Phyllis considers her options and decides that the best way to beat Diane is to bond with Kyle. Meanwhile, Diane feigns concern for Phyllis and offers to talk with her. Jack tersely tells her to stay away from his wife. At the party, J.T. offers beer to Erica, but she refuses, saying she is the designated driver for the night. Raul and Brittany walk away from the crowd for a few moments alone. When the kids learn that the cops are on their way, they scramble to leave. Raul and Brittany return and see the others leaving. Sharon watches Diego massage lotion into Victoria's back. When Victoria and Nick are out of earshot, he reports to Sharon that their scheme is working. Diego bails Raul and Brittany out of trouble. Later, Raul tells Brittany the experience was not his idea of a fun evening. Diego tells Victoria he feels like a poor role model for his brother. She reminds Diego how much Cassie has learned from him. That night, Nick comments to Sharon that Victoria and Diego seem to be enjoying each other's company. Sharon claims she is tired, but Nick follows her up to bed after Cassie thanks them for a wonderful day.
Hope tells Victor that she's very upset at Leanna's expose and has gotten in contact with Julia and Ramona to figure out what to do next. Victor is struck by Hope's anger. He calls Leanna's voice mail and leaves a message that he wants to see her. Leanna and Lou discuss her next report – a two part on Victor Newman. When Leanna learns that Hope is presently located in Victor's jet, she becomes determined to end his womanizing once and for all. Victoria and Diego share ice cream and talk about their past relationships. Victoria marvels at how liberated Diego is, and Diego asserts that she could be the same way. Olivia catches Serena snooping around Neil's apartment and demands to know where Neil is. Brad calls Olivia on her cell phone and informs her that Neil is with him and Nate at the diner. Serena sees a photo of Drucilla and Lily, and jots down Drucilla's phone number. Olivia blasts Neil for going against her wishes, and is tired of his excuses. Neil insists he's not drunk and wants Olivia to hear him out, but Olivia exits with Nate. Jack is still angry that Phyllis walked out on him, but wants to hear her plan that will work for everyone. Phyllis states that Diane can stay in the pool house, but her access to the main house should be strictly limited. Jack thinks Phyllis' plan is more than she can handle, but Phyllis will do everything possible to make it work. Diane complains to Isabella that Phyllis moved back in just when she was starting to get to Jack. Diane thinks Phyllis has changed, and wonders what her next move is.
Nate admitted to his mother that it was his fault Neil had shown up for the baseball game. When Olivia tried to reason with her son about lying to her, Nate defended Neil and asked Olivia why, if his uncle was sick, she didn't help him. Before Olivia could answer him, Brad showed up, and Nate used that opportunity to get out of there to catch his bus for camp. Olivia expressed her anger to Brad for his decision to let Neil accompany them. Brad said that he'd had to make a judgment call, since Olivia was unavailable, and he hadn't wanted to make a scene that would upset Nate. He also defended Neil, saying he'd been on his best behavior and hadn't drunk at the game, even though it was hot and beer was available. Olivia said that was wishful thinking; she was sure Neil was probably already drinking first thing in the morning. She said that as hard as the day before had been on Brad, all he'd done was make it harder on her to enforce the rules with Nate. But she said she could take Nate's anger, as it was in her son's best interest to keep him away from Neil. She then told Brad about catching Serena in Neil's apartment, and they wondered if Serena was going to be moving in with him there and be yet another unsavory influence in Nate's life. Brad apologized for making things more difficult for Olivia, but hoped that Neil's love for Nate might help him make changes for the better.
The bartender at the Olive Tree saw Neil's watch in Serena's hand. As he questioned her about it, Neil came in, and Serena took him a drink and asked him how things had gone the day before. At first Neil was rational, telling her things had gone fine, and insisting he hadn't had a drink the whole time he was around Nate. But as he talked, his words of anger about Olivia seemed to be directed at Serena. In defending herself, Serena slipped up and admitted to knowing that Olivia had gone to the diner and caught Neil with Nate. Just as Neil was accusing her of being the one who called Olivia, the bartender came up and told Serena he knew somewhere that she could get two thousand dollars for that watch. Neil realized she had his watch and keys and had been to his apartment. When he accused her of robbing him, Serena tossed his watch at him and said she'd only gone there to try to learn more about who he was before his life got so messed up.
