Unless you are a person who is very focused on just doing the business, i.e. "its a job", it can be as hard as you are feeling it is to make a decision with working with this guy. That also shows that you put a part of yourself into each job you have because you feel your work represents yourself, your talent and your integrity. But if this guy is lying, what the hell? You accepted the job to do a job, not to be his slave or to have to put up with his shit.
I would look at it from the point of view that it is still a job and you are in business to do what you do - not accommodate this guy's atttitude. I'd be sure to first get all the paperwork in order as if you were building a case to go to court, and then look at where the project is as far as what remains to be done, any outstanding decisions and basically anything that can be recovered at this point. If there things that have been being dragged out, can you lock them down and just get the job done?
I guess I"m looking for things that can be saved and completed, any points of conflict that just aren't getting resolved and can they, and then just be done w/ the situation. Its in teh guy's best interest to get the work completed so anything he's doing to drag it out is impacting your ability to complete the work per the original agreement as well as possibly impacting the rest of your business. How much of what he's arguing about is outside the scope of your original agreement?
If things just can't be resolved, then, make sure your paperwork is in order if you need to go to court. Get pictures of everything
Good luck.
It does suck moose balls but it is still a business agreement and really shouldn't be turned into a big personal thing that tests your confidence in yourself -- this could be a "typical" client for what you do so the best thing you can do is develop an approach to handle it reasonably for both you and the client and move on.
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