Just to clarify, somebody suing another party doesn’t automatically mean that party broke any laws.

Yes, that’s literally what I said. Fan art may not be illegal, but it’s not legal either. The point is moot, however. If a corporation with billions or trillions of dollars can sue you with impunity, while even a meager defense can financially ruin you for life, then there is no practical difference between a legal and illegal act. The fact remains that fighting someone like Disney over something like fanart is beyond the ability of nearly everyone on earth.