Stack overflow question about rxjava and retrofit. How to transform observable's error to another observable?

My SO question RxJava

How do I transform observable's error to another observable?

I am trying to implement algorithm showed on scheme below:

![Block scheme][1]


  [1]: http://i.stack.imgur.com/777p5.png

I am using a tutorial named Grokking RxJava to start my learning and found that flatMap operator can convert one Observable returning by Retrofit into another which allows me to do a chain of invocations of server methods. But in the tutorial chaining methods always return success result. **How I can do the same chaining if one of the remote methods returns error?**


Currently I'm using an approach that looks odd and unclear to me:

    AppObservable.bindActivity(this, userService.checklogin(mPhone)
                .onErrorResumeNext(new Func1<Throwable, Observable<? extends Response>>() {
                    @Override
                    public Observable<? extends Response> call(Throwable throwable) {
                        return Observable.just(null);
                    }
                }))
                .flatMap(new Func1<Response, Observable<Response>>() {
                    @Override
                    public Observable<Response> call(Response response) {
                        if (response == null) {
                            return AppObservable.bindActivity(RegistrationActivity.this, userService.register(
                                    mPhone,
                                    name.getText().toString(),
                                    selectedSex,
                                    selectedDateDay,
                                    selectedDateMonth,
                                    selectedDateYear,
                                    Locale.getDefault().getLanguage(),
                                    persistentUserInfoStore.getInstallationToken()
                            ));
                        }
                        phone.setError(getString(R.string.already_registered_phone));
                        progressDialog.dismiss();
                        return Observable.empty();
                    }
                })
                .subscribe(new Action1<Response>() {
                    @Override
                    public void call(Response response) {
                        startConfirmationActivity();
                        progressDialog.dismiss();
                    }
                }, new Action1<Throwable>() {
                    @Override
                    public void call(Throwable throwable) {
                        progressDialog.dismiss();
                        Toast.makeText(RegistrationActivity.this, "Error while register user", Toast.LENGTH_SHORT).show();
                    }
                });

Is there any more clear approach to do this.

P.S. I am very new in RxJava.