Yeah he said I'm lyin, but I only caught it after hearin it 15 times. It does sound like he said "LA", because he yelled it like "I'm lleeeeaaaaaayyyin" you know.
I mean...this line COULD be seen as a shot at the rest of California, but only to certain people. Most people I know would never say "we don't rep California", even though we always tell people we are from L.A. versus just sayin "California".