When did it go wrong?

Rewatching Season 7, Ep. 14, Tom v. Tom, and Schartz is standing up for and backing Katie against Scumdoval re: inviting abusive James on the pre-Tom Tom opening trip to Mexico. And Scummy eventually respects it (after speaking to Lisa) and even says something like “if I am Schwartz’s partner, I am partners with Katie.” So what I am asking is, when did it go wrong? When did Schartz revert back to not backing his wife? And when did Scumdoval become successful in manipulating Schartz into choosing him over his WIFE?