The judge in Virginia had last month already rejected the defendant's argument that the case should be tossed out in the US because it should be heard in the UK instead.
The family of Harry Dunn, the British teenager killed in a 2019 traffic collision, have been granted permission to seek compensation against the American suspect despite her diplomatic immunity, a US court ruled on Wednesday.
Dunn, 19, died in August 2019 near an air force base in Northamptonshire, England, used by the United States military.
Anne Sacoolas, the wife of a US military staff, admitted she was driving on the wrong side of the road when she collided with Dunn but the couple fled the UK invoking diplomatic immunity. Appeals by Dunn's family to extradite Sacoolas, who now resides in Virginia, have failed.
The family filed a civil lawsuit against her husband in Virginia last year due to a law in the US state that implies he is liable for allowing his wife to use the vehicle that killed the teenager.
On Wednesday a judge in Alexandria rejected a motion by Sacoolas and her husband to dismiss the lawsuit.
If there is no settlement, the next stage in the legal process would be a "deposition", where the US couple would be obliged to give their account of events outside of court.
Radd Seiger, the spokesman for Dunn's family, said that they "are very pleased at the ruling today and that their claims have been allowed to proceed in full. They are also pleased that Mr Sacoolas will also have to be deposed so that they can learn the full account of what happened on the night Harry died."
District Judge T.S. Ellis III had last month already rejected an argument from the couple's lawyer that the case should be tossed out in the US because it should be heard in the UK instead.
The judge's ruling said then that "while it is commendable that Defendant Anne Sacoolas admits that she was negligent and that her negligence caused Harry Dunn's death, this does not equate acceptance of responsibility."
The family's lawsuit alleges that Sacoolas did not call an ambulance and that it was a passerby who arrived several minutes later who called for help.
Sacoolas' lawyers have objected and filed a "notice of correction" to clarify her conduct. They acknowledge that she didn't call for an ambulance but say she flagged down another driver, who did, and that she notified the nearby Air Force base, which actually provided the first emergency assistance.
Judge Ellis said in a reaction to the "notice of correction": "You can make your case to the public if you wish but you can't change my order by filing a notice of correction."
The parties have been asked to discuss the possibility of an out-of-court settlement. If the negotiations fail, a trial would then be expected to take place later in the year.