Chase and Maggie post Cole's bail, and Cole starts working part-time at the vineyard of a stunningly beautiful single mother, Katherine Demery. Richard's newspaper expose of workers' conditions at Falcon Crest leads Chase to publicly commit to higher wages and benefits for the workers, as well as changes in local labor laws. Lance agrees to take Melissa to child-birthing classes but refuses to attend, opting instead to spend time with Lori Stevens, his former girlfriend. Melissa is jealous of Katherine's attractiveness, and later Cole and Katherine's working relationship turns romantic. Richard tells his reporter, Blair, that he wants Cole convicted.

Against Maggie's wishes, Cole moves in with his new lover, Katherine Demery. Richard finds out and plasters The Globe with clandestine photographs of Cole and Katherine kissing. Jacqueline Perrault, Chase's mother, arrives from Zurich for a surprise visit and gives Chase money for Cole's legal defense, but Richard uses his contacts in Zurich to force Jacqueline to leave town. Angela buys up expensive stock in The Globe and continues tracking Emma to get her proxy. Lori demands that Lance come out in the open about their relationship. Lance is defiant when Melissa confronts him about his late night trysts. After a sudden complication in Melissa's pregnancy confines her to bed, however, Angela pressures Lance to spend more time with his wife.

Richard schemes to buy a piece of county property earmarked for a park, on which he plans to build a memorial to Douglas Channing on one small part and plant a vineyard on the rest. While Chase vehemently opposes the plan, Richard plants a bomb in Nick's truck and successfully intimidates Nick to vote his way at the board of supervisors meeting. Leaving her prescribed bed rest in order to win Cole back from Katherine Demery, Melissa collapses and is taken to the hospital, where she delivers an unhealthy, premature baby, whom she names Joseph Angelo Cumson, after Lance's great-great-grandfather. After Cole moves out of Katherine Demery's house, he moves back into his parents' house.

Doctors give Melissa's premature baby, Joseph, who suffers from a host of health problems, a twenty percent chance of survival. Richard uses a lucrative job offer to entice Tony into securing Julia's agreement to sell off her interests in Falcon Crest and The New Globe. However, the plan backfires and Julia is devastated; Tony realizes Richard's job offer wasn't real. When Cole goes on the run to avoid facing trial for the murder of Carlo Agretti, Melissa agrees to a second autopsy of her father's body hoping it will help clear Cole. The autopsy reveals that the killer must have been right-handed, whereas Cole is left-handed, and the charges are therefore dropped.

Melissa is grateful when Richard flies a neo-natal specialist in from Europe to keep her baby alive. Maggie travels to Los Angeles to meet with producer Darryl Clayton about her screenplay. After Darryl turns the script down, Angela meets Darryl in secret and agrees to invest in the film if he will keep Maggie occupied in Los Angeles. As a romantic relationship develops between Vickie Gioberti and her father's associate, Nick Hogan, Vickie finds out from Cole that Nick is married. Chase discovers that Angela is using all of Falcon Crest's investment funds to buy up stock in The New Globe. After Chase confides with Nick about his war with Angela and her attempt to take over the newspaper, Richard soon finds out and confronts Angela. As Joseph's condition improves, Cole vows to be a loving father. Richard puts a down payment on a house in Tuscany Valley.

Angela's Founders' Day Party is in disarray following Richard's announcement that Jacqueline is his mother. When Chase confronts Richard on the veranda, Richard reasons he did not promise to keep Jacqueline's secret, only Chase's. When Angie turns on Jacqueline, Chase suggests taking her home. After Richard calls his mother an adulteress, Chase strikes his half-brother, and subsequently Chase and Maggie whisk Jacqueline away. The next morning, Chase regrets hitting Richard, while Jacqueline believes that the events of the previous night are in the past. She also understands Richard's bitterness, although Chase may never trust Richard again. At Falcon Crest, Melissa overhears Lance making plans to meet Lori. Melissa's attorneys are still evaluating all offers. Nick and Sheila, in their bedroom, share a moment as they dress.

At Chase's office, Sheriff Robbins warns Chase to stop interfering with the Agretti investigation or he will be charged with obstruction of justice. Chase informs him that he intends to keep digging for leads. When Chase relates his run-in to Sheriff Robbins, Maggie pleads with Chase to drop the issue. At Falcon Crest, Angie demands that Lance never mention Joseph's test results again. To Angie, Lance is the child's legal father. Emma has been tracked down somewhere in Texas and her exact location should be verified in about a week. Attempting to avert Angie's anger, Phillip points out that Lance is where Angie wants him, Melissa will soon be forced to sell the Agretti vineyards, Chase is having both personal and political problems (vindicating Cole's complicity), and Jacqueline is finally gone for good. Reconsidering her accomplishments, Angie invites herself to go sailing with Phillip the next day. Later in the lab, Lance complains to his mother about Angie's ignoring Joseph's te

At Lori's, Lance tries to delay Lori from getting out of bed. Lori is irritated that Lance keeps procrastinating in looking for work, since it has been a week since Angela threw Lance out of Falcon Crest. Ultimately, Lori gives in, and they make love. At Chase's office, Chase catches heat from Sheriff Robbins about going to the D.A. with Carlo Agretti's letter from Angela. Robbins doesn't believe the letter incriminates Angie in Carlo's murder. In Richard's office, Diana informs Richard that nearly everyone but Angela has accepted the invitation to Richard's housewarming at the McKay place. Richard is confident Angie will be there, since the party will have three of the nation's most respected wine critics. Richard wants his new neighbors to realize that buying the McKay vineyards was just ""the first step of a much longer journey."" At Falcon Crest, Angie not only tells Julia she has decided to go to Richard's party, but that Angie has the ability to be flexible, unlike Lance. Angie thr