Synopsis
Opening at a Los Angeles party around Christmas, self-aware narrator Harry Lockhart (Robert Downey, Jr.) recounts the events of the film. When fleeing a botched robbery with his friend, Harry's friend is killed, forcing Harry to evade the police by ducking into an audition; when the script mirrors his friend's death, Harry impresses the producers with an outburst they mistake for method acting. Attending the intro Hollywood party before a screen test, Harry is introduced to private investigator "Gay" Perry van Shrike (Val Kilmer), who is enlisted to help Harry prepare for his acting role, and later re-encounters his childhood crush and friend Harmony Lane (Michelle Monaghan); due to Harmony's younger sister Jenna being subject to sexual abuse, Harmony left for L.A. to become an actress and to support her sister. Concurrently, Harry also meets party host Harlan Dexter (Corbin Bernsen), a retired actor and millionaire who recently resolved a ten year feud over his wife's inheritance with his daughter, Veronica.
While investigating the next day, Perry and Harry witness a vehicle and body being dumped in a lake, and are spotted by the killers; as Perry accidentally shot the corpse, they are prevented from calling the police. Returning to his hotel, Harry receives a call stating Harmony committed suicide; Harmony then appears and reveals she was mistaken for her sister, Jenna, who arrived in L.A. and stole Harmony's credit cards, only to then kill herself. Believing Harry to be a detective, Harmony then asks him to investigate Jenna's death as she thinks she was murdered. After Harmony leaves, Harry discovers the lake corpse in his bathroom, as well as a planted pistol; after he and Perry dump the corpse, it is found and identified as Veronica Dexter, whom the pair saw at the party. Perry demands Harry leave L.A. due to the lake killers identifying and framing him. However, Harry discovers Perry was hired to investigate the lake by Harmony's late sister, linking the cases.
Attending a party where Harmony is working, the trio discover Harmony told her sister a fictional character (played Harlan Dexter) was her real father, prompting Jenna to come to L.A.. When Perry leaves to a stakeout for another case, Harry is threatened and beaten by the lake killers, Mr. Frying Pan (Dash Mihok) and Mustard (Rockmond Dunbar). When taking Harry to the hospital, Harmony realizes the lake killers are heading to Perry's stakeout, prompting her to rescue him; when Harry is left passed out in Harmony's car, a Pink-Haired Girl (Shannyn Sossamon), who is affiliated with the killers, unknowingly takes Harry to her safehouse; when Harry witnesses Mustard murdering her, Harry shoots and kills Mustard out of anger.
After Harmony then disappears following a lead, Harry and Perry investigate a private health clinic owned by Harlan Dexter; Perry then realizes that Veronica Dexter was incarcerated there by Harlan so an impostor could drop her court case, before Harlan killed his daughter and crashed the body into the lake after gaining his wife's inheritance. After Harry and Perry are then captured, Dexter reveals he now plans to cremate his real daughter's corpse to remove any remaining evidence, only for Harmony to steal the van containing the coffin. Harry and Perry escape, but Harmony crashes the van, leaving Veronica's body hanging off an overpass. After Harmony flees and is concussed by a fall, a shootout commences that leaves Harry and Perry shot. When Harry tries to save Harmony, he falls over the overpass, grabbing onto Veronica's corpse; after narrowly shooting Dexter and his thugs, Harry finds Harmony, then collapses from his wounds.
Awaking in the hospital, Harry finds that Perry and Harmony are fine, and the former reveals Harmony's sister was not murdered, but committed suicide. After Jenna escaped parental incest in Indiana, she located Dexter believing him to be her real father, only to find him having sex with Veronica's impostor, who was the Pink-Haired Girl; since she looked like Veronica Dexter at the time, Jenna believed Dexter to be incestuous like her real father, and, after hiring Perry to investigate, committed suicide. The film contains an epilogue where Perry confronts Harmony and Jenna's father, before the film closes with present-day Harry giving a monologue on how he now works for Perry.
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