I appreciate that you've invited me to lunch and I hope to have lunch with you in the near future.
If you don't wish to attend the lunch and have no interest on getting together with them to ever have lunch, then just simply say "Thank-you for inviting me to lunch. However, I cannot make it at this time due to prior engagements." Leave it at that. If you never wish to see them again make sure to add "Although it's not appropriate at this time to get together, I look forward to hearing from you in the future."
If you don't wish to attend the lunch and have no interest on getting together with them to ever have lunch, then just simply say "Thank-you for inviting me to lunch. However, I cannot make it at this time due to prior engagements." Leave it at that. If you never wish to see them again make sure to add "Although it's not appropriate at this time to get together, I look forward to hearing from you in the future."
Just saying 'Thanks' by a card works too. Nothing fancy is needed :)
Cheers
Cheers