What is my recourse if I am being sued in small claims court by a co-signer for a debt that was discharged in Chapter 7?

If the debt was discharged, you are not responsible for it. You should file an answer with the court and explain the money was discharged in bankruptcy (and give the number of your bankruptcy case and date of discharge). Doing this should get the case dismissed. If the person continues to try to collect the money from you, they are violating federal bankruptcy law and could be penalized by the bankruptcy court. 

If you used an attorney to file your bankruptcy, I would recommend contacting that person just to confirm that this debt was properly listed on your bankruptcy schedules.