I had encountered this error when I tried to run my application using the Azure Emulator after I created a Windows Identity Foundation Startup Task for my Azure deployment. I needed to change the taskType of the Startup Task from simple to background
ServiceDefinition.csdef
<Startup>
<Task commandLine="Startup\IdentityGac.cmd" executionContext="elevated" taskType="background"></Task>
</Startup>
Based on your question, I'm not sure if this applies to your project, but I figured it would at least be worth mentioning.