diff --git a/java/java-psi-api/src/com/intellij/psi/infos/MethodCandidateInfo.java b/java/java-psi-api/src/com/intellij/psi/infos/MethodCandidateInfo.java
index c46d8f8abcb0..6758e9953a1a 100644
--- a/java/java-psi-api/src/com/intellij/psi/infos/MethodCandidateInfo.java
+++ b/java/java-psi-api/src/com/intellij/psi/infos/MethodCandidateInfo.java
@@ -111,7 +111,7 @@ public class MethodCandidateInfo extends CandidateInfo{
   public int getPertinentApplicabilityLevel() {
     if (myPertinentApplicabilityLevel == 0) {
       myPertinentApplicabilityLevel = getPertinentApplicabilityLevelInner();
-      pullInferenceErrorMessagesFromSubexpressions();
+      myPertinentApplicabilityLevel = pullInferenceErrorMessagesFromSubexpressions();
     }
     return myPertinentApplicabilityLevel;
   }
@@ -474,8 +474,9 @@ public class MethodCandidateInfo extends CandidateInfo{
     return errorMessage;
   }
 
-  private void pullInferenceErrorMessagesFromSubexpressions() {
-    if (myPertinentApplicabilityLevel == ApplicabilityLevel.NOT_APPLICABLE && myArgumentList instanceof PsiExpressionList) {
+  private int pullInferenceErrorMessagesFromSubexpressions() {
+    if (myArgumentList instanceof PsiExpressionList &&
+        (myPertinentApplicabilityLevel == ApplicabilityLevel.NOT_APPLICABLE || !isToInferApplicability())) {
       String errorMessage = null;
       for (PsiExpression expression : ((PsiExpressionList)myArgumentList).getExpressions()) {
         final String message = clearErrorMessageInSubexpressions(expression);
@@ -485,8 +486,10 @@ public class MethodCandidateInfo extends CandidateInfo{
       }
       if (errorMessage != null) {
         setInferenceError(errorMessage);
+        return ApplicabilityLevel.NOT_APPLICABLE;
       }
     }
+    return myPertinentApplicabilityLevel;
   }
 
   private static String clearErrorMessageInSubexpressions(PsiExpression expression) {
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/diamond/DiamondInsideOverloadedThisReference.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/diamond/DiamondInsideOverloadedThisReference.java
new file mode 100644
index 000000000000..e4d8d1c3536e
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/diamond/DiamondInsideOverloadedThisReference.java
@@ -0,0 +1,11 @@
+
+class A<T> {}
+class B<K> extends A<String> {}
+
+class X<L> {
+  public X(A<L> b1) {
+    this(new B<>());
+  }
+
+  public X(B<L> b2) {}
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/Diamond8HighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/Diamond8HighlightingTest.java
index e1e7278ffb77..3827a0bda3ed 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/Diamond8HighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/Diamond8HighlightingTest.java
@@ -81,6 +81,10 @@ public class Diamond8HighlightingTest extends LightDaemonAnalyzerTestCase {
     doTest();
   }
 
+  public void testDiamondInsideOverloadedThisReference() throws Exception {
+    doTest();
+  }
+
   private void doTest() throws Exception {
     doTest(BASE_PATH + "/" + getTestName(false) + ".java", false, false);
   }