San Jose must pay $11.3 million to a mentally disturbed man who was shot in the back by a police officer while standing on his front lawn holding a knife, a federal appeals court ruled Tuesday.

Hung Lam, a Vietnamese immigrant in his mid-30s, survived the shooting but was left paralyzed and must use a wheelchair, said his lawyer, John Burris.

The officer, Dondi West, testified that Lam had first held the knife to his own throat but then began walking backward in her direction, still holding the knife and causing her to fear for her life when she shot him. But the Ninth U.S. Circuit Court of Appeals said the jury was entitled to believe another witness, a retired sheriff’s deputy, who said Lam made stabbing motions only toward himself and posed no threat to West.

“The jury’s verdict is supported by a (first-hand) witness’ testimony,” Judge N. Randy Smith said in the 3-0 ruling.

Lam had been confined in a psychiatric hospital for two days before the January 2014 shooting. His boyfriend drove him home, but Lam refused to enter, said someone else was there and picked up a knife, the court said. Their next-door neighbors called police, and one neighbor, Helen Anderson, the retired deputy, tried to calm Lam down as she spoke to him from 10 to 15 feet away.

Anderson said West arrived with her gun drawn, ordered Lam to drop the knife, and started shooting after Lam instead made stabbing motions toward his stomach. West said she saw Lam pull the knife out of his waistband and walk toward her, sometimes facing her and sometimes with his back turned, and that he was starting to turn in her direction when she fired.

The jury found that West had used unreasonable force and violated Lam’s rights, and awarded damages for economic losses and pain and suffering. The city is responsible for the damage award.

Lam was a former restaurant owner in Vietnam who worked as a cook and had hopes of becoming a dancer, said Burris, his lawyer.

“He was always trying to hurt himself, never trying to hurt anybody else,” Burris said. He said the situation on the front lawn could have been “deescalated,” as Anderson was trying to do, before the officer came in “yelling and screaming.”

The city’s lawyer could not be reached for comment.

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter:@egelko