Unless you have sustained a monetary loss, a defamation lawsuit could costs thousands more than you would likely recover.
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Slander is oral defamation, libel is written defamation. These are hard cases to prove. There needs to be proof of actual damage to your reputation such as on your ability to earn a living. Hurt feelings isn't enough. Does this woman own a home or have assets? If her homeowners insurance policy doesn't cover defamation (and some policies don't), you're not likely to recover money damages even if you could prove the case. Feel free to contact me if you have other cases or want to discuss, but this sounds like a difficult case.
The first issue is whether any of her statement was true. If so, stand down.
Secondly, if her statements were statements of opinion (allegations that you are a "bad person" is classic statement of opinion), then no defamation occurred. Statements of opinion are as a matter of law not defamatory.
Finally, don't get into this if you don't want EVERY nook and cranny of your life exposed and examined. If an insurance company needs to defend, they will do so with a sledgehammer and the purpose and determination to show that your reputation was already bad, based on your conduct, and so the statements of the friend's mother could not have done any significant damage.
These are very difficult cases to endure and to win, and the winner sometimes get a dollar for the effort. Talk with an attorney who has specific citable experience in successfully litigating similar cases before you commit to going forward.
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