diff --git a/src/sql/parts/objectExplorer/viewlet/serverTreeDataSource.ts b/src/sql/parts/objectExplorer/viewlet/serverTreeDataSource.ts
index 495c20c576..8392186449 100644
--- a/src/sql/parts/objectExplorer/viewlet/serverTreeDataSource.ts
+++ b/src/sql/parts/objectExplorer/viewlet/serverTreeDataSource.ts
@@ -7,7 +7,7 @@
 import { ConnectionProfileGroup } from 'sql/parts/connection/common/connectionProfileGroup';
 import { ConnectionProfile } from 'sql/parts/connection/common/connectionProfile';
 import { ITree, IDataSource } from 'vs/base/parts/tree/browser/tree';
-import { TreeNode } from 'sql/parts/objectExplorer/common/treeNode';
+import { TreeNode, TreeItemCollapsibleState } from 'sql/parts/objectExplorer/common/treeNode';
 import { IObjectExplorerService } from 'sql/parts/objectExplorer/common/objectExplorerService';
 import { TPromise } from 'vs/base/common/winjs.base';
 import { TreeUpdateUtils } from 'sql/parts/objectExplorer/viewlet/treeUpdateUtils';
@@ -72,9 +72,13 @@ export class ServerTreeDataSource implements IDataSource {
 				if (node.children) {
 					resolve(node.children);
 				} else {
+					// These similar changes are probably needed for a ConnectionProfile group element as well. However, we do not have a repro of a failiure in that scenario so they will be tackled in a future checkin.
+					// It has been tested for connecting to the server in profile itself and things work fine there.
 					this._objectExplorerService.resolveTreeNodeChildren(node.getSession(), node).then(() => {
 						resolve(node.children);
 					}, expandError => {
+						node.setExpandedState(TreeItemCollapsibleState.Collapsed);
+						node.errorStateMessage = expandError;
 						this.showError(expandError);
 						resolve([]);
 					});
diff --git a/src/vs/base/parts/tree/browser/treeModel.ts b/src/vs/base/parts/tree/browser/treeModel.ts
index 2aa115ed62..3d5600b732 100644
--- a/src/vs/base/parts/tree/browser/treeModel.ts
+++ b/src/vs/base/parts/tree/browser/treeModel.ts
@@ -12,6 +12,8 @@ import { INavigator } from 'vs/base/common/iterator';
 import * as WinJS from 'vs/base/common/winjs.base';
 import * as _ from './tree';
 import { Event, Emitter, once, EventMultiplexer, Relay } from 'vs/base/common/event';
+// {{SQL CARBON EDIT}}
+import { TreeNode } from 'sql/parts/objectExplorer/common/treeNode';
 
 interface IMap<T> { [id: string]: T; }
 interface IItemMap extends IMap<Item> { }
@@ -359,6 +361,12 @@ export class Item {
 			return WinJS.TPromise.as(false);
 		}
 
+		// {{SQL CARBON EDIT}} - Original code does not handle the need to refresh children in case previous refreshchildren errored out.
+		//						 resetting the errorStateMessage before we refresh children so we can track if there has been error in processing.
+		if (this.element instanceof TreeNode) {
+			this.element.errorStateMessage = null;
+		}
+
 		var result = this.lock.run(this, () => {
 			var eventData: IItemExpandEvent = { item: this };
 			var result: WinJS.Promise;
@@ -373,7 +381,14 @@ export class Item {
 			return result.then(() => {
 				this._setExpanded(true);
 				this._onDidExpand.fire(eventData);
-				return true;
+				// {{SQL CARBON EDIT}} - Original code does not handle the need to refresh children in case previous refreshchildren errored out.
+				if ((this.element instanceof TreeNode) && (this.element.errorStateMessage)) {
+					this.needsChildrenRefresh = true;
+					return false;
+				} // We may need special handling for other types of this.element apart from TreeNode as well.
+				else {
+					return true;
+				}
 			});
 		});