Nick and Katie woke up in each other's arms and beamed in the afterglow of their night of lovemaking. Nick asked Katie to move in with him. He said he wanted Katie, Jack, and their new baby to all live together with him as a family. Nick asked Katie if that sounded good to her. She said it did. Nick said after she moved in, she would probably be sick of him in a week, but Katie disagreed. After Katie left, Nick picked up Jack's toys and found the Nerf basketball he and Katie had played with and reminisced about happy memories from their past.
Ridge and Brooke also woke up in each other's arms, equally happy, and Brooke thanked Ridge again for agreeing to allow baby Jack to come and live with them. Brooke said she knew it had been a hard decision for Ridge, and he graciously replied that it would have been harder if he had made Brooke unhappy. Brooke said she would speak to Nick, and Ridge said they should speak to a lawyer. Brooke said they didn't need a lawyer, because Taylor wanted it to happen, but Ridge said if they were going to do it, they should do it right and get partial custody. Ridge said Brooke should have legal rights and responsibilities as a parent.
Ridge asked if Brooke would see a lawyer or Nick first. Brooke said the lawyer would have to make certain that Taylor and Nick would sign off on it. Thus, Brooke concluded it would be best to talk to Nick before he received a call from a lawyer out of the blue. Ridge agreed and said he would stop by Nick's with Brooke. Ridge warned Brooke that Nick might not be alone. Brooke appeared puzzled. Ridge asked her if she knew what was going on with Nick and Katie. Brooke said she didn't, but she did not assume they would move forward with a relationship just because of the baby. She expected them to move cautiously. Katie had a high-risk pregnancy, she explained, so Brooke was unsure if things would last between Katie and Nick. Ridge said at least Jack would have one stable female in his life when Brooke took over as his mother, because it seemed all the other women in Nick's life came and went with the tide.
Ridge warned Brooke that it might not be a smooth transition with Nick regarding Jack. He reminded Brooke that Nick hated Ridge as much as Ridge hated Nick. Ridge expressed the possibility that Nick might not want him to have a presence in Jack's life.
Ridge and Brooke stopped by to speak with Nick about Jack. Ridge explained to Nick that Taylor had come to Brooke with a proposition about Brooke taking over as Jack's Mom and they stopped by to discuss it. Nick said there was not much to discuss because Ridge had made it clear months earlier that he did not want Brooke involved in Jack's life. Ridge admitted he had reservations at first, and still had some reservations. Nick said if Brooke became a part-time mom to Jack, it would mean Nick would be a permanent fixture in their lives. He asked Ridge if he could handle that.
Nick said he didn't want Jack to go from one bad situation to another. Ridge reminded Nick that he admitted that living with Brooke would be good for Jack. Nick said it would be good for Jack, but he knew that Ridge didn't want that to happen. Brooke intervened and told Nick that Ridge was not fighting it and had agreed to let Jack into their home. Nick asked Ridge if he could truly allow Nick and Brooke to make decisions for Jack and parent him. In the style of a true politician, Ridge declined to answer what he was asked, and instead asked Nick if he could deal with the fact that Ridge would be Jack's stepfather.
Ridge said he wanted Brooke to have legal shared custody, and Nick balked. He didn't want to put anything in writing and accused Ridge of throwing his weight around. Ridge said he was only trying to protect Brooke, because if she took Jack in and they made him part of their family, he didn't want Nick pulling rank later and taking Jack away from Brooke. Brooke chimed in and said it was best for Jack, too. She reminded Nick that Jack had been through so much upheaval that it was in his best interests to have a stable and solid living arrangement. Nick didn't want to give in, so Ridge told Brooke it was hopeless and suggested they should go. As they headed for the door, Nick asked them to stop and told Brooke he would agree to shared custody, but only for her sake and Jack's.
Katie went to visit Beth and gave her a glowing review about the night she had spent with Nick. Beth was cautiously happy for Katie. Beth asked Katie to keep the details "G" rated for her. Katie expressed that she still felt guilty about Bridget, but said Bridget had basically given Nick and Katie her blessing. Katie said everything happened just the way she wanted it to. Katie asked Beth for her blessing. Beth said she wanted to be happy for Katie, but asked Katie to examine her heart and make certain that it was what she truly wanted.
