Can you rebuild the title of a car that is being set for demolition?

I have a 1993 civic that i recently bought. Problem is that i went to go switch the title of the car to my name from the previous owner, and they told me that the car was a parts car or needed to be demolished. Apparently the previous owner reported it wrecked to the insurance company to get the money but the car is almost in perfect condition except for the carbon fiber hood. Is there any way to get the car out of that situation? can i at least get a salvage title because the prev. owner gave me a texas blue bonded title but this happened. What should i do? should i report it to the previous owner? But what if he doesnt comply?