Let me start out by pointing out that it was a very bad idea not to redact the lawyer's name, her firm's name, her client's name and the trademarks at issue. How do you know that this lawyer or someone from her firm isn't going to happen upon this thread?
That said, and since you didn't redact that stuff, I feel compelled to point out that you're being targeted by a relatively large law firm and a lawyer who's a partner who's been practicing law for nearly 20 years. Those things tell me that someone is taking all this rather seriously.
Next, while the city name used in the marks at issue is not "trademarked," the lawyer's client owns or claims to own rights in at least two federally registered trademarks. Your domain name, if used in commerce, would pretty clearly infringe on those registered marks.
Getting back to your question, whether you "should" or should not comply with the demand depends on a bunch of things we don't know, one of which is your ability to finance a federal trademark infringement and cybersquatting lawsuit. Do you have a spare $25-40k that you can afford to spend on such an endeavor?
About the only thing I see working in your favor is that you don't appear to be doing anything with the domain name. Of course, that begs the question why you registered it.
