Kelly Price was "supposed to meet up" with Whitney Houston at Clive Davis' annual party Saturday -- but unfortunately, Houston, 48, was found dead just hours earlier in her Beverly Hilton hotel room.

Price, 38, first heard the news about her friend's passing while at a gifting suite. "It just got real weird," she told E! News' Ryan Seacrest at the Grammy Awards Sunday. "My manager grabbed me and said, 'We need to go.' I think they were afraid somebody was going to just blurt it out to me."

PHOTOS: Whitney Houston's highs and lows

"In my heart I was praying that it was an internet hoax. I hate them, but I was hoping that it was one," Price added. "To realize that it wasn't, I don't even know how to explain it."

VIDEO: Whitney Houston's life in the public eye

Houston joined Price onstage at Tru nightclub on Thursday; the two famously collaborated on the 1998 hit "Heartbreak Hotel" (also featuring Faith Evans). Sadly, Thursday's event would be the multiplatinum singer's final performance before her untimely death.

"I wasn't expecting her to sing -- I wasn't gonna ask her to do that," Price explained. "We embraced each other and she said, 'Give me the mic.' i gave her the microphone, she started to sing and I went along with her."

Grammy-winning singer seemed "wasted" and "moody" as she exited the club past midnight, according to a witness. "She reacted angrily to the security guards trying to get her into her car...and started cussing them out."

PHOTOS: Stars we lost in 2011

Despite Houston's passing, Price said the singer would want the Grammy Awards to "be celebratory and about the music. She loved what she did."

Get more Us! Follow us on Twitter, Friend us on Facebook, Subscribe to Us Weekly