Deal with auto dealership

I purchsed a car at dealership on 12/4/2007, and got into an accident on 12.10.2007. I went to dealership ,worked out a trade in deal with dealership, and purchased the new car on the same date. The dealership took the depreciation value and repair cost into consideration when they worked out the deal. Unfortunately, one week later, they reported futher damage on the traded in car, and requested my insurance company to pay for it. I explained the trade in deal was based on original quotation from their authorized body shop plus the depreciation value of the car. The insurance agreed I am not responsible for the excess damage. My question would be, am I responsible for excess repair cost? since I didn't have writing statement on the contract that I will be paying for excess damage. If the insurance company agreed on the case, and entitled the lien holder and myself for the repair cost check, is it against the law? The dealership threatened me that would be insurance fraud and against Federal law if I use the insurance money(I didn't cash the check yet). They are holding my new car registration paper work against this unsolve issue, are they right to do so? I got extened tag from tag office, and will expire on 2/10, if I don't receive my registration paper by then can I sue them for it? Thank you.

Sue them in small claims.

They made a deal and you accepted!!