Are you actually out $6800? What would it cost to walk away?
That is outrageous for what it sounds like you got. You could have bought a crate engine and been money ahead. Maybe you guys need to ship your parts to Iowa to get machined? Around here a machinist stands behind there work. It is there name and reputation on the line.
Did you get a written quote & paper work on what was done? There should be some issues with being charged for new parts & end up getting a lesser or used parts for that same price. Since he has your car he could nail a mechanics lean on it if you don't pay up. Couldn't hurt to get some legal advice as long as you have all your paper work, quote & receipts of what was paid for. A idea to save some coin would be pulling the heads & reinstalling them yourself. But depending on your skill level you may still need a hired wrench to get it finished.
Taking him to court is probably not worth it... Any decent lawyer is going to charge at least a few hundred dollars an hour. By the time you get a judgement even if it goes your way, you'll be lucky if your legal fees don't exceed the cost of the engine. Unless you can get an attorney that understands the case, basically assures you that he can get your money back, and will get the guy to pay for your legal expenses, and if he loses you won't be responsible for paying the bill.
Which I'm sorry to say, is pretty unlikely.
Might scare the guy though if he gets a call from a lawyer... He might be a little more accommodating, maybe refund, or just give you your engine without having to pay his $1,300 extortion money for an uncompleted job that he conned you into paying too much for in the first place.
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