A huge mess

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State is Minnesota.  And I apologize in advance for the length of this.

My DH currently has physical custody of his two daughters, age 16 and 17.  BM formerly had physical but signed custody over to him in August of 2001.  The oldest daughter was having problems at her house and both kids had wanted to live with us for quite some time.

Things were going quite smoothly for a while until BM started up with her old tricks of attempting to poison the kids and anyone who would listen against DH and I.  And badgering them about coming to live with her again.  Around this time, oldest daughter started having problems at our house, not wanting to follow rules and generally misbehaving even to the point of physically assaulting her sister.  Youngest daughter adjusted very well to our house and was and still is thriving in our home and at school.

Fast forward to approximately one year ago.  Oldest daughter and DH were arguing basically because he wouldn't let her skip out on two days of school to attend a dance at her former school.  Frustrated, he finally called BM to ask for her help in parenting her daughter.  She agreed to have daughter come to her house for a visit that weekend so that they could talk.  On Sunday, DH called her up and stated his intentions to come and pick his child up.  To which BM responded, she's in her happy home, her problems were all your fault, she wants to stay here.

With no leverage due to BM's refusal to back him up on anything in regards to parenting and the age and general rebelliousness of his daughter, he felt he couldn't do anything at that point.  We had no money to take the issue to court.  He disapproved of his daughter staying at her mothers but he didn't know if dragging her back to his house against her will would be good for her or her sister.

About two weeks later, BM called up and said that she was having problems with oldest daughter and wanted her "sent up".  DH responded by stating that she needed to return daughter to him so that he could get her into counseling.  BM refused to cooperate.  

Finally, after several months BM agreed that she could not control oldest daughter and that she needed to come back and live with us.  Oldest daughter stated that she wanted to come back because all she ever did with her Mom is fight and she felt her mother didn't listen to her.  Oldest daughter had a couple of weeks to finish out the semester and then we were going to have her come back.  We wanted to allow her to do this so that her schooling wouldn't get even more screwed up from bouncing back and forth.  Within the two weeks that we all had agreed upon, BM kicked daughter out and sent her to her uncle's house that lived nearby.  Uncle agreed to have her stay there for the next week to finish out the semester and then she would be moving back with us.

It was then that the daughter began emailing her father and asking him to let her stay with her Uncle instead.  Basically, Uncle let her do what she wanted and didn't have too many rules except that she had to do her chores and babysit on occasion.  And she wanted to stay close to her friends, whom she puts above all else even though she often times gets into trouble with them.  DH did not want his daughter staying with her Uncle and they argued back and forth and about it.  BM changed her tune and now was backing up daughter's decision to stay with Uncle 100%.  Uncle also refused to make daughter return to her father.  Oldest daughter has lived with her uncle for a few months now and on a positive note, has taken it upon herself to attend night school to finish up so that she can move out of his house as soon as she turns 18.

I realize DH screwed up big time by not having daughter forcibly removed from her mother's home the first time.   He allowed her to have way too much control.  Due to her age at the time and her desire to stay at her mother's house, he didn't think he had much ground to stand on.

Now mother is taking him to court for custody of the oldest daughter only. (she makes absolutely no mention in any of the papers of her youngest child that lives with us)  Even though she doesn't live with her and doesn't support her or make any decisions for her.  And oldest daughter has stated via email that she would rather move back with us than live with her mother.  Oldest daughter is 5 months away from turning 18.  At this point, DH is completely frustrated with the situation.  He has a father dying of Alzheimer's,  he himself is seriously disabled and in almost constant pain and he has a younger daughter who is very happy in our home that needs his attention as well.   Because of his disability, I am the one who works full-time and pays for medical insurance for everyone, including the two daughters.

Mother did illustrate in the papers that daughter is living with her uncle.  But she did lie about pretty much everything else, including accusing DH of abuse of both his daughter and her.  Since he hasn't seen BM in a year and hasn't talked to her for months, it would be impossible for him to abuse her.  He also never, ever abused his daughter.    BM constantly accused DH of abuse going so far as to say he "shot her in the head" and physically abused her while they were married.  At one point, she filed a temporary restraining order against him while she still had custody of the kids and then called his parents up the day after he was served to see if he wanted to come pick them up for visitation.  The case was of course, thrown out when it went to court.  

I guess the question is, what do we do now?  Would it be appropriate to refute the numerous lies she included in her affidavit in order to clear his name?  We do have emails and the like in order to do so.  He really doesn't think that BM should have custody since his daughter doesn't even live with her but at the same time, he realizes that she isn't living with him either.  He isn't happy with his daughter living with her uncle but at her age, he knows he can't simply make her move back after he's previously allowed her to stay there.  Will the judge give the Mom custody even though the Uncle is acting as physical custodian?  What can we expect next?  

I could basically write a 300 page essay on this situation but I tried to trim it down as much as possible without much success.  Thank you for any input you may have.