HASELTON, P.J.

Reversed and remanded.

HASELTON, P.J.

Defendant appeals from a supplemental judgment and second supplemental judgment awarding plaintiff costs and attorney fees pursuant to ORS 20.080(1). The dispositive issue here is one that we expressly reserved in Reed v. Jackson County Citizens League, 183 Or. App. 89, 96 n 8, 50 P.3d 1287 (2002): When a prelitigation offer to pay money is conditioned upon a discharge of the disputed claim, is that offer a "tender" for purposes of ORS 20.080(1)? We answer that question in the affirmative. Consequently, we reverse and remand.

The material facts are undisputed. On December 6, 1999, plaintiff's counsel made a demand on defendant pursuant to ORS 20.080 for payment of $5,500 for damages arising out of an auto accident between plaintiff and defendant. On January 14, 2000, defendant, by way of a letter from her insurance carrier, offered to pay $3,806, in addition to all Personal Injury Protection benefits paid up to that date, to "resolve [plaintiff's] bodily injury claim." Although that letter did not expressly state that payment was contingent upon discharge of the disputed claim, the parties agree that the reference to "resolve" in that letter establishes that the offer of payment was so conditioned.

Plaintiff did not accept defendant's offer. On January 20, 2000, plaintiff filed this action for negligence, seeking to recover unpaid medical expenses of $306, unpaid rental car costs of $380, and noneconomic damages of $4,814 — a total of $5,500 — as well as attorney fees and costs pursuant to ORS 20.080(1). Given the amount in controversy, the matter was subject to mandatory court-annexed arbitration. ORS 36.415(1); UTCR ch 13. Defendant filed an answer that, in part, denied plaintiff's alleged entitlement to costs and fees.

The arbitrator ultimately rendered a decision and award in favor of plaintiff, allowing recovery of $2,750 in noneconomic damages and $222 in unpaid medical bills — a total recovery of $2,972. The arbitrator did not award plaintiff any attorney fees under ORS 20.080. Although the arbitration award and decision did not state any reason for the nonallowance of costs and fees, the parties had, during the course of the arbitration, briefed and argued the question of whether defendant's January 14, 2000 letter evinced or embodied a legally sufficient preclusive "tender" for purposes of ORS 20.080(1).

Plaintiff filed a timely notice of appeal of the arbitrator's award and decision and requested a trial de novo pursuant to ORS 36.425(2). The trial de novo resulted in a jury verdict awarding plaintiff total damages of $2,930 — $42 less than the arbitrator's award — and $876 less than defendant's prelitigation offer of settlement. Following the jury's verdict, defendant petitioned to recover his costs and attorney fees incurred in connection with the trial de novo. Defendant asserted that, because the jury's award on trial de novo was less than the amount of the arbitrator's award, defendant was entitled to costs and fees pursuant to ORS 36.425(4)(a). In the alternative, defendant asserted that he was entitled, at least, to costs and an award of $550 in attorney fees pursuant to ORS 36.425(4)(b) and (5)(b).

Plaintiff opposed that petition and countered with an attorney fee petition of her own. Plaintiff contended, inter alia, as follows: (1) Defendant's prelitigation offer of $3,806 was not a "tender" within the meaning of ORS 20.080(1) because it was not unconditional and, particularly, was conditioned upon a discharge of liability on the underlying claim. (2) Because defendant had made no "tender" for purposes of ORS 20.080(1) — much less one that exceeded plaintiff's recovery in arbitration — plaintiff was entitled to her attorney fees incurred in connection with the arbitration proceedings, and the arbitrator had erred in concluding otherwise. (3) Alternatively, even if plaintiff's prelitigation offer otherwise qualified as a "tender," that "tender" was legally insufficient in that defendant did not ultimately comply with the requirements of ORS 20.180. (4) The sum of plaintiff's damages recovered in the trial de novo plus the circuit court's award of plaintiff's reasonable arbitration-related costs and fees would exceed the amount of the arbitrator's award. (5) Consequently, although the jury's verdict was less than the arbitration award, when the circuit court's award of arbitration-related costs and fees is taken into account, plaintiff actually "improved her position" in the circuit court proceedings. (6) Thus, under ORS 36.425(4)(a), plaintiff was entitled to her reasonable attorney fees and costs incurred not only with respect to arbitration but also in connection with the circuit court proceedings.

After extensive briefing and argument, the trial court agreed with plaintiff that defendant's prelitigation offer was not a preclusive "tender" for purposes of ORS 20.080. In so holding, the court viewed Supreme Court decisions addressing the meaning of "tender" in ORS 742.061, which governs recovery of attorney fees in actions against insurers, as decisive:

"I am persuaded that the use of the phrase, `tendered to the plaintiff' has meaning which is critically distinct from `offer' on the one hand or `pays' on the other. Butler v. United Pacific Ins. Co., 265 Or. 473[, 509 P.2d 1184] (1973), arose under a different scheme governing relations between insurers and insureds, but that scheme is close enough in purpose and effect to those of ORS 20.080 that Butler's reasoning seems unavoidable. At least this much of Butler remains good law and requires that I find the offer by the defendant insufficient as a `tender' under ORS 20.080."

