Phyllis tells Jack that she doesn't know whether to scream or cry, being so relieved that Daniel didn't get convicted. Jack says he's so happy for her and Daniel, but is upset that Phyllis didn't want him there on one of the most important days of her life. Phyllis thanks him for his unending support of her and Daniel's case, but says that she couldn't prepare herself for the worst because that meant acknowledging that the worst might happen. Jack understands and they kiss. Victor admits how proud he was of what Nick did in the courtroom. Nick states that he doesn't know how to feel anymore, and barely even knows who he is. Phyllis comes over to speak with Nick, thanking him for helping Daniel. She states that if he can do it, she wants to bury the hatchet between them and start fresh. Dru panics when Lily doesn't return home. She calls the Abbott house looking for Phyllis. Jack answers and says she isn't there, but tells Dru the good news about Daniel being found not guilty. Dru tells Jack to wake Daniel up; she needs to ask him where Lily is. Meanwhile, Daniel lights a few candles; both he and Lily are euphoric that they can be together again. Daniel becomes emotional, realizing he owes his freedom to Nicholas Newman. They tell each other how in love they are, and passion ignites. Lily and Daniel decide they want to take the next step in their relationship and make love. The next morning they wake up, realizing they accidentally spent the night there and will probably get in trouble. Suddenly the doors burst open Jack, Phyllis, Dru and Neil enter. Neil and Dru demand that Lily get dressed and come with them. Mac relays to Kevin that Kay is totally behind backing them to buy the coffeehouse. Kevin loves the idea of having Kay's help, since she has proven herself in business already. Neither notices Tom watching them from a nearby table. As he's about to leave, Kevin spots Tom with Ashley. He tells Tom that there will be hell to pay if he ever catches Tom with Ashley again. Later, Tom shows up at the loft and tells Kevin that he's moving in with him.
Tom appears at the loft, begins taunting Kevin and shoves him aside, announcing that he plans to be Kevin's new roommate. Kevin tells Tom to get out, but Tom insists he's moving in. Kevin tries to resist and tells his father that this isn't like their old place....there are no closets! Kevin begins to freak, as a cruel Tom tells him he never should have been born. Kevin then has several flashbacks to his childhood when he was at the hands of his abusive father. Tom tells Kevin he is weak, just like his mother. Kevin loses it, and yells at Tom to shut up. Tom then brings his luggage inside and yells at Kevin to go buy him some beer.
A distraught Gloria rushes into Michael's apartment angrily asking Michael why he interfered in her "business relationship" with Tom. She explains to Michael that Tom can't be antagonized now; it's too soon to tell John about him. Michael becomes furious over Tom and tells her he won't condone Tom's extortion. Despite Gloria's fears, Michael tells her they are going to go to John and tell him the whole story. Just then, Michael's doorbell rings; it's Scott. Michael is a bit surprised and tells Scott that Lauren is on a business trip, that they didn't expect him so soon. Scott apologizes for just popping up, but Michael says it's no problem, that he can stay there with him until Lauren returns. Kevin, visibly upset, comes in Michaels apartment....he is introduced to Scott. Gloria delightedly offers to show Scott around, beginning at the Poolside Café at the Genoa City Athletic Club. After they leave, Kevin tells Michael all about Tom, how he showed up at the loft, and that he has now moved in. Michael has had enough and vows to put an end to Tom's reign of terror.
At the Poolside Café, Ashley and John are at a table discussing Abby and her graduation from summer swim camp. Ashley tells her father that she gave her new friend, Tom, the brush-off, as he seemed to be interested in getting serious, but she may be having second thoughts about doing that. They then notice Gloria walk in with Scott. She sees John and Ashley and quickly brings Scott over to the table and introduces him. Ashley offers to show Scott the gym, as she has to pick up Abby there. After they leave, John casually mentions that "new man" in Ashley's life.....that he may even be her date for the wedding!
With Daniel finally home, Phyllis expresses concern over his relationship with Lily. Daniel tells his mother that he loves Lily. Phyllis suggests that he stop seeing her, as Dru and Neil will never condone their relationship. Daniel vows that he will never hurt Lily and says he will talk to her parents and convince them to allow them to see each other. Daniel tells Phyllis he will be seeing Lily at school. Phyllis then breaks the news that he has been expelled from Walnut Grove and cannot return there in the fall. The school administration felt that he would not be a good example to other students due to his underage drinking and the fact that he fled the state.
Dru and Neil are extremely angry with Lily for meeting Daniel in the park and not coming home last night. Lily tells them she doesn't care how they punish her. Neil reminds her she still has charges pending against her. Neil leaves the room to take a phone call. Meanwhile, Dru asks Lily if she and Daniel had sex. Lily didn't want to talk about it, but she finally acknowledged that did occur.
