A Missouri appeals court on Tuesday upheld a Jackson County jury’s verdict of $5.8 million in compensatory damages and $10.5 million in punitive damages against Allstate Insurance Co. for refusing to settle a claim made by one of its insured.

The case arises from a March 24, 2000, car accident in which a drunken driver crossed a center line on Camden County highway and crashed head-on into a couple’s smaller car, which resulted in serious injuries for all parties involved.

Edward and Virginia Johnson sustained medical bills of more than $300,000 after the accident with Wayne Davis Jr., who admitted later that he was driving with more than double the legal limit of alcohol in his bloodstream.

The Johnsons complained that they sent Allstate demand letters but that the insurance company refused to settle, in bad faith.

In 2002, the Johnsons filed suit against Davis, whom they thought was 100 percent at fault for the accident.

Just before the trial was to start in 2004, an Allstate official sent a letter to Davis for the first time explaining that he could be liable personally for any judgment that exceeded policy limits.

After that, the Johnsons’ suit against Davis never went to trial.

Instead, they settled into an agreement whereby Davis admitted that he was drunk and consented to $2.5 million in damages and $1.5 million in punitive damages, and more than $1 million in prejudgment interest.

The twist in the agreement was that the Johnsons would not try to recover the judgment and instead would sue Allstate jointly with Davis so long as the Johnsons recover 90 percent of what they won in the trial against Allstate, which happened in 2005.

A Jackson County jury assessed $5.8 million in compensatory damages and $10.5 million in punitive damages against Allstate.

Judges from the Western District Court of Appeals ruled that Allstate failed to recognize how severe the Johnsons’ injuries were and that the claim would far exceed Davis’ $50,000 policy limits. The court also upheld the finding of Allstate’s failure to advise Davis of the demand and the likelihood that he would be hit with an excess judgment.

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