I have done a tremendous amount of research on this issue and it boils down to a system out of memory exception. Here is a page I found which adequately explains issues programmers will encounter when resizing images on their server.
I ended up using ImageResizer as it tends to throw the correct Out of Memory exception. Basically, if you are resizing images in a 32-bit web app environment, the .NET service can only allocate so much memory approximately 2g is the max. it is easy to run out of memory if you are resizing images of a high resolution and dimension. In my case I was trying to resize a 240 dpi 5000 x 3000 image. Our server simply could not handle it. The telerik ImageEditor should in my opinion throw an error more appropriate with the System.Out of memory exception.
I hope this helps future people.