Katie said it was what she wanted, but she wondered how Brooke would react to the news. Beth said Katie could not assume that Brooke would be happy about it, since Katie and Nick had hurt Bridget so badly. Beth said once Katie was a mother herself, she would realize that there was nothing more painful than the wounds a mother got when she watched her children suffer. Katie said she realized it was all happening fast, and Beth said fast wasn't the word for it. She reminded Katie that she had just personally officiated at Nick and Bridget's wedding and now she was carrying Nicks' baby. Beth warned that no one in the picture had had enough time to process what was going on. Katie assured Beth it was not a rebound. Beth said she was concerned that her relationship with Nick would destroy Katie's relationship to her sister, Brooke. Katie said that sometimes things worked out the way they were supposed to and she only wanted Beth to see how happy she was.
Beth said she was not trying to bring Katie down. She said she was glad that Katie was happy, but wanted to make sure it was lasting happiness. Beth said it would be wonderful if the baby could be raised with its mother and its father. Katie said Nick didn't know who his father was for years, and that Katie didn't know where her Dad was most of the time, so it was important to the two of them to give their baby the life they didn't have. She realized there would be complications, but knew she and Nick could face them together. Katie said she didn't even think she had a future, and Storm had given her the gift of life because he knew what she had to live for. Katie said she could hardly wait to move in with Nick so the two of them could start raising Jack together, and that everything had worked out just the way it was supposed to.
At Nick's house, Ridge kept recalling Nick and Brooke together the previous day when she agreed to share custody of Jack. Brooke spent time with Jack upstairs in Nick's bedroom. Nick and Brooke had a long conversation about their shared parenting of Jack. Brooke told Nick she was happy about having joint custody of Jack. Brooke mentioned that she had felt guilty when R.J. turned out to be Ridge's son, not his. Nick commented that "things worked out the way they were meant to" because they shared a child together. Nick and Brooke questioned if Katie would be as comfortable as Ridge was with the situation. Nick expressed that he wished Taylor could have seen how peaceful Jack was with them. Brooke praised Taylor for placing Jack's needs before her own and having allowed Brooke to take custody of Jack.
Meanwhile, when Katie arrived at Nick's to move in, she said she was surprised to see Ridge there. She told him that Nick had invited her to move in with him. Katie declared that she was in love with Nick and remarked that she was optimistic about her relationship. Ridge informed her that her family was about to become larger. He told her that Brooke was going to share custody of Jack with Nick. The news took Katie by surprise. Ridge tried to have a talk with her. He intended to try to prevent Katie from getting hurt by Nick. She did not want to hear anything negative that Ridge had to say about Nick.
Ridge advised that they should watch Brooke and Nick, but Katie denied that there could be feelings between them. On the contrary, Ridge was suspicious that Nick had so quickly agreed to share custody with Brooke. He believed the reason was that Nick wanted to have Brooke in his life for a very long time. Katie didn't buy Ridge's warning that they should watch Brooke and Nick. Ridge reminded her that Bridget never expected Nick to have sex with Katie, so there was nothing that would keep him from having sex with Brooke. Katie lashed out at Ridge and told him that Nick had asked her to move in; she told him their relationship was not his business. She was adamant that she would not be paranoid.
She also remarked that Ridge distrusted Brooke to the point that he should have done soul-searching. Kate explained that Brooke's sharing a child with Nick would never erase her feelings for him--he was Ridge Forrester, the love of Brooke's life.
Owen met Stephanie in a local restaurant at her request. The first question she fired at Owen was to ask why Donna was lying about sleeping with him. Stephanie also asked him why Donna would choose to remain in a relationship with Eric when she had a much younger man, like Owen, interested in her. Owen told Stephanie the truth. He told her that they had not slept together, regardless of what Stephanie and Eric had seen.
He commented that he was madly in love with Donna, but she was still in love with Eric. He described Donna as a very loyal and loving woman, who was the best wife that Eric could have. Stephanie remarked that regardless of what Owen had just told her, she did not believe him. Donna arrived and saw that Owen was having a conversation with Stephanie. Donna immediately concluded that Owen said something hurtful about her to Stephanie. Donna became very upset with Owen for betraying her. Owen responded to her accusation by expressing his feeling that she had kicked him aside. Donna reminded him that she never planned to leave Eric. He told Donna that he had told Stephanie the truth: they had not slept together and he was madly in love with her.
