I'm still working out the details of this. This is a extremely linear-RPG/Point-and-Click Adventure kind of like The Walking Dead games.
Yes, there will be a battle system in the game. I'm playing around with different battle systems to see what feels right for this game. There will be no random battle encounters. I feel that most people, I included, don't like random battle encounters.
In the last Act in the game, the heroes go into Town Hall which will be Dungeon like.