This week's book giveaway is in the Testing forum. We're giving away four copies of The Way of the Web Tester: A Beginner's Guide to Automating Tests and have Jonathan Rasmusson on-line! See this thread for details.
It is not clear to me how your client and server communicate since I see the client handling ObjectInput and ObjectOutput streams but the server code for handling this is missing! What is clear is that 4348414C is the ASCII characters "CHAL" so I am guessing that the server is sending an error message as characters and not a Java Object.