Owen reminded Donna of the closeness they had shared over the previous few months. Owen was adamant that they had something between them, and that a relationship could work.
He begged Donna for a chance at a relationship. He told her that he loved her deeply and it was hard for him to live without her. She repeated that she would not give up on her marriage. Owen suggested that perhaps Stephanie and Eric "were meant to be together." Donna apologized, but told Owen she planned to get her husband back.
Katie contemplated Ridge's warnings about Brooke and Nick's connection. Nick said he wished he had been there to greet Katie when she arrived. Katie said he was there, but that he was upstairs with Brooke and Jack when she came. Katie explained that Ridge had filled her in on the new custody arrangement regarding Jack. Nick said Brooke deserved to have something in writing, since she had agreed to take over as Jack's mom.
Katie asked Nick if he was really going to be okay with Jack being part of Ridge's family. Nick said he trusted Brooke and he knew she would make sure Jack got all the love he needed. Nick said he and Brooke had always planned for Brooke to be a part of Jack's life, and they were just making it official. He said the bond between Jack and Brooke had always been there. Katie asked if Nick thought Brooke being Jack's biological mother was the thing that kept Taylor from bonding with Jack. Nick said he didn't think it bothered Jack, but thought that it had affected Taylor.
Katie said it astonished her that Taylor would give her baby to Brooke. Nick said it never ceased to amaze him what a mother could do to protect her children. Katie got a faraway look in her eyes, and Nick asked what was wrong. Katie said she'd had a picture in her mind of what their life would look like, and now it had changed. She had envisioned herself and Nick and the kids as a family, and had to adjust to that family including Brooke, too.
Eric got up and got dressed, and asked his family not to try to stop him. He fully intended to return to work. Dr. Patrick was on the scene and agreed that Eric was well enough to go to work if he so decided. Dr. Patrick cautioned that Eric was not back at 100% yet, but said Eric could go back to work as long as he didn't push it. Felicia expressed concern and asked Eric to please take it easy. Eric said he did not intend to run a marathon; he just wanted to sit behind his desk for a few hours. Eric said the first thing he planned to do was to contact Donna. Thorne and Felicia looked annoyed, but agreed to leave the room to give him privacy. Eric called Donna and asked her to come to his house, and she agreed.
Stephanie arrived at the house and Felicia and Thorne let her know that Eric called Donna, and they suggested that Stephanie should call security. Stephanie said no, she did not intend to get in the way. Donna arrived and Stephanie was very gracious. She invited Donna in and told her to go ahead upstairs to see Eric. Donna entered and was pleased to see Eric up and dressed. She said his recovery had happened just as she always believed it would. Eric said he felt as if he was coming out of a fog and had begun to see things more clearly. Donna asked if that was the reason he called her. Eric said yes. Donna said she knew that Eric would not be able to forget what they had meant to one another. She said Eric was the only thing she had thought about for months. He said that he had been thinking about Donna, too.
Eric said he had been thinking about the things Donna said to him during her last visit. He said the doctor had informed him about how many hours Donna had sat at his bedside while he was in a coma. He said Stephanie should not have had her dragged out of the house. Donna said Stephanie did that because she didn't want Eric to hear her side of the story. Donna said she would have stayed by Eric's side every minute if she could have. But Eric said she'd apparently had other things to take care of. Donna explained that, yes, she did. She said she had cared for the house and the business while Eric was ill, which she had done for Eric.
Eric said he had something he wanted to show Donna. He pulled out a magazine with a photo of Donna and Owen with happy smiles for the camera in Paris. Donna explained that his family had sent her to Paris and suggested that she take Owen. Eric said the caption said it all, "Mrs. Eric Forrester does the city of lights with the new man in her life." Donna denied it and assured Eric it was merely gossip. Eric said it was insulting and demeaning. Donna said that what Eric had seen wasn't at all what it looked like. Eric said he saw Donna kissing Owen. She said that was as far as it went, and Eric said that was too far-- she had kissed another man in his house and he considered that betrayal.
