I am not a fan of triggers and dynamic sql, however, what I am working with requires both.

    CREATE TRIGGER [dbo].[GenerateDynamicFormItemViews] ON [dbo].[tblFormItems] AFTER INSERT, UPDATE
    AS
    BEGIN	
    	SET NOCOUNT ON;
    	DECLARE @DatabaseName NVARCHAR(100)
    	DECLARE @FormItemID INT
    
    	DECLARE db_cursor CURSOR FOR
    	SELECT SourceID,FormItemID from Inserted
    
    	OPEN db_cursor  
    	FETCH NEXT FROM db_cursor INTO @DatabaseName, @FormItemID
    
    	WHILE @@FETCH_STATUS = 0  
    	BEGIN  
    
    		BEGIN TRY    
    			EXEC spAddEditFormItemView @FormItemID, @DatabaseName WITH RESULT SETS NONE
    		END TRY    
    		BEGIN CATCH 
    			INSERT INTO AdminErrorLog(SourceID, ErrorNumber, ErrorState, ErrorSeverity, ErrorProcedure, ErrorLine, ErrorMessage, ErrorDateTime) 
    			SELECT @DatabaseName, ERROR_NUMBER(), ERROR_STATE(), ERROR_SEVERITY(), ERROR_PROCEDURE(), ERROR_LINE(), ERROR_MESSAGE(), GETDATE()
    		END CATCH     
    
        	FETCH NEXT FROM db_cursor INTO @DatabaseName, @FormItemID
    	END
    
    	CLOSE db_cursor  
    	DEALLOCATE db_cursor
    END 

Here is what is happening. 
1. An AWS DMS Replication Task is replicating data in batches of 10,000. The implementation of the replication is a black box but there appears to be nested transactions on the connections.
2. EXEC spAddEditFormItemView calls a stored procedure that exec's dynamic sql and errors out on one 
   record.
3. The CATCH block is never executed
4. The error never makes it to AdminErrorLog.
5. The AWS Batch errors our and is never committed and the whole task fails.
6. In extended events the following sql error is caught. This is the error that failed the task. I read about conditions where commands can neither be in a commit or rollback state but truly did not fully understand that concept.

> message:	 The current transaction cannot be committed and cannot
> support operations that write to the log file. Roll back the
> transaction.
> 
> severity:	 16
> 
> sql_text: (@P1 int,@P2 varchar(250),@P3 int,@P4 int,@P5 int,@P6
> int,@P7 varchar(500),@P8 varchar(1000),@P9 bit,@P10 varchar(50),@P11
> varchar(50),@P12 varchar(50),@P13 varchar(50),@P14 int,@P15
> varchar(5000),@P16 bit,@P17 int,@P18 datetime2,@P19 int,@P20
> datetime2,@P21 varchar(200),@P22 int,@P23 varchar(50),@P24
> varchar(50),@P25 varchar(500),@P26 int,@P27 int,@P28 varchar(200),@P29
> varchar(2000),@P30 int,@P31 int,@P32 int,@P33 varchar(4000),@P34
> varchar(200),@P35 bit,@P36 varchar(300),@P37 bit,@P38 varchar(50),@P39
> varchar(50),@P40 varchar(100))INSERT INTO
> [dbo].[tblFormItems]([FormItemID],[FormItemLabel],[FormItemTypeID],[DataTypeID],[FormItemMaximumLength],[DropdownID],[FormItemDropdownSource],[FormItemJavascript],[Existing],[SourceType],[Sourcetable],[SourceColumn],[SourceJoinColumn],[ObjectTypeID],[ViewSQL],[FormItemActive],[LastModifiedBy],[LastModifiedDt],[CreatedBy],[CreatedDate],[FormItemFriendlyName],[WidgetID],[FormItemTotalWidth],[FormItemTotalHeight],[DefaultValue],[FormItemMaxValue],[FormItemMinValue],[FormItemDescription],[HelpText],[MasterGroupID],[ClauseTypeID],[NumDecimals],[FormItemParameters],[FormItemSystemName],[DropdownBlankOption],[FormItemConstant],[UseDefaultValue],[DefaultValueType],[SourceID],[RowID])
> values
> (@P1,@P2,@P3,@P4,@P5,@P6,@P7,@P8,@P9,@P10,@P11,@P12,@P13,@P14,@P15,@P16,@P17,@P18,@P19,@P20,@P21,@P22,@P23,@P24,@P25,@P26,@P27,@P28,@P29,@P30,@P31,@P32,@P33,@P34,@P35,@P36,@P37,@P38,@P39,@P40)

Can anyone explain why the catch block is not being caught and why the client application is getting, what my guess is, a sql exception and rolling everything back. My guess is that dynamic sql exceptions are being handled differently and the implicit trigger transaction is rolling back instead of catching the error. Also, does anyone know of a way to avoid the exception from being propagated?

