Old lady complaining about my shed

Here's the scoop. The old lady across the alley from me is sicking a lawyer on me for having a shed in my backyard.
Here's the facts
1. Subdivision covenants say no outbuildings
2. My shed has been up for over 20 years (12'x32')
3. Almost everyone in the subdivision has a shed of some sorts
4. Old lady has a shed
5. Old lady lives in Belmar #3 subdivision
6. I live in Belmar #2 (the alley between us is the boundary)
7. I need the shed big time as my 69 383-S fastback and my son's 67 notchback are in the garage.

Anybody with experience with something like this?