As requested, Ashley made an early arrival to Olivia's apartment. Olivia greeted her by saying she had something to tell Ashley, and she was sure she wasn't going to like it-that she had watched the video, and she now knew who Abby's biological father was. Shocked and very annoyed, Ashley asked Olivia why she would do such a thing, to which Olivia replied she was trying to get some answers. Olivia confronted her about Abby's paternity and asked how possibly Ashley could keep such a secret from Brad. Ashley replied Brad knew all he needed to know, and that she was making the best decision for her family. Not buying it, Olivia insists on discussing the situation and kept pushing Ashley to tell her the details of the situation. She told Ashley the scenario she thought was logical; an affair with Victor. Totally exasperated at Olivia's betrayal, Ashley gave in and told her the entire story. She admitted to stealing the sperm sample, to which Olivia said she thought was "bizarre." Olivia went on to tell Ashley she owed it to Brad to tell him the truth, because eventually, Victor might. Ashley told her Victor would never tell Brad because he didn't know himself. A very self-righteous Olivia told her if she didn't tell Brad, she would tell him herself.
After a business meeting at Gina's, Brad and Jack's conversation turned to Ashley. Jack complimented Brad on being a good husband to his sister, and asked if they had cleared the air in regards to Victor. While they were talking, Gina approached the table and handed Brad Ashley's credit card, which she had forgotten the previous night. Before walking away, she mentioned in passing that Ashley must have been engrossed in the conversation with Victor and forgotten to pick it up. Knowing Brad's feathers were getting ruffled, Jack quickly said it was likely it was a chance meeting and Brad shouldn't get ahead of himself. Upset, Brad got up and left the restaurant.
Brad went from the restaurant straight to Victor's office. He expressed his consternation to Victor and once again asked him to steer clear of his and Ashley's lives. Victor casually explained it was only by happenstance that he ran into Ashley at Gina's, but Brad was not interested in any kind of explanation from him. Before leaving, he warned Victor plainly to stay away from Ashley, and that he was finished being reasonable about the situation. In his usual curt Victor-like fashion, he urged Brad to stop worrying and dismissed him.
After thinking about the situation further, Michael relented and called the police to drop the charges on Lynne and Mary. After he hung up the phone, Chris walked in earlier than expected. Chris was shocked, and equally as curious as to what they were looking for. She insisted they not let this drop and they clear this up immediately-that way she could clear her mind to give him an answer to his proposal. After she left, he continued to wonder what they were looking for.
As Paul and Isabella were about to leave their hotel room, Paul checked his messages and was surprised to find five of them from Lynne. He immediately went to the hospital and when he saw Lynne, pushed her for answers. Looking totally mortified, she reluctantly but honestly told Paul the entire truth about what happened. Paul got extremely irritated, and other than being angry about the situation, chided Lynne for not breaking into the office properly. When she told him Michael had them arrested, Paul's drew the conclusion that if the arrest hadn't had occurred, Mary wouldn't be at the hospital. After finding out he couldn't see his mother, Paul left the hospital and went to the law firm. He walked in, jumped on Michael, and told him to leave his family alone.
At the Abbott house, Colleen saw John, who wanted to talk. She tried to blow him off and put the conversation off until later, but he was insistent on the conversation taking place immediately. He took a firm hand with her and told her she was grounded and was only to go between school and home. She protested, but he absolutely was not going to change his mind.
Brittany and J.T. were talking at the coffee house and she confronted him about his relationship with Colleen. He got defensive and said he was tired of telling people they were just friends. She warned him it better not be anything else, because the Abbotts would make his life difficult if they got wind of the situation. At that point, John walked in and Brittany went to sit within earshot. John approached J.T. and told him his feelings on he and Colleen's relationship, and the recent concert fiasco. J.T. tried to explain, but John was much more interested in talking than listening. John strongly urged J.T. to stop monopolizing her time so that she could spend time with boys her age. In fact, if he didn't, John promised to make his life very uncomfortable. After John left, Brittany told him John was only trying to protect Colleen. Then J.T.'s phone rang-Colleen-who wanted to meet in the park. He responded by telling her he thought they should lay low for a while. She protested, and got somewhat hysterical, saying how she was willing to sneak out even though she was grounded. Trying to do the right thing, he told her it wasn't a good idea, and to take care of herself before hanging up.
When Paul finally unwrapped his hands from around Michael's neck, Michael told him he had dropped the charges against Mary and Lynne. Paul angrily told Michael Mary had collapsed, and because of him, she spent the evening in the hospital. In a very sincere way, Michael asked if she was O.K., but then turned around and asked why in the world Paul hadn't bailed her out, and was it guilt that provoked his anger?
