Nebraska-based Acceptance Insurance Holdings had a contract with Armstrong to pay bonuses for winning the Tour de France and other races. The company sued to recover its money after Armstrong admitted in January that he used performance-enhancing drugs to win the Tour every year from 1999-2005.
Armstrong's attorneys had asked Travis County judge Darlene Byrne to dismiss the case, arguing the statute of limitations on any fraud or breach of contract claims expired by 2011. The company argued that the clock didn't start until Armstrong admitted doping.
The judge denied Armstrong's request to dismiss on Monday, allowing the case to proceed. Acceptance attorney Mark Kincaid said the company will seek to question witnesses - including Armstrong - under oath, something the cyclist has been reluctant to do with several legal cases pending against him.
"Lance Armstrong would be the No. 1 witness," Kincaid said.
Armstrong attorney Tim Herman did not immediately respond to a request for comment.
Armstrong is facing several lawsuits seeking repayment of millions paid to him during his career. Most notable is a federal case seeking to recover more than $40 million paid to Armstrong and his team by the U.S. Postal Service when the agency was his team's primary sponsor. Federal prosecutors have said they intend to seek treble damages, which could push penalties up to more than $100 million.
The Acceptance case is similar to a $12 million lawsuit filed by Dallas-based SCA Promotions. SCA tried to withhold bonuses from Armstrong in 2005 and went to arbitration in an effort to prove he was cheating. Armstrong testified in that case under oath and denied doping, and the case was eventually settled with SCA paying Armstrong more than $7 million.
Armstrong's attorneys have argued in part Acceptance should have previously pursued Armstrong over the doping questions like SCA did.
The SCA and Acceptance cases differ in that SCA has a settlement agreement that Armstrong's attorneys argue cannot be undone under Texas law.
"That's an obstacle they have to overcome that we don't," Kincaid said.