I'm being sued for non-payment of a car loan but also for lost value of the car, can they do that?

The lost value claim, if it's being added on top of the unpaid loan balance, is ridiculous.  It's a double recovery, really, because what the original amount of the loan, along with any downpayment or the agreed value of your trade-in, was agreed to be equal to the full value of the car when you bought it.  The seller (or anyone who bought the loan) is entitled to the full balance due, with interest, and with any costs that are permitted by law or the loan agreement.  If the car was repossessed, it has to be sold in a commercially reasonable value and whatever it brings gets deducted from the balance you owe;  the loss of value is taken into account by that sale (and then some, since the sale is typically at a wholesale auction, the lowest price the car could reasonably bring).