Worried about Mary, Chris went to the hospital to see if she was all right. She confronted Mary about the break-in and asked what they were looking for. Mary tried to avoid the question, and was more interested in warning Chris of the perils of being involved with Michael. When Chris asked again, Mary conceded and said she was looking for information on the relationship between Michael and Isabella. After Mary checked out of the hospital, Lynne showed up and talked to Chris. Chris told her how surprised she was about her behavior and Lynne was appropriately embarrassed. They talked a bit more about how Mary felt isolated from her grandson, when the subject of the christening came up. Lynne told Chris she thought she should go because Mary could use all of the support she could get right now. After Lynne left, Paul came in looking for his mother. He began to lecture Chris about Michael, but she stopped him cold. She told him his mother was completely out of control and that she had been looking for information to break up his marriage in Michael's office. Not listening, Paul blamed Michael for the arrest, and Chris shot back that had the situation been reversed, he very well may have done the same thing.
Ashley and Olivia were still engaged in their contentious conversation about the videotape. Ashley began to get very upset with Olivia, telling her their marriage was back on track and she had no intention of jeopardizing it. She went on to tell Olivia that she was surprised by her behavior, and Olivia replied that she was surprised that Ashley could convince herself this situation was unimportant. Olivia pointed out that if Ashley was able to tell Brad he was not comparable to Victor support-wise, at some point she was liable to blurt out the paternity secret as well. This infuriated Ashley, who told her she couldn't believe Olivia was acting this way. She asked whose side she was on, and furthermore, whose best friend was she-hers or Brad's? Olivia quickly reassured Ashley she was her best friend, but still tried to get Ashley to see the potential for disaster in the secret. Striking back, Ashley told her she was not giving her advice, she was issuing ultimatums, and what she really needed to do was to respect her wishes. She went on to say she thought Olivia was dangerous because she was acting like she "had a monopoly on honesty and the truth." She also asked Olivia if she planned on telling Brad, and Olivia only told her she would think about it before Ashley left abruptly. When she arrived home, Ashley found Brad playing lovingly with Abby. She looked sad and guilty.
Over at the Carlton's Drucilla paid a surprise visit to Brad. After fussing over Abby, she made the comment that family was important. When Brad quickly agreed, she pointedly asked him, "Then why are you risking it all by getting involved with my sister?" Brad tucked Abby in so they could talk, before demanding to know what Drucilla meant, trying to make her accusation sound ridiculous. He told her she needed to get a boyfriend and to stop fixating on other people's lives because she was way off base. He insisted that Olivia had just been a good friend to him, and told her to forget about it and not to bug Ashley with it. Drucilla replied she had no intention of confronting Ashley, but she was determined to protect her sister. After she left, Brad took a deep breath, looking worried.
Phyllis, at Jack's office, was waiting to hear the verdict from John Silva. When John got there and didn't have any new information, she decided to take a walk to calm her nerves. Before she left, Jack reassured her that everything was going to go her way. After she left, John told Jack it would be more wise to be prepared for the worst, and to be more straight with Phyllis. Just then, a courier arrived with the verdict from the grand jury and a box of evidence. The letter told them that Phyllis had been indicted by the grand jury for aggravated arson and attempted murder. John decided to got through the box of evidence, and found a videotape they had never seen. When they played it, both looked completely stunned by what they saw.
Diane paid Isabella a visit, telling her she really needed a friend. She expressed her fear, and told Isabella about Phyllis's recent strange visit to her hotel room and how she had hired a bodyguard to protect her. She told Isabella she was worried Phyllis would get off on some technicality, and if she did, she planned to leave town as soon as possible. Isabella pointed out that if Phyllis was not found guilty, in all likelihood she probably would steer clear of Diane. The phone rang, and Diane got the news of the indictment. Isabella asked if she was relieved, and Diane responded that now Phyllis would be more angry and desperate than ever.
Phyllis confronted Larry at Crimson Lights, explaining that his running his mouth to Jill about her joke about having Diane killed had gotten back to Jack. When Larry told her that it would blow over, Phyllis asked if he didn't read the papers and know about her arrest. Larry was sympathetic to her, and suggested the next time she was joking, she wink or something. He told her to hang in there. She said she refused to worry, because she was innocent. She then got a call from Jack asking her to return to his office; they had news from the grand jury.
John Silva and Jack watched a grainy video tape of a woman who looked like Phyllis in a hardware store buying a can of accelerant like that used to start the pool house fire. Jack was determined to believe it was all a mistake, and questioned whether John believed in Phyllis enough to represent her. John said he had no problem representing Phyllis. First he planned to order a psychiatric evaluation on Phyllis to prove she was incapable of planning to murder Diane. But they might also consider a plea bargain. Jack said there was no way he was going to ask Phyllis to admit to something she didn't do.
