I would let the kind officer know that you would be happy to refund her the money just as soon as he gets done paying the tab.
However if you work in that area all the time and you decide to stand up to him, keep in mind that even though in court he would surely lose you have to continue to work there as so will he. I think it is times like this that you are the only one who can really make the right decision. I would say use your man brain, then use your business man brain and make a decision based on what you think is best. Dont let me or anybody else influence you as it is easy for me to say I would tell him to go puck himself. And I prob would have as I tend to fly off the handle when something rediculas like that happens. Many times I have thought later and thought, well that was prob not the right decision.
We all know that he dont have a leg to stand on, however is it worth $120 bucks to test the system? You can tell the kind officer that that is the correct rate, If it was her heat out and she called the gas man, how much would it cost to have the pilot light lit?
Lots of ways to comprimise, Ie give her a senior discount. Drop a few bucks off it or something. I know the price is prob fair as you charged it, but honestly I would not charge a lil ole lady 120 bucks if all I had to do was drop a remote. Only you know your business, What should you do?