I'm not a GPL expert or lawyer, so I'm unable to answer with certainty. However my reading of the GPL is that the recipient does not have a right to sue you at all, it is the copyright holder of the GPL code who has a right to sue you for license infringement. The GPL states that your license to distribute is terminated immediately on infringement (there is some grace window in version 3). I think there could be some damages for the unlawful distribution that would have already happened, but I cannot see how the court can force you to pay for the damages using your proprietary code. I don't know, maybe the original owner is ready to waive damages if you agree to distribute your own code, but that's something you would have to agree to yourself.