us we could leave. I have utility bills showing that we are paying on our accounts.
What else can I do?
I found all my proof that the utility bills have been back-dated successfully to the date we moved in there. So she won't win that part.
Now she is saying that the only way she agreed to let us out of the lease was to pay $275 that she claimed we still owed in rent PLUS the utilities directly to her.
We didn't have the $275 because we were forced to pay for a new place. Regardless, that's not what she told us.
So we will probably lose that part and be ordered to pay her the remainder of the lease. That's like $5,000! This woman should not be allowed to be a landlord. I found out from a neighbor that they did this to the prior tenants as well. They were forced to leave from bullying and false accusations.