The car with Sid and the FBI agent goes over the cliff. The agent dies, and Sid is left paralyzed. Sid goes into a coma, and Karen keeps vigil at his bedside. Surprisingly, Richard comes to the hospital to offer his support and offers to help Karen with insurance, to loan her money, etc. Gary wants Karen's forgiveness, but she says she can't deal with him and asks him to leave. Sid wakes up from the coma.

Sid has a blood clot which will permanently paralyze him unless they operate, however, there's a 40% chance the operation could kill him. Karen doesn't want him to get the operation, but Sid insists and makes Karen sign his consent form. Sid tells his family how much he loves them, and after they leave he makes a private tape recording for Karen. The neighbors all keep vigil with the Fairgates during the operation, and Karen and Gary make up. In the operating room, something goes horribly wrong. The doctor finally comes out, and Karen can see by his face that Sid has died. Everyone is crying and in shock. Later, Karen listens to the tape Sid made for her, telling her how much he loves her.

The Fairgates are in turmoil. Michael is terrified that Karen will die, and constantly checks up on her. Eric cries in Sid's antique car, and then is very upset when Karen sells it. Diana's upset that Karen is acting like a robot and won't talk about her feelings. Karen is putting on a strong front, but is angry with everyone. She's angry with Sid for dying on them. At work, she fires Abby and goes off on Gary and starts slapping and hitting him. Val confronts Karen and tells her she's hurting the people she loves. Karen syas she is terrified without Sid, and scared that if she lets herself feel she'll just blow. Ginger has her baby- a girl named Erin Molly. Karen visits them at the hospital, and they ask her to be the godmother. As Karen holds the baby, she breaks down weeping.

Abby is upset and trying to find her children. She answers the phone and it's Olivia, but the line goes dead. After that, she doesn't want to leave the house in case Olivia calls again. But this doesn't stop her from dating; she just has them sleep over. Val and Gary see a newscast about Lilimae helping to sop a thief. The news says Lilimae is homeless, so Val invites her to their house. The next day, Lilimae is arrested for shoplifting, but the jude says he'll only give her six months probation if Val and Gary assume responsibility for her. Val invites her to stay with them.

Richard's boss asks him to procure prostitutes for clients and he does. When Val receives a postcard from Olivia, a detective is able to find the kids. Abby goes there and Jeff tells her that the state won't honor California custody laws. Abby begins manipulating Jeff, but he tells her that he knows what she is doing. Abby perseveres, and soon has Jeff back in love with her. She agrees to remarry him and they all drive back to Knots Landing. On the day of the wedding, Jeff and his mother wait at the Court House for Abby to show up. Instead, a deputy shows up and serves Jeff a restraining order so he can't see his children or esle he will be arrested for kidnapping. Karen later tells Abby that she really hurt Jeff. Abby replies, ""He hurt me. Nobody does that!""

Karen's old boyfriend, Teddy Becker, comes to visit. Teddy is convinced that Diana is his daughter, but Karen assures him that she is Sid's. After hearing Teddy tell Diana that his sons asked to be adopted by their stepfather, Karen decided to let him think that Diana could be his. However, Karen shows Diana a photo of Sid's grandmother, who looks exactly like Diana. Richard gives Laura a new car for her Christmas gift, but then Scooter comes by with a brand new Mercedes for her. Val is upset by past Christmas memories of her when her father died and Lilimae abandoned her. Gary reminds Val that Lilimae was only 14 when she got married, so Val should give her a break. Lilimae gives Val a quilt and they make up.

Richard and Laura plan a romantic getaway, but Richard has to cancel when his boss asks him to throw a client party with prostitutes. Richard's boss ignores all of his business ideas, and only wants him to throw parties. Laura thinks he is having an affair, so goes to Santa Barbara with Scooter out of spite. Laura and Scooter kiss. At the party, one of the prostitutes passes out so Richard brings her home and puts her in the shower to wake her. He is all wet, and tells Laura that he fell into a pool. He later tells her the truth, but she doesn't believe him. KLMotors is being audited, but no one can decipher the books, so Karen rehires Abby. After the audit, the auditor suggests Karen send Abby to an accounting class. Although she had only hired her temporarily, Karen asks Abby to stay on.

Lilimae meets Jackson Mobley, who promises to make her a star. He steals $200 from Kenny and Ginger, and then asks Lilimae to marry him. They go to Las Vegas. When he finds out she's poor, he admits he was trying to con her. Jackson convinces a lounge manager to let Lilimae sing. Val and Gary rush to Las Vegas to stop the wedding, and are relieved to find out they didn't get married. Richard is tired of being the company pimp and takes his anger out on Laura. Laura runs to Scooter's, only to find out that he is getting back with his wife. Richard continues to yell at Laura, and she starts screaming and slaps him. Abby asks Gary to perform a skit with Olivia on ""Father's Night"". As Gary, Abby and the kids get into the car, Abby says, ""See, we're a real family!"" This upsets Val, and Lilimae tells her she'd better watch out for Abby.

