More and and more it seems that there are dealers around the country not wanting to except guns being shipped to them from individuals. Personally I think this is the dealers fault for not asking in advance what you want a copy of their FFL for when you request one for doing an FFL transfer to them.
I found myself in a situation a couple of years ago. Where I shipped a gun I was selling to the buyers FFL dealer. I received an ink signed copy of the FFL and shipped the gun to them. Shortly after it arrived, the buyer called me and said his dealer would not release the gun to him because it was shipped from an individual rather than from another FFL. He then also would not release and ship the gun back to me because I'm not a FFL holder. To say the least this got real ugly, before it all got worked out. I had a pit in my stomach for over two weeks while this shook out.
From then on I get a phone # for the FFL that I'm going to ship to and make a phone call to make sure they know the gun is coming from a private seller. All of this could have been avoided by the receiving FFL holder asking a couple of questions when you request a copy of their FFL wanting to do a gun transfer through them. "What kind of gun are you wanting to do the FFL transfer on? and Who will be shipping it to me?" It's that simple!
If you, as the seller, had abided by the terms of the transaction with the buyer, and if you already had the money from the buyer, then you were done. It became the buyer's problem to collect the gun from the FFL that he selected. If the FFL wanted to hold the gun because you, as seller, did not have an FFL, and if he did not disclose before shipping that he would not accept a gun from a non-FFL, and if you were otherwise in compliance with applicable federal, state, and local regulations, then the buyer could sue the FFL for specific performance (i.e., release the damn gun). The FFL does not have the right to convert or hold the property of others (i.e., the buyer) just because he has a policy that is not supported in law or regulation. Most guns would fall under the limit for small claims courts in most states, so that would be the place to file the suit. The problem with small claims is that the judges/commissioners are not the sharpest tools and probably have no idea what the FFL rules are, so take all the applicable regs with you, have the relevant sections highlighted, cite your authorities, and be prepared to recite them to the court. Some FFL's are just idiots, and some are thieves. This whole scenario is the buyer's problem, unless the FFL disclosed his policy in advance. The easiest solution for the buyer in your case would probably have been to find another FFL in his locality to accept and release the gun, then have the first FFL ship it across town. It's a PITA and adds cost/time, but it may the best solution in this situation. And never, ever do business with the first FFL for anything, ever again. And tell him why you won't do business with him. If he chooses to be an FFL, it's incumbent upon him to know and follow the rules of his business. If he does not want to understand and follow those rules, he deserves to be out of the business. Period.