Julia told Victor that she wanted to have a baby. But behind Julia's back, Victor had a vasectomy. Julia also began modeling at Michael Scott's studio, which was partly owned by Victor. Brock left town because of Julia's inability to end her marriage to Victor. While Victor was out of town, his former secretary, Eve Howard, suddenly surfaced. Julia had hostile feelings for Eve, who d had a one-night stand with Victor. Feeling vulnerable and confused by Eve's presence, Julia slept with Michael. Julia was immediately overwhelmed with grief. Her friendship with Brock had remained strictly platonic. But now that she had slept with Michael, Julia had actually cheated on Victor for the first time in their marriage. When Julia accepted a modeling assignment for Jabot, with Michael as the photographer, Victor suspected that they were lovers.

Katherine Chancellor had a change of heart about Derek and made him head of Chancellor Industries. George Packard, a friend of Rex's, didn't trust Derek and arranged for Judy Wilson to work as Derek's secretary. But George's plan backfired. Judy led Derek to believe that she was actually his ally. Meanwhile, Douglas Austin tried unsuccessfully to pursue a romance with Katherine. With Douglas pining for Katherine, Derek turned his romantic attention to Judy. Fed up with Derek, Katherine decided to dump him. But Derek got Katherine drunk and they made love, which hurt Douglas. While on a cruise with Derek, Katherine realized that he didn't really love her. She jumped overboard. Katherine survived and ended up on a remote island. But Derek, who believed that she was dead, sought to take control of her assets. Mitchell Sherman, Katherine's lawyer, persuaded Victor to regain control of Chancellor Industries to protect Sherman s client in her absence.

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