Truth is a complete defense to libel. But in this particular case proving the truth might be hard, as if the longarmer denies having done the damage and the quilt was out of her hands and control, there isn't any actual evidence that she did it. I'd forget about publishing anything about the experience in writing as this might only cause more trouble. Word-of-mouth (sister of libel called "slander) is the same in terms of legal issues. Just be careful.
Dana