Consequently, the court determined that plaintiff was entitled to her costs and fees in arbitration. Because the sum of those costs and fees plus the jury's damages award exceeded the arbitrator's award, the court clearly determined that plaintiff was also entitled to fees reasonably incurred in the circuit court proceedings. Ultimately, in a supplemental judgment and second supplemental judgment, the court awarded plaintiff costs and attorney fees totaling $35,787. The court concurrently, and necessarily, denied defendant's petition for costs and fees incurred in the circuit court proceedings.

On appeal, defendant assigns error both to the trial court's award of costs and fees to plaintiff and to the court's denial of attorney fees to defendant. Defendant advances two overarching arguments. First, defendant asserts that his prelitigation offer of payment was a preclusive "tender" for purposes of ORS 20.080(1), notwithstanding that that offer was conditioned upon discharge of liability on the disputed claim. Consequently, because plaintiff's recovery of damages in arbitration and on trial de novo did not exceed the amount of that "tender," plaintiff was barred from recovering her costs and fees under ORS 20.080(1). Second, defendant contends that, even if his prelitigation offer of payment was not a legally sufficient "tender," plaintiff did not "improve" her "position" for purposes of ORS 36.425(4)(a) because the jury's award of damages was less than the arbitrator's award. Consequently, even if plaintiff were entitled to recover her arbitration-related costs and fees, she could not recover her post-arbitration costs and fees — indeed, and to the contrary, under ORS 36.425(4) and (5)(b), defendant was entitled to recover his fees incurred in the trial de novo.

As explained below, we agree with defendant's first argument and conclude that an offer to pay that is conditioned solely upon full discharge of the disputed claim is a legally sufficient preclusive "tender" for purposes of ORS 20.080(1). Consequently, the trial court erred both in awarding plaintiff her costs and fees incurred in arbitration and in the circuit court proceedings and in denying defendant recovery under ORS 36.425(5)(b) for his reasonable attorney fees, not to exceed $550, incurred in the circuit court proceedings.

ORS 20.080(1) provides:

"In any action for damages for an injury or wrong to the person or property, or both, of another where the amount pleaded is $5,500 or less, and the plaintiff prevails in the action, there shall be taxed and allowed to the plaintiff, at trial and on appeal, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the action, if the court finds that written demand for the payment of such claim was made on the defendant not less than 10 days before the commencement of the action or the filing of a formal complaint under ORS 46.465, or not more than 10 days after the transfer of the action under ORS 46.461. However, no attorney fees shall be allowed to the plaintiff if the court finds that the defendant tendered to the plaintiff, prior to the commencement of the action or the filing of a formal complaint under ORS 46.465, or not more than 10 days after the transfer of the action under ORS 46.461, an amount not less than the damages awarded to the plaintiff."

That statute does not define "tender." However, in Reed, we considered the general question of whether a "tender" for purposes of ORS 20.080(1) could ever be subject to conditions. After canvassing the common law at the time that ORS 20.080 was enacted, 183 Or. App. at 95-96, we concluded that a conditional offer of payment could be a "tender" for purposes of ORS 20.080(1) so long as "the condition was one upon which the tendering party had a `right to insist' or, conversely, the recipient of the tender had `no right to refuse.'" Id. at 96. Applying that standard, we concluded that, because the offer to settle in Reed was conditioned upon the plaintiffs' execution of a confidentiality agreement — a condition "upon which defendant had no legal entitlement to insist" — that offer was not a preclusive tender. Id.

Because we determined that the defendant's insistence on a confidentiality agreement in Reed was an impermissible condition, we did not need to decide whether an additional condition in Reed that the plaintiffs execute "a full release of [their] claims against [the defendant]" — would, by itself, have rendered the offer a "non-tender." Rather, we expressly reserved that question. 183 Or. App. at 96 n 8 ("[W]e need not, and do not, determine whether defendant's insistence on a full release was a permissible condition."). We now address that question, albeit in an arguably narrower form.

Is requiring a discharge of the disputed claim a permissible condition of a "tender" under ORS 20.080(1)? In answering that question, and in the absence of explicit textual guidance, we turn to the statute's fundamental purpose:

"The purpose of the [statutorily required] notice is to give the defendant an opportunity to settle the case. * * *

"The purpose of the statute is to coerce tortfeasors and their insurance companies into settling small, legitimate claims where it is impracticable for the offended party to employ an attorney to prosecute his claim."

