NOT LEGAL ADVICE...
You should first get this BMW M3 out of impound (assuming that is were it's at; it is accumulating huge expense). Before this matter gets to small claims court, because of the fact you already purchased the vehicle and more than likely signed a bill of sale, title, release of liability and so on... for all practical purposes, this M3 BMW is yours.
In order to get this BMW out of impound you'll need to have proof that the vehicle is yours... meaning you'll need to get it at least transferred into your name formally. The DMV will do this with or without a smog check. Once you get the vehicle out of impound, if you choose, you may take the seller to small claims court.