The solution is go to Top Level Site then Site Settings. Under Site Collection Administration section click Recycle Bin. This is the site collection recycle bin. Then on the left side (SharePoint 2010) choose Deleted from end user Recycle Bin.
Find the list and delete it. You cannot restore it because it will show that a list with the same name is already existing. After deleting refresh the All Site Content and the broken list will be gone.
NOTE: I also discovered that this will also cause error on site's Content and Structure function(under Site Settings-> Site Administration). After removing the broken list, the Content and Structure will work again.