lucreate failed due to – Zones residing on top level of the dataset.

bash _PROD> zoneadm list -cv
  ID NAME             STATUS     PATH                     BRAND    IP
   0 global           running    /                       native   shared
   1 ZONEDB           running    /export/zones/ZONEDB    native   shared
 
bash _PROD> zfs list |grep /export/zones
ZONEDB_rpool     4.66G  20.4G  4.66G  /export/zones/ZONEDB

When we tried to create alternate boot environment, it has ended up with following errors.

bash > lucreate -c SOL_2011Q4 -n SOL_2012Q1
Checking GRUB menu...
Analyzing system configuration.
No name for current boot environment.
Current boot environment is named .
Creating initial configuration for primary boot environment .
The device 
is not a root device for any boot environment; cannot get BE ID.
PBE configuration successful: PBE name  PBE Boot Device .
Comparing source boot environment  file systems with the file
system(s) you specified for the new boot environment. Determining which
file systems should be in the new boot environment.
Updating boot environment description database on all BEs.
Updating system configuration files.
Creating configuration for boot environment .
Source boot environment is .
Creating boot environment .
Cloning file systems from boot environment  to create boot environment .
Creating snapshot for  on .
Creating clone for  on .
Setting canmount=noauto for </> in zone  on .
Creating snapshot for  on .
cannot create '.': missing dataset name
Creating clone for  on .
ERROR: cannot create 'ZONEDB_rpool-SOL_2012Q1': missing dataset name
ERROR: Unable to clone <> on <>.
/usr/lib/lu/luclonefs: ZONEDB_rpool@SOL_2012Q1: not found
cannot open 'ZONEDB_rpool-SOL_2012Q1': dataset does not exist
cannot open 'ZONEDB_rpool-SOL_2012Q1': dataset does not exist
cannot open 'ZONEDB_rpool-SOL_2012Q1': dataset does not exist
cannot open 'ZONEDB_rpool-SOL_2012Q1': dataset does not exist
cannot open 'ZONEDB_rpool-SOL_2012Q1': dataset does not exist

RCA Summary:zone is residing on top level dataset of a different zpool mounted on /zpool_name,i.e. zonepath=/zpool_name, the lucreate would fail. Bug Reference CR: 6867013
As per oracle,
The above mentioned ZFS and zone path configuration is not supported
Live upgrade cannot be used to create an alternate BE when the source BE has a non-global zone with a zone path set to the mount point of a top-level zpool file system.
For example, if the zonepool pool has a file system mounted as /zonepool, you cannot have a non-global zone with a zone path set to /zonepool.
Work around:
Halt the local zone and move the zone to zpool’s dataset using below method. Before proceeding to this, make sure you have latest backup available to restore if anything goes wrong.

bash _PROD> zoneadm list -cv
  ID NAME             STATUS     PATH                   BRAND    IP
   0 global           running    /                     native   shared
   1 ZONEDB           running    /export/zones/ZONEDB  native   shared
bash _PROD> zoneadm  –z ZONEDB    halt

Create new dataset :

bash _PROD> zfs list |grep /export/zones
ZONEDB_rpool                     4.66G  20.4G  4.66G  /export/zones/ZONEDB
bash _PROD>zfs create ZONEDB_rpool/rpool

Set temporary new mount point:

bash _PROD>zfs set mountpoint=/ZONEDB ZONEDB_rpool/rpool
bash _PROD>cd /export/zones/ZONEDB          
bash _PROD>mv dev /ZONEDB/
bash _PROD>mv root /ZONEDB/
bash _PROD>zfs set mountpoint=legacy ZONEDB_rpool                    
bash _PROD>zfs set mountpoint=/export/zones/ZONEDB      ZONEDB_rpool/rpool

Set the permission to the new mountpoint:

bash _PROD>ls –ld  /export/zones/ZONEDB     
bash _PROD>chmod 700  /export/zones/ZONEDB

Boot the local zone:

bash _PROD>  zoneadm  -z ZONEDB boot   

Now the local zone moved from top level dataset to second level dataset. 

After this work,you will able to use liveupgrade and you can create alternate boot environment for patching .

Thank you for reading this .Please a comment if you have any doubt.I will get back to you.