Brittany and J.T. continued to spar at the boutique, with J.T. trying to plant doubts about her relationship with the straight-laced Raul. Raul walked in and J.T. taunted them about their boring lifestyle. After J.T. walked off, Raul and Brit hugged and seemed to be getting along fine. Raul was even amused by J.T.'s machinations; he was confident that J.T. couldn't damage their love. Brittany was startled and asked him who'd said anything about love.
Colleen watched J.T. watch Brittany, and finally asked him if he liked her. J.T. said they were only friends, and it bothered him that Brittany wasn't being herself. Later, Colleen told her friend Caitlin about sneaking out to the party and how J.T. had rescued her when it was raided. The girls covertly watched J.T., and Caitlin wondered if Colleen might have a chance with him. After Caitlin agreed to come to Colleen's dance recital that night, she left the boutique, and Colleen again approached J.T. She told him she was nervous about dancing, and he assured her that she'd be fine.
Victoria was pleased to find her father in his office, but her good mood evaporated when she found out that he'd been working from home the day before and her mother had left town. When Victor told his daughter that Nikki had asked for two weeks to think over his marriage proposal, Victoria was stunned. She wondered if her mother's reaction was because of Leanna's newscast or Max Hollister's influence over Nikki. When Victor tried to cut their conversation short, Victoria plopped down and demanded to know why he wasn't fighting for Nikki. Victor told her that Nikki had to make her own decisions. When Victoria finally left him alone, it was obvious that she wasn't pleased with her parents.
Lou listened as Leanna called Victor Newman and was summoned to his office. Leanna told her ex-husband that she was busy, and Victor said if she didn't come to him, he would come to her. After Leanna hung up the phone, she speculated to Lou that Victor was trying to do damage control. She felt like that might mean she was on to a bigger story, and she hoped it might even include an interview with Nikki, who had left town abruptly according to Leanna's sources. When Lou questioned her further, Leanna admitted that she was a little apprehensive about meeting with Victor, but she refused to be intimidated by him the way she once was. When she arrived at his office full of bravado, implying that she had the upper hand, Victor began to tell her how wrong she was.
Phyllis and Diane ran into each other downstairs at the Abbott house, and Phyllis had a little fun toying with Diane. She led her to believe that Jack was not happy with his wife and was going to lay down some new ground rules. Diane, secretly delighted to believe that Phyllis was in trouble, generously offered to speak on Phyllis's behalf to Jack, letting him know how much pressure Phyllis was under. When Jack came downstairs and said he wanted to talk to Diane alone, Diane had a smug look on her face as Phyllis meekly agreed to give them privacy. Diane was distressed to hear that it was she who Jack was laying down the law about; her movement on the Abbott estate was limited to the pool house, and he or Mamie would take Kyle to and from the pool house to the main house. Diane was to use her own bathroom and schedule any necessary trips to the kitchen. When Phyllis returned, Diane hobbled off on her crutches, looking displeased about the new rules. Phyllis then promised Jack that she would keep up her end of the deal by not carrying out any further schemes against Diane. She then got Jack's admission that he had made the situation worse and should have handled Diane's living arrangements a lot better.
Victor outlined his plan of attack for Leanna. He told her that the three women involved would have lots of resources to pay attorneys who would assure that they would win the case. She asked if he had an idea for a compromise -- she was willing to listen. She agreed to make a public apology and retraction. "You won the battle this time, but you didn't win everything or everyone," she said as she left his office.
