WASHINGTON (AP) _ The Supreme Court today said it will consider blocking trial of a $2 million lawsuit against a judge and a car dealership's owners by a New York woman who says she was arrested falsely for not paying a car repair bill.

The court agreed to review rulings that reinstated the lawsuit.

The dispute began in 1977 when Lynn Conway of White Plains, N.Y., brought her 1973 Opel to Bano Buick, owned by Alfred Martabano and his son, Alfred V. Martabano.

The shop replaced the engine in her car and billed her $431.34.

She said she stopped payment on the check to the dealership the following morning because the car had stalled out on the way home from the repair shop.

The Martabanos said they repeatedly telephoned Ms. Conway but were unable to contact her. They said they were notified by their bank that the check was invalid because of ''insufficient funds.''

The dealership owners said they were advised by their lawyer, Vincent Cerbone - who is also a justice of Mt. Kisco Village court - that issuing a bad check is a crime.

The Martabanos contacted the Mt. Kisco police and on June 30, 1977, Ms. Conway was arrested. She said she was held in jail for seven hours before she was arraigned.

Her lawsuit said the reverse side of the check issued to Bano Buick stated that a ''stop'' order was placed on the check and that it was not returned for ''insufficient funds.''

Ms. Conway said the Martabanos were aware of this before they called police to have her arrested.

In 1979, the criminal charge against Ms. Conway was dropped with Cerbone, in his role as town justice, presiding over the case.

Court records showed the case was dismissed ''due to the period of time that has elapsed (not on the merits.)''

It was not clear who inserted the parenthetical phrase.

Subsequently, a federal judge threw out Ms. Conway's suit that charged Cerbone and the Martabanos with malicious prosecution.

But last December, the 2nd U.S. Circuit Court of Appeals reinstated the civil suit.

The appeals court questioned Cerbone's dual role in the case - as attorney to the Martabanos and as a judge who ordered the criminal charge against Ms. Conway dropped only after the expression ''not on the merits'' was inserted.

The significance of the phrase is that it could be grounds for killing Ms. Conway's malicious prosecution suit.

The appeals court also ruled that Cerbone is not immune from the civil rights suit since he acted as a private individual in the dispute, and not only as a judge.