This question was recently asked and answered in this thread: http://www.avvo.com/legal-answers/how-do-i-defend-against-small-claims--neighbor-cla-1148877.html
The burden of proof is on the complaining party. They have an obligation to show that you caused the damage they allege, and the amount of harm it involved. You have the right to demand that they provide to you copies of any evidence they have, including testimony, by means of a deposition. They have the same rights against you.
You must file a response or the other side will win automatically. You must file this no later than 14 days after having been served with the complaint. If the amount of the claim is high enough, you can request that the case be moved to circuit court ("big-boy court", we call it, as opposed to the toddler's environment of small claims). You can then hire an attorney to handle the case for you. If you win, the plaintiff could be ordered to pay your attorney fees and costs. (Of course, if they have no assets to take, then this award won't mean much.) If you're stuck in small claims court, then you can't have an attorney representing you directly, but you can still consult with one in private for advice. This is a much better idea than asking for specific advice on the internet. This forum is not private. Your adversary could well be reading all this. So don't get into specifics. Talk to someone in private.
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You don't have a legal matter unless neighbor trades some kind if action. You have a neighborhood issue that is better resolved over a cup of coffee than a court.
NOT LEGAL ADVICE. FOR EDUCATION AND INFORMATION ONLY. Mr. Rafter is licensed to practice before the state and federal courts in Virginia. There is no implied or actual attorney-client relationship arising from this education exchange. You should speak with an attorney licensed in your state, to whom you have provided all the facts before you take steps that may impact your legal rights. Mr. Rafter is under no obligation to answer subsequent emails or phone calls related to this matter.
You should get a lawyer to help you defend against this case. If your neighbor sues you, it will be up to him to prove his case - you won't need to prove your innocence.
But, there are a number of theories to consider:
1) You never threw any blocks against the wall;
2) The blocks didn't damage the wall;
3) The wall was already damaged;
4) It's not his wall
Any of those theories would be a partial or complete defense. A good lawyer can help you evaluate each theory to see whether you should argue it in court.