I would definately call the humane society and/or the police, although I don't know how much they could do legally. We all know taking the dog wouldn't be the best way to go, but could you offer to buy her? Maybe just tell him you fell in love when you met her and want to know if he would consider selling her to you. He certainly doesn't sound to attached to her, and to a jerk like that a couple bucks is probably more attractive than a disobediant dog. That way, no laws would be broken and everybody involved would benefit, especially that poor puppy!