Hello everyone

I am relatively new to being a landlord and today I had very unusual situation that I don't exactly know how to tackle.

I own a 3 story building with poor attic insulation and during the summer the attic gets very hot, since there is only one window the tenant can only have 1 AC unit that can't cool the entire place down. Recently the thermostat was showing 90 degrees for couple of days and tenant was very upset about it (understandably) and informed me about the excessive heat in the unit. I immediately called the contractors to see what can be done, and decided that best option would be to insulate the attic. I was very fast and scheduled 3 contractors the next day. This job should cost me about 1400$ for blown insulation. Later I called an HVAC guy for estimate and he said to install central AC it would cost about 3500 - 4000$. I went to talk to the tenant today and he was very angry at me, and started to make threats. He said he used to be a lawyer with big experience but had to quit due to his temper. He later said that he wants to sue me for 20 000 $ an amount that will include move out/in fees, lawyer fees, days off he took when contractors were doing their job and place was too hot. He demanded of me to install central AC or he will have to take this matter to court. When I went to see him today after part of the place was already insulated he gave me all this talk and under the pressure I said I would waive the next month's rent, and if the place is still hot we will install central AC. 

I wanted to ask more experienced landlords how should I have handled this situation. Does the tenant have basis to sue me if I do everything I can to fix the issue ASAP. Last question I have is that what should happen in a situation where tenant asks for upgrades that I cannot afford ?