I bet the safest solution would be modify the trigger to cram the sql commands into a table and then have a sql agent job look for commands to run every minute or so.   

EDIT - Adding Dynamic SQL:

I am just porting this to a cloud database. Please understand that this was not written by me and has been around for a long time now.

    CREATE PROCEDURE [dbo].[spAddEditFormItemView] ( 
    	@FormItemID int,
    	@Schema nvarchar(100)
    )
    AS 
        DECLARE @Existing bit
          , @FormItemFriendlyName varchar(200)
          , @FormItemTypeID int
          , @ObjectType varchar(100)
          , @ObjectTypeID int
          , @DataTypeID int
          , @FormItemSystemName varchar(200)
          , @SystemName varchar(200)
          , @SourceType varchar(50)
          , @TableName varchar(100)
          , @DataColumn varchar(50)
          , @DropdownSQL varchar(2000)
          , @ObjectTableName varchar(100)
          , @ObjectKeyField varchar(100)
          , @FieldValue varchar(50)
    
        SELECT  @Existing = isnull(Existing, 0)
              , @FormItemFriendlyName = FormItemFriendlyName
              , @FormItemSystemName = FormItemSystemName
              , @FormItemTypeID = FormItemTypeID
              , @DataTypeID = DataTypeID
              , @ObjectTypeID = ObjectTypeID
              , @FormItemTypeID = FormItemTypeID
              , @SourceType = SourceType
              , @DropdownSQL = FormItemDropdownSource
        FROM    tblFormItems
        WHERE   FormItemID = @FormItemID
    
        IF @ObjectTypeID = 4 
            BEGIN
                SET @ObjectTableName = 'tblLeaseAbstract'
                SET @ObjectKeyField = 'LeaseAbstractID'
            END
        ELSE 
            BEGIN	
                SELECT  @ObjectTableName = TableName
                      , @ObjectKeyField = KeyField
                FROM    tblObjectType
                WHERE   ObjectTypeID = @ObjectTypeID
            END
    	
        SELECT  @DataColumn = Case when @DataTypeID IN ( 6, 5, 206 )
                                   then 'FormDataFloat'
                                   when @DataTypeID = 7 then 'FormDataDate'
                                   when @DataTypeID = 200 then 'FormDataText'
                                   when @DataTypeID = 201
                                   then 'FormDataVarChar400'
                                   when @DataTypeID = 202 then 'FormDataVarChar50'
                                   when @DataTypeID IN ( 2, 3 ) then 'FormDataInt'
                                   else 'FormDataText'
                              end	
    
        SELECT  @TableName = DynamicFormDataTable
        FROM    tblObjectType
        WHERE   ObjectTypeID = @ObjectTypeID
    --create view if it is not there...must know objectType and formItemType first
        if (@Existing = 0
            and @FormItemFriendlyName <> ''
            and @FormItemTypeID <> 8 --and @FormItemTypeID <> 9 --Calculated=9
            ) 
            /*Modified 2/17/2011 to create form item views for existing listbox form items*/
            OR (@FormItemTypeID =1 AND @SourceType = 'sql')
            BEGIN
                select  @ObjectType = ObjectType
                from    tblObjectType
                where   objectTypeID = @ObjectTypeID
                select  @SystemName = REPLACE(@FormItemSystemName, ' ', '')
                select  @FormItemSystemName = 'vwFormItem_'
                        + cast(@ObjectTypeID as varchar) + '_'
                        + REPLACE(@FormItemSystemName, ' ', '')		
    
