Yep, dog owner should pay.
If it was a GSD or a Mastiff, there would be no question, the dog owner would pay. If the owner of the vehicle bothered to stop and make the case.
Just because a dog is only 13 pounds does not mean he isn't a nuisance. If the guy swerved to avoid the dog and hit a mailbox or a ditch, then he would be at fault and liable for the damages to the mailbox or ditch as well as his car.
I feel no sympathy for the min-pin owners. They did not protect their dog. Some poor guy had to watch as his car smooshed it, and now he had to take off work to get his car fixed. It is kind of like the lottery, sometimes a bad thing that is your fault happens and someone says, gee it's ok, don't worry about it. Sometimes someone says the dent left by your dog cost me $1800 to get rid of, pay up. The owner of the dog should be able to have two or three estimates, but ultimately they should pay up.
The dog's owners should be fined for filing the counter-suit.
It is a disgusting way to lose an animal, but suing for lost work, the price of the dog, and the price of a new replacement dog ticks me off. Whatever happened to appologizing and taking responsability. What total zeroes.