Their senior year is winding down and the kids from Laguna Beach are just getting started for their summer of fun...and drama. Lo, LC, Morgan and Christina are the most popular senior girls in school. The four get together one gorgeous afternoon to discuss how they can begin their last summer together. They decide on a fashion-themed formal at the luxurious Surf and Sand Hotel and they call it "A Black and White Affair." Now it's time to figure out who should be on their guest list, and of course, who should not.One name that some of the girls aren't so comfortable with is Kristin. She's a junior and is dating Laguna's most-eligible bachelor, Stephen. Stephen is one of the hottest guys in town and is friends with practically everyone, especially LC. So begins the love triangle: Stephen and Kristin are pretty-much boyfriend and girlfriend. However LC and Stephen have been friends ever since they were little kids. LC wants to take Stephen away from Kristin and have him all to herself, making it impossible for Kristin and LC to get along. Get it? Good.It's seven o'clock on Friday night, and Kristin visits Stephen at work. Stephen mentions that his best friend Trey is hosting a barbeque party. Kristin is not keen on attending a party where a run-in with LC is likely. Stephen makes it to Trey's BBQ later that night, where he meets up with LC, who is spreading the word about the upcoming Black and White Affair. As the night goes on, Stephen and LC exchange alluring looks.The next day, LC invites Stephen to come and see her new house, which is still under construction. They talk about life, friends and college. Meanwhile, Kristin and her best friend Alex paint their toenails in preparation for the Black and White Affair. Both get giddy over the prospect of how cute Stephen and Kristin's kids would be. When Kristin later meets up with her friend Talan, another junior, he questions her relationship with Stephen and she reveals that she doesn't trust him around LC. Later that night, Stephen and Kristin go out to dinner. With Talan's words still fresh in Kristin's mind, she accuses Stephen of lying about where he was the night before.After dinner, Stephen meets up with close friends Dieter and Trey, and admits to them that he sees Kristin as more of a "good hookup" while LC is more of a "girlfriend" girl.It's time for the Black and White Affair to begin, and the girls are all decked out in black. Kristin is the only girl to show up wearing a white dress, which somehow strengthens LC's disapproval. But Kristin's party doesn't last long. Kristin had only intended to make a brief appearance at the party, and is frustrated with Stephen because he wants to stay longer. LC and Stephen exchange looks with each other several times during the party, and it is obvious that his relationship with Kristin might not last much longer. Welcome to Laguna Beach.