Donna said she realized she had let Eric down. She had given in to fear and loneliness, but in spite of a kiss or two, she was still committed to Eric. Eric said she had not been committed enough. Eric said he informed Donna long before that the one thing he could not tolerate was infidelity. Donna said she hadn't done that. Eric said there was more than one type of infidelity: emotional infidelity and mental infidelity-and that Donna had gotten so wrapped up with Owen that Owen assumed it was okay for him to make moves on Donna. Eric said Owen actually believed there was a chance for him. Donna protested and said she told Owen that she only loved Eric. Eric asked if she told him that before or after she got in bed with him. Eric said he had heard Donna's side and Stephanie's side, and that he had come to a decision. Donna begged him to tell her what he planned to do, but he said nothing.
Bridget stopped by to visit Brooke and they discussed Donna. Brooke said Donna had been hiding in her room. Bridget commented that it was a good thing she hadn't moved in, or Brooke would have a real halfway house on her hands. Brooke said Bridget was welcome to move in if she needed, but Bridget said she was actually doing well and felt like she had dodged a bullet. Bridget said it was better to find out early than to find out five years down the road. Bridget said she had entertained the notion that she and Nick were meant to be, had just been kept apart by circumstances, and that fate had brought them back together, but it was an illusion. She said it still hurt, but she was glad that she found out sooner rather than later. Ridge arrived home and discovered Brooke and Bridget embracing, so he asked if everything was all right. Bridget said yes, and told him that Brooke had invited her to move in. Ridge said Bridget was always welcome and they would love to see more of her.
Bridget left and Brooke mentioned that Ridge had been quiet since Bridget had gone. Ridge said he had been thinking about Nick. He said he was surprised at how easily Nick had agreed to joint custody with Brooke. Brooke said he had done it for Jack. Ridge said Jack might benefit from it, but the baby wasn't the only reason Nick had agreed. Ridge said if things were going to work out, he needed some reassurance from Brooke about her relationship with Nick.
Ridge said he heard Brooke and Nick talking about raising "their" child, and it troubled him. Brooke explained that it had been an emotional moment. She said she would be more sensitive to Ridge's feelings and assured him that Nick would not come between them. Ridge asked if he could get that in writing. Brooke said she would be delighted to declare her love for Ridge in front of God and their family, and Ridge said he would love that. He opened a garment bag and presented Brooke with a lovely little bridesmaid dress for Hope, as well as two little wedding suits for R.J. and Jack, and a pillow for Jack to be their ring bearer. Brooke was thrilled by the gift. But Ridge was not finished; he placed a giant Wilma Flintstone sized pink diamond on Brooke's hand. Broke said she wanted to be Ridge's wife again, and this time, forever. They kissed.
At Eric's house, Donna was on her knees begging Eric for another chance with him. She told him that she was pleased when he called because she had been worried since his family had prevented her from seeing him. Eric defended Stephanie, Ridge, Thorne, and Felicia because they were trying to enhance his recovery. Donna said she could only imagine how close Eric had grown with his family, something he hadn't had since he married Donna. She said she knew that his family had always disliked her.
Downstairs, Thorne and Felicia worried to Stephanie that Eric was alone with Donna upstairs. They tried to convince Stephanie that Donna had been upstairs with Eric too long. They claimed Donna was very persuasive. Stephanie told the kids that she knew Eric was disgusted with Donna's infidelity.
Upstairs, Eric told Donna that when he called her over to the house, he intended to ask her for a divorce. Donna said she knew he couldn't do it because he still loved her. Eric said he was afraid his love for her was not enough. Donna said their love could get them through anything. She said her love for Eric was what got her though his coma. Donna said she knew Eric still loved her and she was confident their love could survive.
Eric said he couldn't trust Donna. He added that they had to have trust in their marriage, not just need and habit. Donna fired right back that need and habit were what he had with Stephanie. She added that Eric had given Stephanie numerous second chances, and Donna wanted just one second chance. Donna said she deserved at least one chance and claimed that their marriage deserved it. Eric said he never believed that she would ever betray him with another man, but she did.
Donna apologized. She caressed his face and told him there still had to be hope. She kissed him, but Eric pushed her away. Eric said he didn't want to be pressured, and he felt he needed to be in his home without her. Donna was convinced that Stephanie would pressure him, and she begged him not to close the door on their relationship. She kissed him again and left.
