In an unexpected move, the WGA has ditched efforts to settle a 2005 class-action suit over how it handles foreign levies and has opted instead to go to trial.

An attorney for the WGA disclosed Friday in state court that settlement talks in the tangled legal action — which covers millions of dollars collected for but not delivered to writers — had not resolved the issues.

“There’s been no agreement reached on all material terms,” said Emma Leheny in a hearing before Los Angeles Superior Court Judge Carl West.

The jurist expressed surprise over the development given that both sides in the case said a month ago that they had resolved the issues. He also noted that the case has consumed six full days of mediation. “My suggestion would be to try to salvage this,” he said.

West told attorneys that if they’re unable to do so, they should provide a proposed timeline leading to a trial in the first quarter of 2010. He asked them to return July 8 for a status conference.

Paul Kiesel, an attorney for lead plaintiff William Richert, told West he had been “blindsided” by the WGA’s refusal to settle.

At stake in the suit are millions of dollars in foreign funds due to authors as compensation for reuse — such as taxes on video rentals, cable retransmissions and purchases of blank videocassettes and DVDs. Unlike in the U.S., writers, actors and directors in most other nations cannot surrender the copyright on their works.

Settlement talks in Richert’s suit began in 2006. The action alleges the WGA has no authority to collect the funds for nonmembers, hasn’t communicated that information to the affected writers and hasn’t paid them; WGA officials have said repeatedly that the suit was without merit.

Kiesel told West on Friday that the only issue preventing the settlement had been attorney fees, but Leheny disputed that contention. She refused to indicate in court what other issues had caused the settlement to collapse, asserting that such information was privileged.

In March, West had called the case a “mess” after Richert — who’s been designated as the class representative for WGA members — objected to the settlement, and ordered both sides to meet with Judge William Highberger to work out a settlement. Both sides told West last month that meetings with Highberger had resolved the issues, leading to the judge asking both sides to file a preliminary settlement agreement.

The DGA settled a similar suit last year, declaring it had distributed $48 million in levies to DGA members and $4.9 million to nonmembers. SAG’s facing a similar suit from Ken Osmond that’s yet to be resolved.