Landers v. E. Texas Motor Frt. Lines, 266 Or. 473, 475-77, 513 P.2d 1151 (1973); see also Heen v. Kaufman, 258 Or. 6, 8, 480 P.2d 701 (1971) ("The obvious purpose of the statute is to encourage the settlement of damage claims where the amount involved is not large."); Johnson v. White, 249 Or. 461, 462-63, 464, 439 P.2d 8 (1968) (Statute's purpose is "to prevent insurance companies and others having liability for torts from refusing to settle and pay just claims therefor. * * * The statute is in the nature of a warning to plaintiffs not to inflate small claims beyond just amounts, in order that the tort-feasor may in good faith make settlement of such claims without resorting to the courts."); Troute v. Aero Mayflower Transit Co., 78 Or. App. 564, 568, 718 P.2d 745 (1986) (statute's purpose is "the prompt settlement of small but well-founded claims").

Consistently with that fundamental purpose of encouraging settlement, we and our Supreme Court have implicitly — and, on occasion, explicitly — equated "tender" for purposes of ORS 20.080 with "settlement offer." For example, in Landers, 266 Or. at 476, the court listed four requirements to recovering fees under ORS 20.080:

"The statute requires only that:

"1) The amount pleaded be $1,000 [now $5,500] or less;

"2) The plaintiff prevails in the action;

"3) A written demand for `such claim' be made more than ten days prior to the commencement of the action; and

"4) Plaintiff's judgment be greater than any offer of settlement made by defendant prior to the commencement of the action."

(Emphasis added.) Most recently in Ayres v. Bae, 173 Or. App. 53, 57, 20 P.3d 862 (2001), we held that a defendant's prelitigation "settlement offer" in an amount exceeding the plaintiff's ultimate recovery "squarely trigger[ed] the disqualification provided in the last sentence of ORS 20.080[(1)] (1997)."

Obviously, and as we held in Reed, not every settlement offer constitutes a "tender" for purposes of ORS 20.080(1). To the extent that payment is contingent upon the plaintiff's satisfaction of a condition upon which the defendant has no legal entitlement to insist, there is no preclusive "tender." The inquiry thus narrows to whether, given the settlement-promoting purpose of ORS 20.080(1), a defendant is entitled to insist on discharge of the underlying disputed claim as a condition of payment.

Defendant was entitled to insist on discharge as a condition of his payment. Payment without discharge is not "settlement" — and requiring defendants to make such gratuitous, unconditional payments may well subvert, rather than promote, the operation of ORS 20.080(1). In that regard, we agree with the observations of amicus National Association of Independent Insurers:

"A settlement of a case requires that parties reach an agreement as to its final resolution. The trial court's determination that a tender under ORS 20.080 cannot be conditioned on the plaintiff's releasing the defendant defeats the purpose of the statute and is inconsistent with the notion that the statute is intended to encourage settlement of cases. If there is no release, then the case will not settle. [Plaintiff's] position that a tender under ORS 20.080 means that a defendant must unconditionally pay an amount of money without obtaining a release in effect requires a defendant to make a gift in order for the statute to apply. There is little incentive for defendant * * * to make such a payment when [plaintiff] can keep the money and still proceed with her suit."

Plaintiff argues, nevertheless — and the trial court felt compelled to agree — that cases construing "tender" under ORS 742.061, particularly including Butler, dictate a different result. We disagree.

In Butler, the plaintiff recovered a judgment for fraud, including both compensatory and punitive damages, against an auto dealer. The plaintiff then made a demand on the defendant, who was the dealer's surety, for the full amount of the judgment. The defendant surety responded by tendering the full amount of the compensatory damages but conditioned that tender on the plaintiff giving "full satisfaction of plaintiff's judgment against the dealer for both general and punitive damages." Butler, 265 Or. at 479. The plaintiff refused the tender and, in the ensuing trial, obtained a judgment for the amount of the compensatory damages only. The trial court denied the plaintiff's petition for attorney fees under ORS 743.114 (1971), the direct antecedent of the present ORS 742.061(1), because the plaintiff's recovery did not exceed the defendant's "tender."

The Supreme Court reversed:

"Defendant's offer was not a tender. To be a tender an offer to pay a certain sum must be unconditional.

"`To make it effectual, a tender must not be fettered with a condition, imposed by the one making it, that a discharge shall be executed releasing him from all demands. He must rely in that respect only upon the force the law gives to the tender.' Purdin v. Hancock, 67 Or. 164, 166, 135 P. 515 (1913). * * *

"Plaintiff is entitled to attorney fees in the trial court and this court because no sufficient tender was made."

Butler, 265 Or. at 479 (footnote and citations omitted).

