You raise two issues here. First, not all statements in a letter that includes an offer of settlement are excluded at trial. The reason settlement offers are excluded is to prevent the judge or jury from drawing the inference that the offer to settle is somehow an admission of liability. If used for that purpose, then it is not allowed. However, an admission that the underlying legal instrument on which the claim is based is "invalid" may very well be admissible, notwithstanding that it was contained in a letter that also contained a settlement offer. Check with a lawyer in your jurisdiction regarding the evidence rules applicable in your state. The second issue has to do with the prior case in county court that was dismissed. If it was a claim for the same debt, then the dismissal could be "res judicata" to the second suit in superior court. "Res judicata" is a Latin term, which when used in the law stands for the legal doctrine that, once a case has been filed and brought to a legal conclusion in one court, then that decision stands as a bar to all subsequent suits between the same parties on the same subject matter as the previous suit. Res judicata may be limited to cases where the subject matter was fully litigated--it depends. Or, if the county court action was only a suit for judgment of possession of the leased premises, and not for the breach of contract portion seeking monetary damages for failure to pay rent, then the second suit in superior court seeking those damages may not be barred because the subject matter of the two causes of action--basically, the relief sought--are separate and distinct and the bar does not arise. That is often the case in landlord-tenant matters, where court dockets are divided between suits for eviction/possession, and suits for money damages. Again, you should seek the counsel of a local lawyer in your county or state on this issue.
ER 408 addresses the admissibility of COMPROMISE AND OFFERS TO COMPROMISE:
" In a civil case, evidence of (1) furnishing or offering or promising to
furnish, or (2) accepting or offering or promising to accept a valuable
consideration in compromising or attempting to compromise a claim which was
disputed as to either validity or amount, is not admissible to prove liability
for or invalidity of the claim or its amount. Evidence of conduct or statements
made in compromise negotiations is likewise not admissible. This rule does not
require exclusion of any evidence otherwise discoverable merely because it is
presented in the course of compromise negotiations. This rule also does not
require exclusion when the evidence is offered for another purpose, such as
proving bias or prejudice of a witness, negating a contention of undue delay,
or proving an effort to obstruct a criminal investigation or prosecution."
Landlord/tenant cases have to be in Superior Court anyway.
A dismissal ends a case when it is "with prejudice". If the dismissal is "without prejudice", it may be re-filed.