Dorothy : Rose, I am not in denial.
Rose : Yes, you are. You're just denying you're in denial.
Dorothy : I am not denying I'm in denial.
Rose : If you're not denying you're in denial, then you're in denial.
Dorothy : Look, fluffhead. Why should I deny being in denial? I never said I was in denial, YOU are the one who said I was in denial, and don't you deny it.

I remember those words but don't remember the episode. I have all episdoes quotes on paper but I need to check it out.

I do know it's the episode where Dorothy and Rose work on the bathroom. Getting the new toliet in and working. That much I know.

the episode where they install the new toilet is "Second Motherhood"