When Phyllis arrived at Jack's office to find him alone, she fell apart upon learning that the grand jury thought there was sufficient evidence to send her to trial. When Jack showed her the video tape, Phyllis insisted that it wasn't her; she'd never been in a hardware store in her life. She frantically speculated that Diane had gotten a wig and taken a dress and shoes from her closet to impersonate her and set her up. Jack pointed out the problem with that theory--the woman on the video tape did not have her leg in a cast and was not limping around. Phyllis begged Jack to look her in the eye and tell her that he knew she was innocent. When Jack tried, Phyllis became hysterical, feeling that he was lying to her. She ran out of his office crying.
Neil was happy when Dru came to see him. He admitted that he hadn't heard anything from Newman Enterprises about a job, so he was looking elsewhere. Dru said she was glad he was being proactive. They then discussed Lily. Dru explained the trouble Lily had gotten into for spray painting graffiti in public places in Europe. She had brought her daughter back to Genoa City because she needed Neil's help. Lily was being rebellious, fresh, and indolent. Neil asked about her grades, and Dru admitted they were fine. Neil begged Dru to believe in him and give him a chance to be a loving, positive role model for their daughter. The idea of being a father to her was what had gotten him through rehab, and he felt if he only had the opportunity, if Dru didn't take her back to Paris, then he could help their daughter through this time.
Lily told a sympathetic Wesley how miserable it was to be a teen. She begged him to help persuade her mother to return to France and take Lily with her. Wes said he would talk to her, but he advised Lily to go with the flow. It took too much energy to fight. Dru came in as Lily was hugging him, telling her daughter that Neil wanted to see her immediately. After Lily left, Wes told Dru he feared Lily was showing early signs of depression. Dru rejected that theory, saying Lily had everything. Wes said that Lily was asking valid questions about when she could return to her friends, school, and life in France. In fact, he had the same questions. Dru said it wasn't going to happen; she and Lily were staying there, and Lily would be going to school in Genoa City.
Neil tried to put a positive spin on the news he had to give Lily. He said that he and her mother loved her very much, so they had decided it was best for all of them if Dru and Lily stayed in Genoa City. Lily began yelling that they could not force her to stay.
Nick called Sharon from work, telling her to get the children and be ready. When he came home, they were having a family talk in which they would explain that they were separating for a while. Sharon begged him to reconsider, but Nick hung up the phone. Nikki came in and found out what was going on. She reminded Nick that Sharon wasn't the only one who'd made mistakes, and Sharon had once forgiven him. Nick said maybe that was true, but what he couldn't forgive was Sharon continuing to fantasize about the stable hand. He couldn't forget that. Nikki worried about the effect all of this was going to have on the children. Nick said he felt the best thing was to tell them the truth; Cassie already suspected something was wrong.
Victor was distressed to hear Sharon's news when he went to see her. Although he understood Nick's position, he didn't want to see their family break up. But he said that Sharon hadn't just made one mistake. She'd continued to think about Diego even after their one indiscretion; that was why she'd been so jealous of Victoria. Sharon reminded him that he'd once promised to help her reason with Nick. Victor said he really would like to see them work through their problems. But he said it was up to Sharon to convince Nick to stay.
Nick was annoyed to come home and discover that Sharon had asked Miguel to pick up the children, who were at his parents' house. Again, Sharon pleaded with him to reconsider. Nick said that their marriage was a joke. Sharon said it wasn't a time for either of them to be selfish. The children would be devastated, and they should put them first. Nick told her that he had to get away from her for a while. He insisted that she get Cassie and Noah so they could have the discussion. Sharon tearfully walked out of the house to do as he'd asked.
Victor urged Nick to reconsider his decision to move out of the house. Nick threw Victor's past back into his face and told his dad to leave his nose out of it. Sharon and the kids came home to interrupt them.
Nick and Sharon talked to Cassie and Noah, who didn't take well to the news well that Nick's moving out. Noah asked his dad when he would see him and Cassie put pressure on them to tell the truth about what happened to cause this.
Victor and Nikki took opposite sides about Nick and Sharon's separation. Nikki brought up her first concerns about Sharon way back when Nick met her. She acted like Sharon was the only one who did something wrong.
Neil talked to Lily and tried to help her accept a future in Genoa City. He wanted to come back into her life and help her through this tough time in her life. Lily accused him of using her to put his own life back together. Then she told him that it was too late and he hugged her for a second or two, then she backed away.
Dru explained to Wes that she's confident Lily needs her father's guidance. Wes wondered if Dru has other reasons for moving back to Genoa City. He disagreed with putting Lily in school there and talked about her friends back in Paris and her possible depression.
Diane found Jack, concerned that Phyllis might do something else to her. She apologized for making things worse, and insisted that if she knew what was going to happen that she would have made things easier for him. Diane started reminiscing about their past and what could have been. Finally, she moved closer to him, took his head in her hands and tried to kiss him. He pulled back, shocked. She apologized profusely and ran off with her tail between her legs.