                if not ( exists ( select    *
                                  from      dbo.sysobjects
                                  where     id = object_id(@FormItemSystemName)
                                            and OBJECTPROPERTY(id, 'IsView') = 1 ) ) 
                    BEGIN
                        IF ( ( @FormItemTypeID = 1
                               OR @FormItemTypeID = 5
                             )
                             and @SourceType = 'tbldropdown'
                           ) 
                            BEGIN
                                EXEC
                                    ( 'CREATE VIEW '+@Schema+'.' + @FormItemSystemName + '
    			AS
    			SELECT ObjectID
    				, tblDropdownValue.Dropdownvalue as ['
                                      + @FormItemFriendlyName + ']
    				, tblDropdownValue.DropdownDisplay as ['
                                      + @FormItemFriendlyName + 'Display]
    			FROM tblDropdownValue		
    				inner join  ' + @TableName
                                      + '  fd on fd.DropdownValueID = tblDropdownValue.DropdownValueID
    			WHERE FormItemID = ' + @FormItemID
                                    )
                            END
                        ELSE 
                            IF ( @FormItemTypeID = 1
                                 AND @SourceType = 'sql'
                                 AND ( @DropdownSQL LIKE 'SELECT DropdownValueID%'
                                       OR @DropdownSQL LIKE 'SELECT tblDropdownValue.DropdownValueID%'
                                     )
                               ) 
                                BEGIN
                                    EXEC
                                        ( 'CREATE VIEW '+@Schema+'.' + @FormItemSystemName
                                          + '
    			AS
    			SELECT ObjectID
    				, tblDropdownValue.DropdownDisplay AS ['
                                          + @FormItemFriendlyName + ']
    				, tblDropdownValue.DropdownValue AS ['
                                          + @FormItemFriendlyName + 'Value]
    			FROM ' + @TableName
                                          + ' LEFT JOIN tblDropdownValue ON tblDropdownValue.DropdownValueID = '
                                          + @TableName + '.' + @DataColumn
                                          + ' WHERE FormItemID = ' + @FormItemID
                                        )
                                END	
                            ELSE 
                                IF ( @FormItemTypeID = 18 ) 
                                    BEGIN
                                        EXEC
                                            ( 'CREATE VIEW '+@Schema+'.'
                                              + @FormItemSystemName + ' 
    			AS
    			SELECT 
    				ObjectID
    				, dbo.udfGetMultiSelectAsTextValues(' + @DataColumn
                                              + ')as [' + @SystemName + '] 
    				, ' + @DataColumn + ' as [' + @SystemName + 'Values] 
    			FROM ' + @TableName + '  
    			WHERE FormItemID = ' + @FormItemID
                                            )
                                    END
                                ELSE 
                                    IF ( @FormItemTypeID = 10 ) 
                                        BEGIN
                                            EXEC
                                                ( 'CREATE VIEW '+@Schema+'.'
                                                  + @FormItemSystemName + '
    			as
    			SELECT ObjectID,
    				CONVERT(varchar(8000),Clause) as [' + @SystemName
                                                  + '],
    				SourceDocument as [' + @FormItemFriendlyName + ' Doc],
    				SourceSection as [' + @FormItemFriendlyName + ' Sec],
    				SourcePage as [' + @FormItemFriendlyName + ' Page]
    			FROM tblClauses
    			WHERE FormItemID = ' + @FormItemID
                                                )
                                        END
                                    ELSE 
                                        IF ( @FormItemTypeID = 9 ) 
                                            BEGIN
                                                IF @DataColumn IN ( 'FormDataText', 'FormDataVarChar50', 'FormDataVarChar400' ) 
                                                    BEGIN
                                                        SET @FieldValue = '''Calculation - Update Form Item View'''
                                                    END
                                                ELSE 
                                                    IF @DataColumn IN (
                                                        'FormDataFloat',
                                                        'FormDataInt' ) 
                                                        BEGIN
                                                            SET @FieldValue = '99999999'
                                                        END
                                                    ELSE 
                                                        BEGIN
                                                            SET @FieldValue = '''1/1/1900'''
                                                        END
    
                                                EXEC
                                                    ( 'CREATE VIEW '+@Schema+'.'
                                                      + @FormItemSystemName + ' 
    			AS 
    			SELECT ' + @ObjectKeyField + ' AS ObjectID ' + ', '
                                                      + @FieldValue + ' AS ['
                                                      + @SystemName + ']
    			FROM ' + @ObjectTableName
                                                    )
                                            END
                                        ELSE 
                                            BEGIN
                                                EXEC
                                                    ( 'CREATE VIEW '+@Schema+'.'
                                                      + @FormItemSystemName + ' 
    			AS 
    			SELECT 
    				ObjectID
    				, ' + @DataColumn + ' as [' + @SystemName + '] 
    			FROM ' + @TableName + '  
    			WHERE FormItemID = ' + @FormItemID
                                                    )
                                            END
    
    			
    						
                    END
            END