At the Tuscany Valley Cemetery, a funeral is in progress that will drastically affect the lives of everyone at Falcon Crest. After admitting to the murder of Carlo Agretti, Julia pulls out a gun, critically wounds Chase and fatally wounds his mother Jacqueline. At Jacqueline's funeral, Chase's cousin, Dr. Michael Ranson, appears for the first time and is taken into the Gioberti household. At the prison, Julia fights Angie's attempts to help prove her innocence, believing prison is better than living under Angela's tyrannical control. Lance feverishly pursues Melissa, who is horrified that his mother murdered her father and who vows never to forgive any of the Channings. Back at the hospital, Chase finally comes out of his coma, only to discover that the bullet lodged in his spine has left him paralyzed.

Angela jeopardizes Chases recovery by telling him about his mother's death. After Maggie confronts Angela, Angela declares that it's time to go for the jugular. When Angela learns that Dr. Lantry augments his income by illegally selling pills, she uses this information to blackmail the doctor into signing an affidavit about Chase's incompetence to manage Falcon Crest. As Lance helps his grandmother in her scheme, his wife, Melissa, is turning to Richard for affection. Back at Falcon Crest, baby Joseph is rushed to the hospital after swallowing the pills that Lance had procured for Angela's blackmail scheme. With hatred and fear in her eyes, Melissa coldly accuses Lance of trying to destroy her baby.

After their baby's accident, Melissa and Lance agree to a truce, and Lance and Angela are soon thrilled when Melissa announces she's pregnant. Carrying out Angela's plan, Dr. Lantry informs Maggie and Michael that the bullet in Chase's spine has caused an infection, and that he may have to operate. Later, Lantry discreetly injects drugs into Chase's I.V. During this, Richard becomes guilt-ridden when he learns from Philip that Jacqueline was dying of cancer and stepped in front of Richard to spare her son from the gunfire. Richard and Melissa then plan to gain Julia's trust to manipultate her to avenge the deaths of their parents. Meanwhile, Maggie begs Michael to face his fears and take over Chase's case. That night, Dr. Lantry triumphantly announces to Angela that Chase has a raging fever and could die whenever she wants. Angela is horrified, but Lantry coolly informs her that it's too late and reminds her she's an accomplice to murder.

Michael frantically races against time to stop Dr. Lantry from operating on Chase, which could leave Chase paralyzed for life. Angela then sets a court date to have Chase declared legally incompetent to manage Falcon Crest. Chase regains some feeling in his legs, and through physical therapy, begins to recover. At the hearing, just as the judge appears ready to rule in Angela's favor, Chase hobbles in on crutches, and the judge denies her petition. While Julia is declared not to be criminally insane, jail inmates continually torment her. At the Gioberti's house, Maggie convinces Michael to take a staff position at the hospital, but is shocked when he tells her he's the executor of Jacqueline's estate.

Melissa helps push Julia closer to the gas chamber as she faces sentencing for two murders. As the judge prepares to pronounce sentence, Julia announces she'd rather die than spend her life in prison. The judge, however, sentences her to life behind bars. Michael Ranson accuses Dr. Lantry of malpractice, but Lantry tells Angela he will implicate her if she doesn't stop Michael. Meanwhile, Richard Channing spins a malicious web using Emma to lure Maggie to work for his newspaper as a feature writer while he fights Chase by delaying the reading of Jacqueline's will. Philip returns the original contract to Melissa that Angela had forced her to sign that would have given the Agretti harvest to Falcon Crest.

Julia breaks down to beg Angela for protection against the ruthless inmates and prison matron who are out to kill her. Angela pays the matron off to make things easier on Julia. Maggie uncovers evidence that Dr. Lantry's paychecks are supplemented by a mysterious and handsome additional income. Dr. Lantry is feeling the heat from Chase and Michael's investigation into his competency and ethics as a doctor. Afraid of being implicated by Lantry, Angela threatens Dr. Hooks into dropping any inquiries. Maggie's sister, Terry Hartford, discovers that Maggie has become wealthy and heads for Falcon Crest.

Angela desperately protects herself when she discovers that Chase and Michael's investigation into Dr. Lantry's underhanded past points to her. After Angela reveals to Lance that Melissa and Richard Channing are having an affair, Lance, boiling with anger, sets out to find them. Melissa covers by telling Lance that she's trying to maintain Richard as an ally, while Richard has his eyes set on Pamela. Linda's father refuses to acknowledge Cole as part of his family, while the newlyweds start a custody battle for baby Joseph with Melissa and Lance. Maggie's sister Terry seeks her fortune in Tuscany Valley by manipulating her way into the Gioberti's home.

Railroaded by Angela, Dr. Lantry is jailed, but now he poses a bigger threat to the wine baroness who fears he will turn the state's evidence against her in court, implicating her in the attempted murder of Chase. Philip arranges Lantry's bail and plans to have him sent out of the county, but Chase and Michael are determined to prove that Lantry is allied with Angela. Angela investigates Terry's dark past with plans of using her to destroy the Gioberti family. After discovering that Terry had been a prostitute in New York, Angela uses this fact to force her into stopping Cole's custody suit. Meanwhile, Terry, scheming to gain wealth, plans to overtly flirt with the men of Falcon Crest. At the same time Richard is incensed to learn that the cartel demands 100 percent control of his racetrack and will stop at nothing to get it.

Lance betrays Angela by revealing to Chase where Dr. Lantry is hiding. Chase accuses Angela of having arranged Lantry's bail and tells her that he found out from Lance. Angela denies everything but can barely control her fury over Lance's betrayal. Chase locates Lantry, who confesses that Angela had blackmailed him into signing the affidavit concerning Chase's incompetency. Before Chase can stop him, Lantry injects himself with a lethal dose of morphine. When Osborne's dead body is found on Richard's property, this not only further tarnishes his already scandalous reputation, but poses a threat to Richard's own life. Meanwhile, Michael warns Richard that his inheritance is in jeopardy, and Philip is exposed as the publisher's business associate.