I got the same error in 1.10.2. In my case, I wanted to make clicking on the background overlay hide the currently visible dialog, regardless of which element it was based upon. Therefore I had this:
$('body').on("click", ".ui-widget-overlay", function () {
$(".ui-dialog").dialog('destroy');
});
This used to be working, so I think they must have removed support in JQUI for calling .dialog() on the popup itself at some point.
My workaround looks like this:
$('body').on("click", ".ui-widget-overlay", function () {
$('#' + $(".ui-dialog").attr('aria-describedby')).dialog('destroy');
});