Angela threatens Nick Hogan not to vote with Chase against her at the county supervisor meeting. If Nick votes to redistribute Falcon Crest's water to other vineyards, Angela warns that she won't be buying the $17,000 worth of pipes she was going to buy from him. Nick casts his decisive vote with Chase, and Angela warns Chase that he will come to regret his moment of glory. Emma disappears, secretly giving Chase the voting proxy to her twenty percent share of The Globe before she leaves -- the same proxy Angela hoped would give her control of the newspaper's board of directors. Richard prints a sensational article suggesting Cole murdered Carlo Agretti. When Richard asks Melissa to sell her the Agretti house, she suspects that Richard could have had a hand in her father's death. Cole is arrested for Carlo's murder after Cole's fingerprints are found on the statuette used to kill Carlo.

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.