The lawsuit contends that AMI paid McDougal $150,000 for exclusive rights to her story for the goal of keeping it out of the public eye - a practice known as "catch and kill" - to protect Trump.
McDougal claims that Trump's lawyer Michael Cohen was secretly involved in talks with the company.
McDougal, in a lawsuit filed in Los Angeles Superior Court, says her $150,000 legal agreement with tabloid giant American Media Inc., whose CEO David Pecker is a close friend of Trump's, should be deemed invalid.
McDougal contends AMI is keeping her quiet and avoiding publishing her content, but the company said she was featured on the cover of its highest-selling issue of Muscle & Fitness Hers in 2017. The president has firmly denied the women's claims.
Judge Jennifer Schecter in Manhattan supreme court said there was "absolutely no authority" to dismiss or stay a civil lawsuit by Zervos related "purely to unofficial conduct" just because Trump is the president of the United States.
FILE - Adult-film actress Stephanie Clifford, also known as Stormy Daniels, poses for pictures at the end of her show at the Gossip Club in Long Island, New York, Feb. 23, 2018. The alleged mistresses have made similar claims about their courtships with the Big Cheeto, like being showered with golf course related gifts and dates at the same Beverly Hills hotel.
Sources told the Daily News that McDougal was "fielding multiple offers" before she signed the agreement with the National Enquirer. McDougal then hired entertainment lawyer Davidson to represent her interests.
The news of McDougal's suit came as NY judge allowed a defamation case brought by Summer Zervos, who has accused Trump of sexual assault, to move forward by denying a defense motion to dismiss the case. While they did publish some stories for her, it was not the amount that McDougal expected. She says when she renewed negotiations in 2016, she was informed of Pecker's friendship and the idea AMI would buy her story but not run it.
The lawsuit also accuses McDougal's former attorney, Keith Davidson, of colluding with Cohen and American Media.
"These revelations have placed Ms. McDougal at the center of a national controversy with broad implications for our democratic system", according to to the complaint.