I am an instructor myself and I can tell you that, even if the criticism was correct, it was delivered inappropriately. No instructor with any professionalism at all would undermine another teacher nor would they hurt a student in this way. As for the playing one student against another issue, it sounds to me as if this instructor lacks self-confidence himself and wants to play diva. Go to the owner of the studio and tell him/her what is happening to you. Demand that this issue be strongly addressed and that you be put with the teacher of your choice. It is your hard earned money being spent and you are in the driver's seat. Be sure to document everything...date, time, who you spoke with, and what was discussed. Write it all down and do it every time you need to complain. If you choose to stay with this studio, you should expect them to comply with your wishes and to fulfill their contract with you. If they refuse to honor your wishes and you end up needing to take legal action, your documentation will be invaluable to you. (Did I mention that I also have a 28 year legal background in addition to being an instructor?? :) )
Good luck to you, darling...don't EVER let anyone demean you, deserved or not. You, like everyone else who has discovered the joy of dancing, deserve to be treated with courtesy and respect and to receive the best instruction you can afford. I hope this encourages and helps you.