After Caroline, Neely, and Manny rescue three orphan teenage boys from drowning near a rock jetty, Caroline seeks out a mysterious youth who helps her rescue one of the boys, named Derek, who is connected with a street gang that means harm. It turns out that the youth is actually the ghost of Derek's long-dead brother, who's looking out for him since no one can see him except Caroline. Meanwhile, Neely's ex-husband, Peter, arrives, and she becomes confused again ever since she walked out on him two years ago.

Kristy and Todd are two of Manny's friends at his high school and are madly in love with each other. When their romance is threatened by Todd's wealthy and snobbish parents, who employ Manny's mother as their maid, and Kristy's single working-class mother, Kristy and Todd make a suicide pact rather than end their romance. Mitch and Caroline rescue the teenage lovers. Meanwhile, Cody meets a mermaid while scuba diving who mistakes him for her long-lost love. But no one will believe Cody's story, except C.J, who together they attempt to track her down.