Felicia was shocked when Donna came downstairs. Donna told Stephanie that Eric didn't ask for a divorce, but Stephanie pointed out that Eric didn't ask her to stay either.
Stephanie asked Felicia and Thorne to leave. Stephanie told Donna that Donna's marriage to Eric was over. Stephanie snickered that Donna was begging Eric for forgiveness. Donna told Stephanie that Eric had a lot of compassion, something that Donna knew Stephanie disliked in him. Donna said she knew Stephanie saw Eric's compassion as weakness. Stephanie denied it, and she told Donna that Donna's marriage had been a farce. She warned Donna not to dare to compare Donna's marriage to Eric to what Stephanie had with Eric. Stephanie reminded Donna that Stephanie was the one with Eric when he came out of the coma. Donna agreed, but she warned Stephanie that Donna was still legally Eric's wife. Stephanie firmly stated that Donna's marriage to Eric was over. Upstairs, Eric found his wedding picture with Donna and stared at it.
At Brooke's, Brooke hugged Ridge and thanked him for her beautiful engagement ring. They both claimed they had never been happier. In walked Nick and Katie as Brooke beamed about the official engagement. Brooke told Nick and Katie that her kids were thrilled that Jack, their little brother, was going to be living with them part-time. Brooke said Jack looked like he belonged there. He played and laughed and enjoyed every minute. Katie marveled at Brooke's mammoth ring.
Nick presented legal documents for Brooke to sign regarding the new custody arrangement that would give Nick and Brooke shared custody. Nick said that Taylor had already signed the papers. Ridge interrupted and handed Nick some papers. Ridge said he had drawn up a parental declaration of intent. Ridge said he didn't want any animosity or antagonism among them, for Jack's sake. The document said that they all agreed to provide two loving homes, and respect each other and their relationships. Ridge wanted Nick to promise to respect Ridge's relationship with Brooke. Ridge said that he would give Nick his word that he would also respect Nick's relationships. Brooke smiled with tears in her eyes. They all signed the papers and Brooke thanked Nick and Ridge for agreeing to the arrangements. Ridge said he was glad Jack would be around, and so was RJ, who was happy he wouldn't be the baby anymore. Katie said there would be another baby soon, as she and Nick were having a child. Brooke agreed that Katie, Nick, and Jack would also be a family. Brooke kissed Ridge and told him everything was falling into place. Katie went to the kitchen and returned, but she suddenly grabbed her stomach in pain. She cried out, and she dropped to the floor as everyone rushed to her aid.
Ridge, Brooke, and Nick brought Katie to the hospital; she was doubled over in pain. Katie feared that something was wrong with her baby. As the doctor examined her via ultrasound, Katie asked if her baby would be okay. The doctor sadly announced that Katie had suffered a miscarriage. Her baby was gone. Katie burst into tears. Nick asked the doctor if she was certain, and she said she was. The doctor said that perhaps the fetus was not viable due to all the medications that Katie was taking. She said they would run tests to get the answers. But Katie said her baby was already gone, and it didn't matter anymore. Nick held Katie as she cried.
The doctor informed Ridge and Brooke that Katie had lost her baby. She added that Nick and Katie had requested time alone. Ridge and Brooke discussed Nick and Katie's loss. Brooke said she felt very sad for her baby sister's loss. She pointed out to Ridge that it was ironic that on the same day she brought Jack home and claimed her own child, her sister Katie had lost her baby.
Back in Katie's room, Katie wept, clearly heartbroken by the sad news. Nick tried to reassure her they would get through the heartache together. Katie said losing the baby was all her fault. Nick said it was nobody's fault. He said the two of them had considered the baby a blessing, and perhaps it was still a blessing. Katie asked Nick how he could say that; because of her Nick had lost everything. Nick said he had not lost Katie, and if she had carried the baby full-term, she could have died.
Katie said since they didn't have a baby on the way, Nick could be free of her and move on with his life. Nick asked Katie if she truly believed he wanted to be free of her. Nick assured Katie he was not with her because of the baby. Katie asked how they could go on after the tragic event. Nick said they would start immediately - they still had each other and baby Jack. Katie asked if Brooke was still there. Nick said she was, and Katie requested that Brooke come in and bring baby Jack to visit her.