Neil comes back into the room, saying that it was the headmaster of Walnut Grove on the phone. He then broke the news to Lily that they had received a letter informing them she had been expelled from school. They had tried to convince the school to take her back, but they refused. Lily seemed upset at first but then announced she would just go to Genoa City High with Devon and enroll in an honors program there. Dru is obviously very upset at the outcome, as she and Neil worked very hard to keep Lily in private school. As Lily leaves to go take a shower, Neil tells Dru they are going to have to take serious action. They feel that if they are proactive in their approach to Lily, the judge may drop charges against her. Dru then tells Neil she needs to tell him something that will break his heart.....that Lily actually slept with Daniel last night. They now agree that there's no other way.....they must send Lily away from Daniel. They discuss boarding school for Lily. They feel this will convince the district attorney that Lily is keeping her academics a priority. They agree this is the only way....Neil leaves to make the call.
A while later, Lily receives a call from Daniel. She tells him her parents were really angry, but it was all worth it....she has no regrets. She insists she still wants to see Daniel, no matter what the consequences.
Tom, having settled comfortably into Kevin's loft, calls Ashley. He tells her it was nice running into her earlier and asks if they can go out again. She's not sure but will get back to him. Tom then hears a knock at the door.....it's Michael. He tells Tom he's there to call his bluff.
Gloria and Scott return to Michael's apartment. Kevin is there and tells her Michael has gone to talk to Tom. Scott then says he is going to go outside and take a walk to look around at the neighborhood. Gloria senses there is something wrong with Kevin. He finally confesses it's about Tom. Gloria immediately becomes upset, but Kevin tells her Michael is taking care of it.
At the loft, Michael tells Tom in no uncertain terms that the two of them are going to John Abbott tonight and tell him everything. Tom's reign of terror will soon be over!
Gloria tried to get Kevin to tell her what Michael was up to, but they were interrupted by Scott's return. Gloria told Scott that she was thrilled that he was in town and knew that Lauren would be, too. She hoped that Scott and Kevin could become friends. After Gloria left to go home, Kevin apologized for his mother's enthusiasm, but Scott said that he liked her. He also liked Michael. He asked if Kevin's father was like the rest of the family. Kevin said they weren't close to his father, and Scott apologized for intruding. Scott explained that he'd never known his own father, who died when he was a baby. He felt very close to his mother, however, even though there were a lot of things about her life that he didn't know. When Kevin found out that Scott was going to be in town for a while, he said he had a better suggestion about his living arrangements than staying with Lauren and Michael.
At the loft, Tom didn't believe Michael's threats about telling John the truth. Michael insisted that he was serious. Even if his mother never forgave him for going to John, even if John threw his mother out, the one thing that would be accomplished was that Tom would be out of her life and could no longer extort money from her. Tom said that if Michael was serious, he wouldn't have come to Tom first and warned him. Michael told Tom that he was merely giving him a chance to come along and watch events as they unfolded. He left the loft to go to the Abbott house, and Tom followed him. After they left, Kevin came in with Scott and warily looked around, relieved when he saw no sign of Tom. He explained that things could sometimes get intense at Michael's, so he thought it was a better idea for Scott to move in to the loft.
When Gloria got home, John had stopped by to pick up some papers for work. He told her how beautiful she looked and how he'd enjoyed running into her at the club earlier when she was giving Scott his tour. It was also nice to meet Lauren's son. Gloria wondered if Ashley would be bringing the new man in her life to the wedding or if she'd invite Paul. John told her that right now, Ashley just seemed to be friends with the man. He was sure if things got serious, Ashley would bring him by to meet her father and get his approval. Gloria said that Ashley definitely wouldn't care about her approval. When she showed her insecurity about their relationship, John assured her that she had nothing to worry about. He loved her very much. After he left, Gloria stared at her reflection, trying to reassure herself, but her composure vanished when Michael showed up with Tom and Tom told her that they were there to see John.
Glenn Richards agreed to drop charges against Lily if she went into a more supervised environment. Lily was horrified to hear her parents' plan to send her to boarding school. They said that it had been taken out of their hands. She could either go away to school, or she'd be spending her senior year in juvenile detention. Lily accused them of trying to get her away from Daniel. While they were arguing, Malcolm arrived. Drucilla went outside with him and brought him up to date. Malcolm wasn't sure that boarding school was the only answer. Inside, Neil tried to soften things over with Lily, but as soon as she brought up Daniel's name, Neil lost patience with her. He said that she'd made one bad decision after another since becoming involved with Daniel. When Malcolm and Drucilla came back inside, Malcolm said that he wanted to talk to Lily alone. They went out on the terrace, and Malcolm warned Lily that he was about to say some things that would shock her.
Sharon went by Newman Enterprises to ask Brad if it was okay for her to go back to work. Brad said that if she was sure she was ready, then he was looking forward to having her there. Sharon said that she and Nick were handling their loss in different ways, but maybe that was to be expected. She said if she never smiled again and always wore black, no one would be surprised. But if she smiled or seemed happy, people would probably think she was insensitive. But she would miss Cassie every day for the rest of her life. All she wanted to do was focus on something other than her grief. Brad told her that she couldn't worry about what other people thought. She should just be who she was. He knew she'd have bad moments, and when she did, all she had to do was tell him, and he could cut her some slack at work.