Jill brought Billy home from the hospital. They talked about the summer being almost over and Jill offered to enroll him into a program with Oxford in England. Billy politely declined her offer, telling her that he wanted to spend the rest of his summer near the people that he loved, including her. Soon, Mackenzie arrived to see him. They talked about college that was going to take them away from each other and all the wasted time they had spent with miscommunication and hurt feelings. They agreed that they couldn't let anything separate them again. . . . .
Back at the Chancellor Estate, Jill and Kay argued again about Larry Warton moving in. Jill accused Kay of trying to make her miserable. Kay suggested that Larry must affect Jill in some way. Jill rejected that idea, and soon Larry arrived for a drink of water while he worked in the heat. Jill was affected by him in his muscle shirt and he tried to find out what was really bothering her. He knew that Jill didn't like Mackenzie and she pressed him for information about the true nature of Mac's relationship with Billy.
Raul and Brittany continued their confusing conversation about their feelings, then she sent him off to the coffeehouse to wait for her. Phyllis came in the door, wanting to talk about the roles that Brit and Raul had been playing on the Glo by Jabot website, wondering if it could possibly be true. Brittany could not deny that she was having mixed feelings about what being in love with Raul really meant, and when she asked Phyllis what to do about it, Phyllis had no answers given her current situation with Jack. Before she left, Brittany said that she wouldn't have to give in and accept any real changes to her life until she was damn good and ready, if ever.
J.T. put a bug in Diego's ear about the trouble that Brittany could be for Raul, so Diego was on Raul's back as soon as he arrived at the coffeehouse. Raul insisted that J.T. was jealous and resisted his brother's advice. At the same time, Colleen was meeting with her granddad. He couldn't attend her dance recital that evening and had heard that she was in the boutique after closing hours the night before. She stayed with her story about being home all evening watching TV in her room and wondered if J.T. would ever consider coming to watch her dance at the recital. . .
Victoria ran into Max Hollister at Gina's. She made it clear to him that she didn't appreciate what he had done to hurt her parents' relationship. He was surprised to find out that Nikki hadn't accepted the proposal from Victor. Later, Max arrived at Victor's office. Victor thanked him for saving him the trouble of tracking Max down.
Sharon surprised Nick at his office, and they made a date for dinner and a movie later. But her affectionate mood vanished when Nick told her how successful he thought his plan regarding Diego and Victoria was. Miguel had seen them dancing together by the pool after the cookout. When Sharon seemed less than thrilled by the news, Nick questioned her. Sharon said it was fine for Victoria, but as Diego's friend, wondered how Nick could want him to be chewed up and tossed out by his sister. When Nick disputed Sharon's assessment of the situation, Sharon assured him that Victoria would never think that a stable hand/waiter was in her league.
Diego thanked Victoria for helping him deal with Raul, and told her that he and Raul had a long talk which meant a lot to him. He noticed that she seemed a little down and asked her what was wrong. He then listened sympathetically as Victoria explained her distress over the situation with her parents. When she complained that Nick and Sharon treated her like she was obsessed, Diego assured her that he was on her side. He respected that she cared so much about her parents and wanted them to be happy, comparing her situation with his. Even though his own parents were still together, he knew how upset he'd be if they split up. Victoria was surprised that he'd made her feel better. Diego then suggested that Nick did have a point that Victoria needed to get out more, and he suggested they go dancing at a new club he'd heard about. After confirming that Diego was asking her out on a date, Victoria agreed to go. Later, Sharon overheard Cody agreeing to rearrange Diego's schedule so he could go out with Victoria. Sharon confronted Diego and said he wasn't going anywhere with Victoria.
At Crimson Lights, J.T. overhead Caitlin tell Colleen she wouldn't be able to make her dance recital because of a family commitment. Though disappointed, Colleen continued to hope at least Brad would be there to see her, since her grandfather was also going to be a no-show. She also said that Brad would be taping it for the rest of the family. She then left for Walnut Grove to get ready.