Plaintiff also relies on Dockins v. State Farm Ins. Co., 329 Or. 20, 985 P.2d 796 (1999), which also addressed the scope and application of "tender" for purposes of ORS 742.061(1). In Dockins, the principal issue as framed by this court, 155 Or. App. 377, 963 P.2d 119 (1998), and as reversed by the Supreme Court, 329 Or. at 30-33, pertained to the timing of the defendant's tender viz., whether, notwithstanding that the defendant's settlement offer was made more than ten months after the filing and service of the plaintiff's complaint, that offer constituted a legally sufficient "tender" under ORS 742.061. The court concluded that the offer was not a preclusive "tender" because it was not timely:

"In the context of the present case, in which the filing of the insured's complaint is deemed to be the `proof of loss,' that means that State Farm had six months from the date of service of the complaint in which to make a tender, i.e., an unconditional offer to pay money. As noted, it did not meet that deadline."

329 Or. at 33 (emphasis added; footnote omitted).

Plaintiff here seizes on the emphasized language as supporting her view that a tender must be unconditional. However, of at least equal contextual significance is what the court did not purport to decide. Following the statement quoted immediately above, the court inserted the following footnote:

"Because State Farm's offer was not timely, we need not address the question whether it was unconditional, and we express no opinion on that question."

329 Or. at 33 n 5.

The full significance of that footnote becomes clear by reference to the parties' Supreme Court briefs in Dockins. There, the plaintiff expressly argued that, under Butler, the defendant's offer to settle was not a "tender" because it was conditioned on a release of liability and entry of judgment on all disputed claims. See 7124 Oregon Briefs, Petition for Review at 14-15. The defendant disputed that view and asserted that Butler was materially distinguishable. Thus, the court was presented with the opportunity to state — or, in the plaintiff's view, to reiterate — that a "tender" under ORS 742.061(1) can never be conditioned on a discharge of the disputed claim. The court did not do so. Instead, it observed broadly that an offer to pay must be "unconditional" — and then reserved the question of whether an offer contingent upon discharge was "unconditional."

We do not pretend that it is easy to reconcile the decisional law under ORS 742.061 and its predecessors, and particularly Butler, with our construction of "tender" for purposes of ORS 20.080(1). The trial court wrestled with the issue thoughtfully and reached a contrary conclusion. Nevertheless, and notwithstanding Butler, we adhere to our view announced above for several reasons.

First, as noted, our understanding of "tender" comports with previous Supreme Court characterizations of "tender" under ORS 20.080(1), Landers, 266 Or. at 476, and promotes, rather than subverts, the statute's fundamental settlement-enhancing purpose.

Second, in other statutory contexts, the Supreme Court has recognized that "tender" is properly construed in the context of the statute's underlying purpose. See, e.g., State Highway Com. v. Efem Whse. Co., 207 Or. 237, 242, 245, 295 P.2d 1101 (1956) (in condemnation process under ORS 366.380(7) (1955), an offer of payment conditioned upon the landowner's giving a warranty deed was a legally sufficient preclusive "tender" because the state was legally entitled to insist on that condition).

Third, the legislative purposes underlying ORS 20.080(1) and ORS 742.061(1) are not congruent. The purposes of ORS 20.080(1) include "giv[ing] a defendant an opportunity to settle the case," Landers, 266 Or. at 475, and providing a mechanism by which "the tortfeasor may in good faith make settlement of such claims without resorting to the court," Johnson, 249 Or. at 464. ORS 742.061(1) has no such defendant-protective purpose. Rather, as the court explained in Dockins:

"[T]he statute seeks to protect insureds from the necessity of litigating their valid claims. It has no converse purpose of protecting insurers from litigation."

329 Or. at 29 (first emphasis in original; second emphasis added). Thus, "tender" for purposes of the two statutes can plausibly, and properly, be construed differently.

Finally, with respect, the crucial language in Butler is conclusory and fails to acknowledge the all-important distinction between conditions upon which the tendering party is "entitled to insist" and those for which there is no such entitlement. That distinction is acknowledged in other Supreme Court decisions, see Reed, 183 Or. App. at 94-95 (citing cases), and, particularly, in Efem Whse. Co., 207 Or. at 245. We do not suggest that we can ignore Butler. Rather, given that Butler construed a different statute with different purposes — and, then, did so in a conclusory fashion that does not necessarily comport with other antecedent authority — we decline to treat it as dispositive.

In sum, defendant's prelitigation offer of payment was a legally sufficient "tender" for purpose of ORS 20.080(1). That tender exceeded plaintiff's recovery in arbitration, precluding any recovery of arbitration-related fees. Moreover, plaintiff's recovery on trial de novo was less than defendant's tender and less than the arbitration award. Consequently, the trial court erred in awarding plaintiff her costs and attorney fees under ORS 20.080 and ORS 36.425(4)(a). Finally, because plaintiff's recovery on trial de novo did not exceed the arbitration award, defendant is entitled to reasonable attorney fees of up to $550 relating to the trial de novo.

Reversed and remanded.