Hi,
   We created a website and now one website company is claiming
copyright over the text/images on our website. To avoid any issues we
have removed the disputed content from our website. Can they still sue
us ? We are a small corporation in california.

Thanks

In the United States, almost everyone *can* sue just about anyone for
whatever reason. I suspect that what you really want to know is "do
they have a good case?" or "can they win?"

You may want to consult an attorney. Google Answers is a good place
for general information about the law, but we are not a source of
authoritative legal advice on the exact circumstances of a particular
case.