“POULSBO – After upping the ante on its $130,000 lawsuit against Poulsbo earlier this year, library contractor Flag Construction of Kent last week filed a claim accusing city engineer John Stephenson of slander. The action is the latest in a string of complaints the agency has issued since accepting the $1.3 million contract in November 1999 and puts an exclamation mark on months of misunderstanding between the city and Flag. The library contractor in February filed a claim against Poulsbo, seeking $462,432 in damages for an alleged breach of contract. Attorney Todd Foster Stewart of Sokol and Gray, LLC, the law firm representing Flag in both cases, sent the city a notice of claim on March 26, seeking damages in the amount of $125,000. Foster alleges that the city engineer has been informing subcontractors hired by Flag that Flag has either been terminated or abandoned its contractual obligations owed to the City of Poulsbo. In addition, Mr. Stephenson is misrepresenting the facts concerning payments withheld by the City of Poulsbo that are due and owing to Flag, the claim states. As a result of Mr. Stephenson’s misrepresentations, Flag’s subcontractors have made claims against bonds posted by Flag’s surety. This has adversely affected Flag’s ability to conduct business and will damage Flag in the future if it is required to indemnify its surety for bond claims. Stephenson said Tuesday he was unable to comment on the claim. Included in the claim is a March 14 letter from a law firm representing subcontractor Library Systems, Inc. which states, We understand that the project is nearing final acceptance and that Flag Construction has either terminated or has abandoned the project. City council approved final acceptance of the Poulsbo Library March 19, over seven months after the original completion date of Sept. 5, 2000. Miscommunication over shelving and furniture expenses added to the fray between Flag and the city and initially sent the contract skidding through the mud. The process has been bogged down ever since. Despite the council’s acceptance last week, the city conceded in a summary statement that the Flag lawsuit would affect closeout paperwork on the project as a whole, delaying the end of the already lengthy process even further. “