Brad stopped by Crimson Lights before going home. He apparently had not heard Colleen's message, because he told Cody what a bad day he'd had and said he was going home to spend a quiet evening with his wife. After he left, J.T. asked Cody about their conversation, and realized Brad wasn't going to Colleen's recital.
Colleen was disturbed to hear from another dancer that no one was sitting in the seats she'd saved for her family. As she went onstage and danced, her disappointment was obvious. When she walked offstage, she sadly commented on how no one had come. After she changed clothes, she was about to leave the school when J.T. caught up with her. He admitted that he'd come to watch her dance and been impressed by how she became one with the music. After J.T.'s kind and sensitive remarks, Colleen's whole mood changed, and she was especially happy to learn that J.T. had caught her whole performance on his new camera, so her family could see it after all. J.T. told her that he'd drive her home, but would have to let her out about a block away, because he didn't want any trouble with her grandfather. Colleen agreed, and the two sort of bumped together like old friends as they left the school.
Olivia went to the Carlton house to apologize to Brad, but found Ashley there alone. Ashley was wearing a turban, but was obviously embarrassed about the way she looked and admitted to Olivia she'd been having some nausea. Olivia was as supportive as she could be, and Ashley said she felt much better now that Olivia was there. They then discussed the situation with Brad and Nate. Olivia admitted she'd been harsh with him, and Ashley said that she was glad Brad was spending time with Nate, because she wanted him to do more than worry about her health. She cautioned Olivia about being too unyielding where Nate and Neil were concerned, and Olivia asked if Ashley was trying to make her second-guess herself. Ashley assured Olivia she was a great mother. When Ash was struck by a bout of nausea and left the room, Olivia remembered how devastated Brad was by Ashley's cancer and the thought of possibly losing her. Later, Brad came in and found them together. Olivia gave him the apology and he walked her to the door, quietly asking how Ash was doing. Olivia suggested he ask his wife. Once they were alone, Abby began to cry and Brad went to check on her, casting a worried look at Ashley before he walked upstairs.
Larry was uneasy when Jill asked him what kind of friend he felt she needed. She said she'd noticed his glances and heard his suggestive remarks about her perfume. When she seemed to be coming on to him, Larry asked if she wanted him to respond so she could run to Mrs. Chancellor and tell her that Larry had made improper remarks or attacked her. Jill admitted she hadn't liked the idea of his living over the garage at first, but now she thought it might be interesting to have him around. When Larry said he felt like she was playing a game with him to try to find out information about him and Katherine, Jill said her interest no longer had anything to do with Katherine. Larry finally said that he realized Jill had been lonely since Sean left. When Jill angrily told him that he had no idea how she felt about Sean, Larry said that Sean, at least, had told him a couple of hundred times how much he loved Jill. Jill became vulnerable after Sean's name came up, and she said she hadn't wanted to get married, but there were other ways a couple could be together. Larry admitted he didn't know beans about love, but he could see that Jill was lonely. They began to kiss passionately.
Victor was curious about why Max had come to his office at Newman Enterprises. Max said he understood Nikki was out of town, and he wondered if Victor might give him a number where he could reach her. He said he was sure that Victor was glad to see him, so he could gloat some more about how he'd bested him in their business dealing. He said that Victor had interfered in a place he shouldn't have, his business. Victor said his actions had been to protect Julia because he cared about her, and Max was no more to him than an annoying gnat. Max said that, in any case, he had no regrets, because in attempting to get back at Victor, he'd been able to meet a woman as beautiful and vibrant as Nikki, who must surely be tired of being treated like one of Victor's possessions. He suggested that was why she'd left town. Victor argued that Nikki was simply taking a short vacation. Max said he knew Victor had proposed, so Nikki had either turned him down or told him she needed time to think about it. Annoyed, Victor told Max not to invest too much in his view of the situation; that way, he wouldn't have so far to fall when he fell. He then ordered Max to leave. When Max smiled and walked out, not in the least disturbed by Victor, Victor frowned and picked up the phone.