In post-war Los Angeles, was an incriminating wire recording of a tryst that wasn't supposed to be fatal. It was recorded by LA private detective J.J. "Jake" Gittes for his client: real estate developer of B&B Homes "Jake" Berman, to 'incriminate' Berman's 'unfaithful' wife Kitty who was having an affair in the Bird of Paradise Motel in Redondo Beach with Berman's own real estate business associate Bodine.
Berman shot Mark Bodine in cold-blood as he fled into the motel's bathroom. In the tape recording, a mysterious reference to Katherine Mulwray between the two adulterers stirred up memories of the past for Gittes. (Katherine Mulwray, the blonde teenaged daughter of the earlier film's tragically-killed heroine Evelyn Mulwray-Jake's former client and lover, was sired by incestuous rape by her tycoon father Noah Cross.) It was revealed that Gittes had been set up in the murder-for-profit scheme. The murder could not be considere justifiable homicide because Berman had deliberately killed his partner-he had a gun conveniently planted under a chair delivered to the room-in order to commit pre-meditated murder of Bodine, a capital crime.
For business reasons, partner Bodine's will excluded his sexpot widowed wife, Lillian Bodine and named "surviving partner" Berman the sole beneficiary of B&B Homes' enormously profitable real estate business (tract housing in San Fernando Valley). Her attorney Chuck Newty stated that she was entitled to her husband's wealth if the murder could be proven to be pre-meditated. Did Berman plan the murder with his wife Kitty in order to collect money from the deceased partner's share? If true, this would also makes Gittes an unwitting accomplice to murder.
During convoluted developments in the plot, Gittes discovered that Berman's tract housing subdevelopment, located in an orange grove (the same irrigated location that Gittes visited in the original film), was also being surreptitiously drilled for its vast underground resources by greedy oil baron Earl Rawley, Bodine's business associate. In a preliminary court pubic hearing regarding the recording, the tape was played, but the evidence was obviously tampered with by Gittes to hide Berman's cold-blooded guilt and to protect Mrs. Berman; red-haired Kitty was actually the elusive blonde Katherine Mulwray- which Gittes figured out when he realized that she dyed her hair red; through varous legal and title documents, Katherine was shown to be the original owner of the orange grove and of the mineral rights to the subdivision land, but was forced to sign over a quit-claim deed to the land only to criminal nightclub owner Michael 'Mickey Nice' Weisskopf, Berman's gangster associate, on July 17, 1946.
Bodine was blackmailing Berman about the real identity of his wife, threatening to expose her if she didn't sign over the mineral rights-and Bodine was also, as Berman jealously admitted, engaged in a real affair. That was the real motivation in killing Bodine. Gittes perjured himself in court to protect the daughter of the woman that he was unable to protect. Berman also divulged to Gittes that he was terminally ill (with advanced syphilis viewed on X-rats and under a mictoscope, unsuccessfully treated with radium implants which were also causing cancer)-but had not told his wife Kitty about his condition. To ensure that she would definitely inherit his real-estate fortune (his intention all along)-he deliberately and suicidally blew himself up and ended his life in one of the development's tract homes by lighting a cigarette in the volatile, natural gas-filled environment after a shaky earthquake.
In the final scene, Gittes spoke to Kitty/Katherine about their mutual pasts as she left his office, in the final line: "It (the past) never goes away" (Jake's belated answer to her earlier question: "Does it ever go away, the past?").
