"The best thing about not having Joe Simpson anymore as a father-in-law is I don't have to play grab-ass under the table on Easter Sunday," Lachey had said on a TV show.
The singer was on the show to promote his new album '98 Degrees'. He is also known to have admitted to the host that Joe had touched him inappropriately, reported Radar Online.
"Jessica was shocked and horrified that Nick said what he said. She's upset. Nick might have thought it was funny and he got a cheap laugh, but to Jessica, it wasn't," a source said.
The 32-year-old had married Lachey in 2002. She starred with him in the MTV's reality show 'Newlyweds: Nick and Jessica'. The show aired from 2003 to 2005. The couple divorced in 2005 after three years of marriage.