BANGOR – A Canadian engineering firm has sued Great Northern Paper Inc. in federal court, claiming the paper company has defaulted on close to $700,000 it owes for services connected to the repair and overhaul of one of its paper machines in the Millinocket mill.

Genivel-BPR Inc. of Montreal is charging the Penobscot County-based paper company with breach of contract and is seeking damages for violations of the Prompt Payment Act.

In a lawsuit filed Oct. 21 at U.S. District Court in Bangor, the Canadian firm seeks repayment of the bill plus a penalty of 1 percent per month on any outstanding fees. The firm claims it has been damaged by the mill’s apparent refusal or reluctance to pay, and also wants payment of costs and attorney’s fees.

Portland attorney David Silk is representing Genivel-BPR Inc. An associate said he is out of town until Thursday.

Efforts to reach Brian Stetson, spokesman for Great Northern Paper Inc., were not successful Wednesday. An office secretary answering the call said Stetson was out of town until Friday. Efforts to reach mill president Eldon Doody also were not successful.

The Canadian firm asked a federal magistrate judge this month to order the attachment of $684,252 in Great Northern assets, the amount Genivel-BPR claims it is owed.

Magistrate Judge Margaret J. Kravchuk of Bangor denied the motion, according to court papers. Genivel-BPR filed the motion because it feared the paper company would “encumber” or not make assets available.

In an affidavit, Jacques A. Bedard, engineer and vice president of Genivel-BPR Inc., said the firm and GNP signed a contract June 5, 2000, whereby the Canadian firm agreed to provide engineering services in connection with a major rebuilding of the No. 11 paper machine. Genivel-BPR “provided services to GNP” and the paper machine went on line again Dec. 4, 2001, according to the affidavit and the civil lawsuit. The Canadian firm concluded its service soon afterward.

During the next several months, GNP and Genivel-BPR discussed a final payment for services provided. “At that time, GNP had certain alleged claims against Genivel-BPR relating to the No. 11 paper machine rebuild project,” according to a court document.

After several months of discussions, the parties resolved their differences, agreed on an amount to be paid and set the dates for payment, according to a court document. The agreement was signed July 12, 2002, by Jacques Bedard for Genivel-BPR and by Lambert Bedard, Great Northern Paper Co.’s chief executive officer.

The agreement called for GNP to pay Genivel-BPR $738,440 in two equal payments, according to the legal complaint. The first payment was due in August, and the second payment was due in September. “GNP made no payment in August, 2002 nor any payment in September, 2002,” the lawsuit stated.

While the legal agreement stated the parties could agree to postpone any payment up to Dec. 31, 2002, if GNP did not obtain certain financing or had not completed the sale of woodland, “at no time has Genivel-BPR agreed to postpone the August or September, 2002 payment date,” according to the lawsuit.

In October, payment was received from Great Northern Paper Inc. for $54,187.95, reducing the amount owed to $684,252.05, according to the lawsuit.

“Genivel-BPR has made repeated requests for payment and despite promises to pay, no payments have been made,” a court document stated.

Great Northern Paper Inc. has not filed a legal response to the lawsuit but must do so within a few weeks. The case could be ready for trial in nine months to a year.

The lawsuit comes two months after GNP completed a $50 million land deal with The Nature Conservancy.

In exchange for purchasing 41,000 acres in the Debsconeag lakes area and obtaining a conservation easement on 200,000 acres of Great Northern’s forestland, The Nature Conservancy purchased $50 million of the paper company’s existing debt primarily from John Hancock Bond and Corporate Financial Group. In January 2001, John Hancock gave GNP a loan, which was secured with 380,000 acres of the paper company’s forestland as collateral.

The conservancy, which has 1 million members worldwide and 11,000 in Maine, paid off $14 million of the debt. It also refinanced the $36 million balance for the paper company at an interest rate that is less than half of what the company paid.

Great Northern Paper employs 1,100 people at its mills in Millinocket and East Millinocket.