Looks like Grace is trying to set the pecking order/pack leader. One thing your dog HAS to learn is YOU are the pack leader and always will be. This is the Yorkie side in Grace. How much younger is Grace? There are a couple of things to look for. Does this happen when you come in the room? Does it happen when you are not in the room? When Alice goes after her does she first stand over her behind her neck? Does she stare at her first? When she goes after her does she grab her behind the neck, or go for her front legs.
Well Grace may have to be moved down the list in pecking order. The quiet one may have to come first to show Alice she is not first. This would mean feeding Riley first. Give a treat to Riley THEN a treat to Alice. Alice will come 2nd in everything. Take Riley out for a walk leaving Alice behind, then bring Alice for a walk. After a week you should be able to take both out with no problems. In the house you will need strong command words. Say Grace's name first, then the command OFF. Stare at Grace and continue to keep doing it. She may go back after Riley in 20 seconds, stand there and continue to do it until Grace stops. YOU, the pack leader won this battle. Here is a excellent article. Ignore the leashes and the pictures and just read the article.
Dog training is always good. But the trainer will probably come to the house. Or you can bring Grace and get her to learn the commands. Just my opinion
Keep us posted!!
http://leerburg.com/aggresiv.htm