i have a theory.
Carmen realizes Devon has the envelope with the info on her affair with the married businessman. She naturally wants to get it back before Devon opens it and shows it to anyone.
She has no idea where Devon lives. She calls Jack and he tells her where Devon lives. Carmen gets straight there. Jack is curious and decides to go see what she up to.
Carmen bangs at the door but no one is home. Devon is at Carmen's place to give her the envelope back. Carmen feels desperate and wants the envelope bad. She tries to break in. Or maybe she succeeds.
In the meantime, Phyllis is on her way to see Daniel (he and Devon and Lily share the same apartment). She notices something suspect and think a creep is in Daniel's appartment. Maybe it's Alex back for revenge she thinks. She takes a weapon and the moment she sees Carmen she hits her causing her death. She is overly shocked when she discovers she just killed her friend Carmen.
Jack arrives on the scene and calms Phyllis down. After both collect their thoughts, Jack wraps the body in garbage bags from Devon's place and uses the duct tape as well. He dumps the corpse behind Neil's club so it looks like Dru is the one who murdered Carmen.
Phyllis and Jack are aware they can't look too chummy all of a sudden and decide that the best things to do is to do as if nothing has changed (the NVP feud, the sarcastic remarks, the yelling). Notice that when Devon got arrested for the murder, BOTH Jack and Phyllis claimed that Dru is the real killer.
Last thing: how could Phyllis had hot sex with Nick after killing someone? Well, since she knew Carmen's body was going to be found behind Indigo, she had to come with a plan to stay home without looking too suspicious.She just knows how and where to handle Nick.
I'm done being Hercule Poirot for today.