Large Language Models (LLMs) with API-calling capabilities enabled building effective Language Agents (LA), while also revolutionizing the conventional task-oriented dialogue (TOD) paradigm. However, current approaches face a critical dilemma: TOD systems are often trained on a limited set of target APIs, requiring new data to maintain their quality when interfacing with new services, while LAs are not trained to maintain user intent over multi-turn conversations. Because both robust multi-turn management and advanced function calling are crucial for effective conversational agents, we evaluate these skills on three popular benchmarks: MultiWOZ 2.4 (TOD), BFCL V3 (LA), and API-Bank (LA)—and our analyses reveal that specialized approaches excel in one domain but underperform in the other. To bridge this chasm, we introduce **CoALM** (**C**onversational **A**gentic **L**anguage **M**odel), a unified approach that integrates both conversational and agentic capabilities. We created **CoALM-IT**, a carefully constructed multi-task dataset that interleave multi-turn ReAct reasoning with complex API usage. Using CoALM-IT, we train three models **CoALM 8B**, **CoALM 70B**, and **CoALM 405B**, which outperform top domain-specific models, including GPT-4o, across all three benchmarks. This demonstrates the feasibility of a single model approach for both TOD and LA, setting a new standard for conversational agents.

Task-oriented dialogue (TOD) systems are experiencing a revolution driven by Large Language Models (LLMs), yet the evaluation methodologies for these systems remain insufficient for their growing sophistication. While traditional automatic metrics effectively assessed earlier modular systems, they focus solely on the dialogue level and cannot detect critical intermediate errors that can arise during user-agent interactions. In this paper, we introduce **TD-EVAL** (**T**urn and **D**ialogue-level **Eval**uation), a two-step evaluation framework that unifies fine-grained turn-level analysis with holistic dialogue-level comparisons. At turn-level, we assess each response along three TOD-specific dimensions: *conversation cohesion*, *backend knowledge consistency*, and *policy compliance*. Meanwhile, we design **TOD Agent Arena** that uses pairwise comparisons to provide a measure of dialogue-level quality. Through experiments on MultiWOZ 2.4 and Tau-Bench, we demonstrate that TD-EVAL effectively identifies the conversational errors that conventional metrics miss. Furthermore, TD-EVAL exhibits better alignment with human judgments than traditional and LLM-based metrics. These findings demonstrate that TD-EVAL introduces a new paradigm for TOD system evaluation, efficiently assessing both turn and system levels with an easily reproducible framework for future research.