Follow up to this - I WON!!! Well kind of. I ended up filing suit, made an awesome case with plenty of documentation and presented it calmly and professionally. Unfortunately my case was randomly selected by the State of Michigan for mediation...boo. The guy blew up and freaked out and I told him I was doing him a great service by not asking for all my money back. I didn't have time to adjourn the mediation and go to full court (which I didn't disclose) because I am moving away and I wanted this settled THAT DAY! I let his kid sit in on the mediation and halfway through the dad got pissed and told the son it was his problem because he was selling the engine for him so any negotiating would need to be done on his behalf. So I made the 17 year old kid pay for all my court fees, serving fees, gas money, parking costs and copies made for my case. And some extra money for my time and I keep the engine and trans and I resold it myself. I ended up breaking even. I also got the judgment 'with prejudice' so I don't have to worry about his bogus counter lawsuit! I couldn't ask for much more I guess. I learned a ton and even though I wish I didn't have to do all this, it was very rewarding and self-empowering to use the law and court system. Good luck to everyone, sometimes things do work out!
