Jack and Phyllis tried to figure out a game plan to defend Phyllis's innocence. They agreed the biggest hurdle to get over was the damning videotape. While Phyllis said she felt it was Diane on the video, Jack disagreed because the woman was not hobbling. During their conversation, the phone rang—Diane—who wanted to come over to talk with Jack. He began to protest, but Phyllis waved at him, telling him to let Diane come over. When Diane arrived, she told Jack she was worried about him, how she was there to support him, and how she was glad he was beginning to accept the reality that Phyllis is crazy. At that point, Phyllis came downstairs, baggage in tow, screaming at both of them that she was tired of proving herself to Jack, she was leaving, and that Diane could have Jack, once and for all. Looking stunned and not realizing she was acting, Jack started to protest, but Diane interrupted, telling him to just let Phyllis go ahead and leave. After Phyllis slammed out the door, Jack asked Diane to leave as well, and sat looking perplexed. Once the coast was clear, Phyllis came back and Jack told her to warn him the next time she pulled a stunt like that. She felt her act was effective and now that Diane thought she was gone, it would only be a matter of time before she gave herself away.
Serena, all dressed up, stopped by to see Neil in his apartment. He apologized for their last encounter and she shrugged it off. She told him he looked more confident and together and asked him what his plans were. He told her he was concentrating on getting a job and being a father to Lily. He explained he and Drucilla had decided to enroll Lily in Walnut Grove Academy because the two of them planned to stay in Genoa City indefinitely. She made an offhand comment about his not having time for her anymore, and he quickly told her he felt she had saved his life, and that he would never forget that. After she left, he picked up an early photo of he and his family and stared at it for a long time.
Drucilla had a contentious conversation with her agent Sid in Wesley's hotel suite. She was interested in working more, but he made a lot of excuses as to why she wasn't being offered anything at the moment. She asked him if he thought her career was on a downswing, and when he wouldn't answer her directly, she angrily told him he needed to find her work or else she needed to find another agent. Wes walked in and although she tried to cover, admitted he heard the tail end of the conversation. He reassured her he loved her for her inner beauty, not her fame. He told her of Serena's visit to Neil, and Dru told him she felt Neil was nice to Serena strictly out of obligation, and that she was his former drinking buddy. Wesley told her she didn't in any way look like she was abusing alcohol to him, but was more interested in talking about Neil. He said he told Neil his opinion about Lily staying in Genoa City, and told Dru he would support her in whatever decision she made.
Victor paid a visit to Victoria in her office and tried to convince her to come back to the ranch to live. He tried in several different ways to convince her that Diego was no good, but she didn't listen. She respectfully told him that she appreciated his concern, but that she had no intention of ending her relationship with Diego. She went on to say Diego was paying for them to stay in a motel downtown, and they were looking for an apartment together. They ended the conversation in a loving way, agreeing to disagree.
Meanwhile at the ranch, Diego paid a visit to Nikki. She wasn't very interested in talking with him, and implied his interest in Victoria was based on her wealth. He denied it, telling her he loved her and promised to do everything he could to make her happy. Nikki gave him a piece of her mind, telling him Nicholas and Sharon had broken up and her family was torn apart, thanks to him. She also told him it would probably be in his best interest to leave before Victor got back. Diego encouraged her to talk to Victor about this, and not to make Victoria choose between him and her family, because he felt certain the family would lose. After he left, Victor came home and he and Nikki talked about the situation. Nikki gently pointed out that Victoria hasn't been this happy since Ryan died, and perhaps they are misjudging Diego like they initially did to Ryan.
Victoria came "home" to the motel room and told Diego about Victor's visit. In turn, he told her he went to see Nikki at the ranch, and she reacted strongly. He calmed her down by telling her not only did Nikki not throw him out, he felt she was even softening a bit.
Vicki surprised Diego with breakfast in the motel room. He asked her again if she was certain she wanted to pursue the relationship, and she told reassured him one more time. While enjoying breakfast, they decided they would go look for an apartment later on that day. When Diego balked at the cost of the kind of place she would want to live in, she told him it didn't matter who paid, and that she has money and he might as well get over it.
At the ranch, Nikki and Victor were discussing the children's lives again. Nikki expressed disappointment about Sharon's behavior and told Victor that while she didn't wish her any ill will, she didn't feel as if she could be trusted any longer. She also warned Victor to be careful not to alienate Vicki. He assured her he wouldn't, but Nikki told him he likely would, but would be clever about it.
At Newman, Nicholas and Vicki were arguing over business plans, and Nicholas began to make it personal. He turned the conversation to Diego, and expressed his annoyance at her relationship with him. She shot back that although he probably didn't want to hear it, they were going to search for their own apartment that very evening. Livid, Nicholas told her he wouldn't allow her to do that and called her "hard up." He told her if she moved in with Diego, that he was finished with her-that he no longer had a sister, and wanted nothing to do with her. Tearing up, she told him their dad would expect them to work together, and he replied, "no way," and left her office. His words obviously impacted her; after he left, she looked totally crestfallen.
Meanwhile, Victor paid a visit to Diego at the motel. As he barged into the room, he implored Diego to just listen to him. He told him he understood Diego was a drifter, just a day laborer who never had any money. He produced a big envelope full of money--$100,000. He offered it to Diego in exchange for him leaving town and ending the relationship with Vicki. Diego protested, but Victor knew which buttons to push. He told Diego he knew his parents were hardworking people, but that they never got any financial help from Diego. He outlined how the money could pay off their house, allow them a vacation, and go toward their retirement. Diego, completely beside himself, told Victor he loved Vicki and all the money in the world couldn't stop that. Victor warned him if he didn't take the money, there would be hell to pay, and left the envelope on the counter when he left. Diego just stared at the envelope looking totally shocked, wondering what to do.
Jill and Larry were in bed after a night of passion when Jill jumped up, realizing she was late for work. She started yelling at Larry, telling him he shouldn't have spent the night, and now someone might possibly see him on the way out. He expressed his annoyance at being her dirty little secret and told her she was being rude to him. On cue, Esther came by Jill's room to drop off her laundry, and when she wouldn't open the door, asked who was in there with her. Larry suggested they just let her in to prove she wasn't ashamed of him, but Jill shoved him out the window to shimmy down the pipes half-dressed. Unfortunately, the pipe broke, and Katherine was standing near the window when Larry fell to the ground. She asked him what he was doing outside in his underwear, and being no fool, quickly put two and two together. Jill tried to sneak out, but Katherine saw her and wasn't about to let her off the hook. Jill tried to pretend nothing unusual was going on, asking Larry why he was half naked, and Katherine took the opportunity to milk it for all it was worth. When Jill accused Larry of lying about being involved with her, Larry got mad and spilled the beans. Jill was so embarrassed she just left the house as quickly as she could.
Paul and Andy went to the coffee house to chat. They caught up on their family situations, when the conversation turned to Chris. Paul told Andy he was unhappy about who she was with, and that they often ran into each other. On the other end of the coffee house, Chris and Michael met so Chris could give him an answer to his proposal. After some good-natured teasing, a nervous Michael finally asked her what her answer was. Chris shocked him by saying "yes" and very pleasantly surprised, he got up and kissed her passionately. At that moment, Paul looked over and saw them kissing and got up to jump in between them. Andy grabbed him and shoved him out the door before Paul was able to make a scene.