My dog is only aggressive to ONE other dog (my sister’s dog)

Hi All. I have a 3 year old rat terrier mix “Boudreaux” I rescued when he was around 1 year old. His previous home had 11 other dogs and so he grew up with a lot of dogs. He is neutered.

He is very defensive (barks a lot) when he’s in the backyard but I guess bec that is his territory and he thinks he is “protecting it”. When we go for walks he doesn’t react to other dogs at all.

My neighbors have a female Lab that I dog sit often and my dog is real good with her.

My sister has 3 dogs. 10yo GSD female “Tinkerbelle” (spayed) – our only princess who is never bothered and is pampered by everyone. Even my dog loves her, his big sister. A 2+ yo male Aussie Shep/Shih tzu rescue “Iggy” (not fixed) who is very mellow and timid. He was rejected by his birth mom so he was bottle fed as a puppy so he is very affectionate with humans. The 3rd dog is a 6 month old male Pomeranian puppy “Thanos” who is in his T-Rex and chaotic puppy phase. My dog plays w Thanos the most bec Thanos annoys everybody and wants to play with everybody so my dog humors him a lot.

All 3 of my sister’s dogs are not aggressive. My dog is ok with all 3 of them but sometimes he gets very VERY aggressive with Iggy. My dog resource guards humans in particular. We have been consistently trying to train his aggression & guarding out but sometimes he loses it when it comes to Iggy and ONLY Iggy. When the other dogs get love my dog doesn’t care but when Iggy is given a little bit of attention my dog starts to be aggressive.

My sister got Iggy as a puppy and my dog met Iggy when he was a puppy. They played a lot together. My dog only started being aggressive to Iggy when Iggy was out of his puppy phase.

My dog has only ever been aggressive and territorial to Iggy. No other dog, ever. Iggy is quiet, doesn’t bark, loves to cuddle and is very mellow. He doesn’t even fight back when my dog starts his craziness. It has gone to a point where Iggy just stays away and avoids my dog every time we are there. I feelvad cuz it’s Iggy’s territory and my dog is the one being very aggressive and we have to corral one of them…

I’m at my wit’s end, I cried during our drive home today…my dog suddenly lunged at Iggy when Iggy wanted to cuddle w me and it was a mess and I had to avoid Iggy and my bro in law corral’ed Iggy to protect him. All Iggy wanted was to get a hug from me. My dog and I were the visitors but the house-owner’s dog had to be corraled. I was so embarrassed.

Can anyone help me with some insight as to why my dog (who is so OK with all other humans & dogs) could be selectively aggressive to this ONE DOG only?

TL;DR: My 3 yo fixed male rescue is very good with all humans & other dogs. He has never been aggressive to any other dog except for my sister’s dog. He resource guards humans and gets very aggressive when sister’s dog even tries to get close to the human members of the pack. In need of insight.