huh...I know your problem all too well. The breeder doesn't have to do a thing, unless it was specifically written in a contract (which you said there was none). If they have a broad health guarantee they might at least pay half or something, but with no health guarantee you don't have much luck. Not to mention a lot of the time the health guarantee just allows you to return your dog in exchange for a new one. Demodex just jumps up to bite you without any previous reason. Autumn has this too, and when it becomes generalized (more than 4 spots) it gets pricey and hard to treat. Autumn is still not getting any better after 2 months of treatment.
My breeder said that his dogs have never had a problem, and it's very likely. It's an immune system problem, so unless he sold the dog to you when the dog was too young (which could effect the immune system) he hasn't done anything wrong. It just happens.
I wanted to call up the breeder and yell too when I found out that I would have hundreds of dollars in vet bills related to this, but I stayed calm and called him to just let him know anyway. The best he could do for me was exchange her for a new puppy, but Autumn was 8 months, and had just had a big move...I didn't think that would be fair to her to move again, not to mention she's great. I didn't want a baby puppy. I think we will get at the very least a discount on another puppy if we want to get one from him again, which I probably would because this is just a fluke problem and no puppies have had this problem before.
Aren't we the lucky ones?