Lg Leashed dog attacked unleashed dog that ran up to her while walking her...

...requiring stitches- who is liable? My daughter was walking our 66 lb dog on a leash, when a neighbor's rat terrier ran up to it unleashed. Our dog bit & shook it before releasing it. The terrier required stitches. Both dogs were in the middle of the street. Can our dog be considered a nuisance? Am I liable for vet bills? Animal services were called & charges are pending (Sarasota Co-FL), although I was told this is an unusual case. Our dog has never bitten another animal or person ever.
 
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