Nick asked Brooke to take Jack in to see Katie. Brooke asked if Nick thought it was a good idea for Katie to visit Jack, since she'd just lost her own baby. Nick said that was what Katie wanted and asked Brooke to comply. Brooke agreed. Brooke told Katie she would be there for her and would give her anything she needed. Katie filled Brooke in about Nick's reassurances; Nick was committed to her in spite of losing the baby. Katie thanked God she still had Jack and asked if she could hold him. Brooke hesitantly put Jack in Katie's arms.
Thorne and Felicia badgered Stephanie to ask Eric if he had ended things with Donna. Stephanie said she wanted to think before she acted. Thorne and Felicia urged her to ask Eric what happened because they were very worried that Donna had talked her way back into Eric's life. Stephanie assured them that if that happened, Donna would have a fight on her hands. Stephanie vowed not to allow Donna to take advantage of Eric again.
Felicia and Thorne cautioned Stephanie about getting in between Eric and Donna. They said the plan would probably backfire on her and drive a wedge between her Eric. They reminded Stephanie that she and Eric were in a good place, and suggested she leave it alone. Stephanie said they were probably right, but she had another plan to work on; she left the house.
Marcus and Donna met at the Sky Lounge and Donna explained that she had convinced Eric not to file for divorce, at least for the time being. Marcus said she should hang in there, and be patient. He was certain things would work out. Marcus was paged and had to leave. As soon as he was out of sight, Owen walked up to Donna's table and accused her of having him fired. Donna said he should not be surprised that he was let go. Owen said he could deal with losing his job, but he could not deal with losing Donna.
Donna reminded Owen that she had told him from the beginning that she loved her husband and that had never changed. She said that since Eric was recovering, she wanted to attempt to fix her marriage. Owen agreed that Donna had been up front about her love for Eric, but he asked Donna to admit that she loved him as well. Donna admitted she had developed feelings for Owen, but inferred it was only because he had saved her life from crazy Aunt Pam. Owen said the feelings Donna had for him would not go away. He said that Donna was not meant to be with a guy who was her father's age. He reminded her that Eric and Stephanie were back together, so she was not leaving him alone, and her leaving would not hurt Eric.
Owen said that Donna needed to do what was right for her and not for everyone else. Donna argued that Eric was good for her. She said she wouldn't be half the woman she was if not for Eric. She said she was not with Eric due to guilt, but because of love. Owen said if that were what Donna truly wanted, he would not stand in her way. Owen said he worried about Donna because Pam was still at large. Donna assured Owen she would be fine. Owen confessed that he would never stop loving Donna.
Marcus went back up to the lounge and tried to catch up with his mom, but instead, Thorne chewed him out. Thorne demanded that Marcus return to shipping to unload a shipment. Marcus said the shipment hadn't arrived yet and asked Thorne to chill. Thorne reminded Marcus that his mom was out, and the Forresters were back. Thorne said that Marcus had better start treating him with respect.
Donna arrived and witnessed the two of them fighting. She said Thorne should lay off of Marcus because it was Donna that Thorne had an issue with. Donna said Eric was trying to make a decision about his marriage and asked Thorne to respect that and to give Eric space the way she had given Eric space. Thorne laughed and said Donna had only agreed to give Eric space because he kicked her out. He said Donna had better stay away from Eric. Marcus asked Thorne if he had just threatened Donna. Just as they were about to come to blows, a dockworker arrived on the scene to let Marcus know his shipment had arrived. Confrontation was averted.
Marcus brought a giant crate to Donna, which supposedly contained shoe samples. As Donna began to open the crate, crazy Aunt Pam's voice could be heard making threats into the air, and proclaiming that Donna would die. In the meantime, Donna got a phone call and stepped away from the crate. Marcus continued to open it and, as he pulled off the lid, a giant venomous snake lunged at him and bit Marcus. Marcus collapsed on the ground and Donna yelled for someone to call 9-1-1. From a distant balcony, Aunt Pam looked on as the wrong victim was bitten. Donna realized the snake was Aunt Pam's handiwork.