David Albelda has been unsuccessful in his bid to force Valencia to buy him out of his contract.
Albelda was told by coach Ronald Koeman in December that he would not play for the team again this season.
The Spanish midfielder was under contract until 2011 and he claimed at a civil court hearing that he had suffered constructive dismissal.
However, Valencia president Juan Soler denied the Spanish international had been fired or removed from the squad, and the court has ruled in the club's favour.
Albelda recently voiced concerns over his international future and revealed that he was prepared to quit the game altogether over the row.
"I don't deserve what they are putting me through, and I don't know the reasons," he complained in January.
"I am considering giving up football."
Albelda has five days to appeal the court's ruling.