NEW ORLEANS—The 5th U.S. Circuit Court of Appeals has unanimously upheld a jury’s $21.6 million verdict for damages a gourmet grocery store chain sustained during Hurricane Katrina.

In its Tuesday opinion, the three-judge panel in New Orleans upheld a June 2008 jury verdict in favor of New Orleans grocer Robért Fresh Markets against United Fire & Casualty Insurance Co., ruling that the insurer was liable for damages to five stores within the chain. The court also awarded the grocery chain an extra $1 million in bad-faith damages.

United Fire appealed the jury award, but the appeals court wrote in its opinion that “there is no reversible error on United Fire’s appeal” and “there was ample evidence to support bad-faith penalties.”

The case, filed in August 2006 in U.S. District Court in the Eastern District of Louisiana, pitted New Orleans-based Marketfare Annunciation L.L.C. against Cedar Rapids, Iowa-based United Fire.

During the jury trial, the grocery chain argued that the stores were severely damaged during Hurricane Katrina and its aftermath.

United Fire determined that much of the damage was caused by rainwater that flooded the buildings after the storm’s high winds tore holes in the roof, but that the damage should be covered under the policy of Marc Robért II, who owns the grocery chain.

United Fire made some claim payments but disputed the amount of damage to the family-owned stores and said the damage was related to flooding that occurred after the storm, which the policy did not cover.

Neither side could be reached for comment on the ruling.