Hi Jill-Connie Lorentsen,
The problem is related to docking layout engine in the current edition of DockingManager. Dock layout uses flat split containers (left/right panel) logic and nesting and resizing operation is based on it.
We are currently implementing a new RadDock component with a new layout engine and this problem will be solved.
Sorry for the inconvenience and thanks for the feedback.
the Telerik team