Error when uploading image file to grid image

When attempting to upload an image file to the grid image when the same file is already used in the topic summary you get the following error:

Grid Format Image Exception:...
Can not create file "26494/course/section/3738///03preventing-bullying.jpg"

line 1265 of /course/format/grid/lib.php: call to debugging()
line 110 of /course/format/grid/editimage.php: call to format_grid->create_section_image()

Moodle version 2.5.3 & plug-in version 2.5.5
upgraded to Moodle version 2.6.2 & plug-in version 2.6.1.5 and issue still exists.

to replicate:

Create a course using grid format.
Edit the topic summary for section 1 and insert an image into the Summary.
In the grid for section 1 choose the "Change image" link and upload the same image you used in the section 1 summary and save. You should get the error that the file can not be created.

If you change the name of the file before uploading to the grid it will save, but this was not a needed step in earlier versions.