Phyllis paid Michael a visit with the bad news and freaked out as he tried to look at the situation logically in order to help her. She went on and on about how her husband didn't believe her and wasn't happy with Michael's help, so she left hastily against his wishes. He was worried about where she would go and what she might do.
Jack returned home to find Phyllis packing a suitcase. He tried to stop her and she fought him tooth and nail. He wanted her to listen and finally was able to say enough to stop her tyrade. He told her that Diane paid him a visit and by her actions he could tell that she was capable of anything in order to get what she wanted. . .
Cassie was furious to learn about her parents' pending separation, reminding them that they had promised her their family would stay intact. When Sharon tried to reason with her, Cassie grew increasingly belligerent, until finally Nick asked to speak with their daughter alone. After Sharon was gone, he fixed Cassie some hot chocolate and explained that this would not change their relationship. He would still be close by and would see her all the time. Cassie wanted to know what specifically had happened to change everything. Nick wouldn't tell her, saying only that the best thing she could do was try to be more helpful around the house, especially with Noah. Cassie said he was just asking her to not make him feel guilty and walked out on him.
Nikki argued with Victor about the best way to handle Victoria. Victor said she needed to see reason, and Nikki reminded him that Victoria loved Diego and didn't blame him for Nick and Sharon's problems. She begged Victor to let the kids handle their own problems; this wasn't something they could fix. And if Victor went to Victoria with guns blazing, he would just make her more determined to side with Diego against the family. While she agreed that Victoria might be making a mistake, it was her mistake to make. All they could do was be there for her if she got hurt. Meanwhile, it would be better for the two of them to focus on their own refound happiness than to interfere with the kids' lives. Victor said there was something he had to do and left.
When Sharon came in, telling Nikki that the kids were very upset, so Nick was talking alone to Cassie, Nikki made it clear she blamed Sharon for everything. Sharon said she had no intention of making excuses. She'd made a mistake, but the only thing that was important to her now was putting her family back together. Nikki wondered when Sharon suddenly stopped being obsessed with Diego. She said she was seeing Sharon in a whole new way.
Victoria and Diego spent the morning in their hotel room. Diego wondered if she should defy her family for him. He didn't want to cause her any more trouble than he already had. Victoria reminded him that life was short. She was in love with him, and had learned to hold onto love when she had a chance at it. Diego said he didn't want to be a wedge between her and the Newmans, but admitted that he loved her, too, and wasn't planning to go anywhere. Victoria suggested they get an apartment together, since she wouldn't find much support at the ranch for their relationship. Later, when she went to work, her father confronted her, telling her she wasn't seeing Diego for who he was. Victoria told him that Diego admitted he'd made a huge mistake, but that was in the past. The two of them loved each other, and she wanted to be with him. She wondered why her father was being so judgmental, since he wasn't exactly a paragon himself. Victor admitted that, and asked Victoria if she'd just come back to the ranch.
Diane was fantasizing about the day Jack would come to her, admitting that Phyllis was a psychopath and he was well rid of her. Now he could find happiness with Diane. Her daydream was interrupted by Isabella. Diane told Isabella she was very hopeful, now that Phyllis had been indicted, that she and Jack would start over with their relationship. Isabella listened when Diane took a call from her real estate broker. Though the house she was buying was ready to close, Diane delayed him, saying her options might have changed. When she was off the phone, Isabella suggested that Diane thought that Phyllis was going to jail, so she expected to have a clear shot at Jack.
Jack convinced Phyllis that he believed her. Not only that she was innocent, but that Diane had probably set her up. He said there had been something far away in Diane's eyes when she talked to him, and he felt like she'd had an agenda all along. Phyllis was relieved to hear Jack finally concede that she had been right from the beginning. She asked if he would tell that to John Silva, and Jack said he would. But that didn't help them with a judge or a jury. They embraced and tried to figure out how they were going to prove that Diane was the one who'd set fire to the pool house and made it look like Phyllis did it.
Dru tried to reason with Lily when she came home, but Lily said there was nothing that was going to make Genoa City feel like home to her. The only thing she wanted was to go back to Paris. Dru insisted that if Lily just gave it a chance, she could turn her life around and find happiness there. Lily disagreed, citing the difficulty of starting at a new school in the middle of a term, when even the new kids had already gotten a chance to make friends. Genoa City would never feel like home to her.
Wes went to see Neil out of concern for Lily. He wasn't sure this was the best thing for Lily, and he tried to explain her state of mind to Neil. Neil said he and Dru were doing what they felt was best for their daughter. He didn't intend to drink ever again, and could be a parent for Lily 24/7. He wondered if Wes was going to make things harder. Wes said he would not do anything that would cause more tension for Lily. When he was leaving, he turned back to Neil, speculating that it wasn't just Lily that Neil was thinking about when he'd made his decision. He opened the door to see Serena standing on the threshold.