This is caused by when the API returns an unexpected condition to the integration.
It is best practice to examine the HTTP response code for non-200 responses and including some logic to deal with that situation.
Additionally it is best practice to examine the Error object of the JSON response even if a 200 HTTP response is received.
A Rally WSAPI JSON response will always include an Error object as highlighted below and if the API encounters a problem with fulfilling the request, it will populate that object with an error
"Could not read: Could not read Defect 2037775838845 to update."
Keywords: Agile Central Webservices WS-API WSAPI