Keep Your Dogs Out of My House

My next door neighbors have 3 small yappy dogs.
These dogs yap at early hours of the morning, they leave little poops all over our front yard, and they're not particularly cute (which if they were, I would probably be more forgiving).

My husband & I have awakened though all hours of the night, weeknights and weekends, at the sound of all three mutts yapping at -- nothing? -- who knows what.

Our neighbors, on the other hand, are awesome.  Despite the dog situation, they are pretty cool, laid back people.  Good 'ole blue-collar folks, that remind me a lot of my husband and myself.

Now my husband & I are pacifists for the most part - not really against confrontation, but more opposed to stirring the pot and causing problems than most people seem to be.  We have never once brought up how annoying their dogs are to our neighbors.  We kind of just deal with it - things could be worse, right?

Well today, I get home from church and the garage door was closed.
I specifically told him to leave the door opened since I do not have a garage door opener and don't like the hassle of dealing with getting it up to get my car inside.

I ask him, "Why didn't you leave the door opened after I told you to?"
He says, "Well - I was going to, but after you left I heard a ruckus..."

He proceeds to tell me that he opens the garage door to investigate what the ruckus could be, and finds a bulldog and a pug inside our garage playing (No, these are not our neighbors dogs).  He continues to tell me that while he stands there, trying to figure out what to do, the yappy neighbor dogs just stroll in to our open garage and start this all-out war with the mystery pups in our garage.
After watching this almost unbelievable scene unfold, he eventually ushers the dogs outside of the garage so he can close it.  He looks around out side and asks, "Where is everybody?!"  Not one neighbor was outside - not the neighbor dog owners, not anyone looking for these two mystery pups... no one.  He closes the garage door and goes back inside.

Now, as he tells me this I remember that last night the yappy dogs were particularly unruly.  I'm thinking they had their first encounter with the mystery dogs.

So in this situation, I'm thinking - well great.  What the hell are we supposed to do now?
I'm thinking that, in regards to our particularly passive style, we'll just ignore things until they get too disruptive.  I'm wondering at what point we actually have the awkward conversation with our neighbors.  There has to be an easier way.  But this new dog situation could make things very much worse, and push us past our breaking point.

Only time will tell, until then I suppose we'll keep the garage door closed, watch where we step, and continue to take Melatonin throughout the night.