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I was stupid...Now am mad.

I know that this does not necessarily pertain to the list, but I have a
classic MB which is getting a complete resto.  Long story short, I paid a
friend/neighbor to do the body work.  I made the huge error of trusting him
and sticking to his price.  Well, he wanted a little more, and more and
more........  I did give him a little more money then agreed because I
thought he did do the work and earned it.  I paid him as he went as he
really needed the money.  Well, a few months ago, he came to me saying he
wanted about 10 grand total to finish the project.  The original cost was
about $3000.  He refused to give me the car.  After negotiating and needless
to say blowing up at him, we finally worked it out so I got the car back. 
In the process, he demanded $1200 in order to release the car.  I paid him
and towed the car home.  This was last October.  Well last sunday, I drove
the car out of the shop and found out that it really did not drive.  After
investigation, I discovered he had put motor oil in the tranny.  Man I am
pissed.  I have not confronted him.  Don't plan to as he is one to take
justice in his own hands.  I let emotion and my passion to help the poor
sucker get the better of me.  I never wrote up a contract or had any kind of
written document.  This is especially bad since in May I will have a masters
in bus. and know that you never do bus. this way.  Any of you have ideas as
how I should proceed in solving this problem (possibly getting him to pay
for a new tranny)?  I am waiting a call back from my lawyer.  Maybe I could
learn a legal thing or two as I am going to law school next year.  Anyway,