Wow, that is really strange. I wonder if the root is damaged somehow. When blooming is done on other peonies, maybe you dig it up to see what happens underneath. Is there any possibility of the plant being exposed to herbicide?

Hi again. I found an article that describes various problems that affect peonies. Your stunted peony maybe virused. If that is the case, immediate removal and disposal of the plant is best. Check out the article on page 4 where it describes the condition of a peony affected by virus.

Here is a link that might be useful: peony problem