Sharon was grateful for Brad's understanding and support. She said hearing the not guilty verdict had been painful, but it was over. The one regret that she would always have was that she hadn't followed her instincts and kept Cassie from going out that night. She'd known something was off, but Nick hadn't wanted to see it. She would never blame Nick, but she did wish it was something they could talk about. Nick just wasn't ready yet.
Nick is waiting for Daniel at the Athletic Club. First, he thinks he won't show. When Daniel appears, Nick tells him that he's not going to apologize for withholding evidence. Daniel says that he has come to thank Nick for setting him free. Nick says that he did it for Cassie. Nick finally feels some relief talking to Daniel.
Devon tells Sierra he has to go see his mom. He says she has been doing better and hopes she is still staying clean. Sierra asks if she can come. Devon is not sure, he's afraid his mother will be embarrassed. Meanwhile, Daniel's mom finds her old crack dealer and apologizes for turning him in. She has a watch that she would like to try to sell to him for drugs.
Lily's not sure what Malcolm would have to say could surprise her. Malcolm says that he knows how she feels. He was burdened himself once, and understands what Lily is going through. Lily tells him sometimes she wishes he were her real father. She says he is her best friend. Malcolm convinces Lily that although this is not the perfect solution, it will keep her out of jail. He says that if Lily and Daniel are really meant to be, it will still happen for them.
Gloria is in shock to see Michael and Tom walk in the door, but eventually agrees that telling John is the right thing to do. Tom thinks that Gloria still wants to be with him and not some old man like John. Gloria tells Tom that her marriage with him was a nightmare. She says she has finally realized why he is so sadistic. Because no one could ever love him. Gloria says the only thing that was ever good in her marriage to Tom was having Kevin. She says the only decent part he ever had is forever gone. Tom angrily leaves. Gloria is amazed. She thanks Michael for his bluff. Michael tells her that he's not bluffing. They are going to tell John the truth right away.
Sheila puts on a disguise and ends up meeting Tom at a bar in Genoa City.
Devon and Sierra came back to the Winters' apartment to tell Lily goodbye. Sierra was sad that she'd be missing senior year with her best friend. She promised that when she saw Daniel, she'd tell him what had happened, since Lily hadn't been able to get in touch with him on his cell phone. Sierra left to wait for Devon in her car, and Devon said his goodbye to Lily. They promised to keep in touch, and when Dru and Neil came in, Lily told him how lucky he was to have them for parents. After a group hug, Devon took the luggage down, and Dru gave Lily and Neil some time alone. Neil told Lily that she should see this as her chance to start over. He promised to visit her and bring Devon. Drucilla reminded them that she had to get to the airport with Lily, and Neil commented on how he hadn't been able to find his other watch.
In the park, Yolanda wanted more drugs from her dealer. She was sure the watch she'd given him had been valuable. He gave her the drugs, but warned her not to smoke it all at once. Later, Devon and Sierra returned to the park to look for her, and didn't see that she was lying under a tree. They went to a nearby shelter and when they didn't find her there, they went back to the park. Devon saw her drug dealer, who said he might have given her something and walked away. As Devon turned to go after him, he spotted his unconscious mother. Sierra called 911 on his cell phone while Devon hugged Yolanda and called out for someone to help them.
At the athletic club spa, Kevin introduced Scott and Daniel. Daniel complimented Lauren and listened to Kevin's account of how Scott was writing a novel. When Daniel noticed that he had a message on his cell phone, he dialed in and found out that Lily had been frantic to get in touch with him. He left the club and went to her apartment, and Neil told him that she was already gone. Neil told him to let her go so she could start over.
Daniel went to the airport and bought a ticket so he could get to the boarding gate before Lily left. Drucilla had gone to make some business calls, so he and Lily were able to say goodbye. He promised her that no matter how far away her parents sent her, nothing would change between them. He'd be waiting for her when she came home. He backed out of sight, and Drucilla never saw him. Just before they boarded, Lily turned around and blew Daniel a kiss.
At the rooftop spa, Tom had a conversation with Sheila, who'd disguised herself and was using a British accent. When she found out that he'd had some plan that had been ruined by other people, she said that she never let anyone get the best of her. Recognition flickered across Sheila's face when she saw Scott in the hot tub with Kevin. Tom wondered if she knew them, and she said no. Tom said it was no loss; that was his son and his new roommate. Kevin spotted Tom and told Scott it was time to go. Scott looked over and saw Tom, but he didn't recognize Sheila. After they were gone, Sheila again said that Tom needed to take action without letting anyone know what he was doing. Tom agreed and left.
Gloria continued to try to talk Michael out of telling John the truth. He could cost her everything, and she didn't want to lose John again or grow old alone. Michael assured her that wouldn't happen. He'd always be there for her. But as long as Tom held her secrets over her head, she was in his power. The only way to be free of him was to tell the truth. Even if John didn't forgive her, she would survive.
John prepared to leave the office after calling Gloria and telling her that he wanted to take her out to dinner, then go dancing at Yves afterward. But before he could leave, Tom came in. He introduced himself simply as "Tom, Ashley's friend." John said that it was nice to meet him, but he was in a hurry. Tom said before he left, he needed to tell John something that involved John, Gloria, and himself.