Laura takes the neighborhood women with her to check out an estate to sell. The estate is rumored to be haunted by the three sisters who lived there. The women must spend the night when Karen's car won't start. The ghosts of the sisters want Val to join them and be their mother, and try to get her to jump off the roof. On the roof, Lilimae is able to talk Val out of her trance, and she doesn't jump.

Gary and Abby decide to invest in a Mexican company making methanol cars. Gary mortgages the house without telling Val. Gary goes to Mexico to work out a deal with Pete, the owner. Abby decides to follow, and Richard goes to help them with legal points. While in Mexico, Gary and Abby have their first kiss, but later he gets mad at her when she wants to cut Pete out of their deal. Richard warns Gary that Abby is trouble. Meanwhile back home, Val's upset that Gary didn't ask her about mortgaging the house or tell her that Abby was with him.

Richard and Laura introduce Karen to a friend of theirs, Charles Linden, and she has her first date, but they don't get along. Kenny has Ginger make a demo tape for a song, and Andy Moore, another producer, encourages Ginger to pursue a singing career. Kenny's against this, and wants Ginger to stay home with the baby. When he finds out Ginger and Andy are working behind his back, he's not happy but Ginger decides to go ahead with it.

Karen's college roommate, Victoria Hill, a fashion designer is in town to work with Karen on a benefit fashion show. All the neighborhood women are the models. Victoria offers Karen a job in New York and she considers it. Diana is enthralled with Victoria and wants them to move to New York. In the end, Karen decides to stay in Knots Landing. Gary tells Abby he's tired of her acting sexy to manipulate him. Laura tells Scooter she's leaving Richard, and they finally sleep together. Scooter wants her to move in with him, but she says no. Then Laura finds out that she's pregnant.

Karen's brother, Joe Cooper gets a job as a visiting professor at USC and moves in with them. Rusty, an old boyfriend of Val's comes to town and abandons his daughter Cricket at the Ewings. Upset at being abandoned, Cricket lies, steals and accidentally hurts Olivia. Val reluctantly takes Cricket to a shelter, but reconsiders and brings her back home. Gary finally locates Rusty, and Val confronts him, and he decides to come back for Cricket.

Val finishes a journal assignment about the Ewings for her class. Lilimae find and reads it, then gives it to Abby who shows it to Joe. Joe thinks it's publishable and sends it to a publisher. When Val finds out, she is both furious and flattered. Gary thinks it is a scam and runs off to work on Methanol with Abby. Laura tells Richard she is pregnant, but is going to get an abortion and leave him because she doesn't love him anymore. Richard convinces Laura to keep the baby and that he will change, and starts pampering her and being really nice, which only irritates her. Richard is very sincere about wanting to change, and tells Karen how excited he is about the baby. When he gets home, Laura has left him.

Abby tells Gary they need $20,000 to keep their Methanol business going. Abby meets an engineer named Larry, but casts him aside when she meets Andrew Douglas, a famous silent-movie director. Larry, meanwhile, becomes more interested in Karen, and Abby is jealous. Abby uses Andrew, who says she reminds him of his deceased wife, Terry Clarington. Andrew is rich, and somewhat senile, and at times thinks Abby is Terry. He tells Abby that he will put her in his will. However, when he dies, he has left the money to Terry Clarington, so Abby gets nothing. She's also lost Larry to Karen, which further upsets her.

Joe's girlfriend Lorraine comes to town, but they determine they want different things and it won't work. Abby, Gary and Val go to Sacramento to see Senator Riker, because if a bill doesn't pass to make Methanol legal, they will lose their business. He says there's nothing he can do. Abby sleeps with him, and then he decides to push the bill through. Val is mad at Abby and how she uses sex to get what she wants. Abby tells Val she could learn from her. Larry asks Karen away for the weekend, but she's not ready. Joe tells Karen she needs to stop living in the past and should take off her wedding ring. He shows home movies of the Fairgates, and everyone laughs and cries. Karen goes to the cemetery and talks to Sid. She says she will love him forever, but will now wear her ring on a chain to symbolize letting go of her fantasy that he's not really gone.

A publisher wants to publish Val's book, but Gary doesn't want her to since it airs his family's dirty laundry. Val agrees that she won't if Gary will only see Abby at KLMotors during normal working hours. Knowing this, Abby deliberately sets up a meeting at night, and convinces Gary he has to be there. Gary goes, so Val signs the publishing contract. Richard's boss tells him to set up another client party with prostitutes. Unaware that she's taping him, Richard tells a prostitute that his company is only using him as a pimp. The tape is played on the news, and his boss releases a statement that hiring the prostitutes was all Richard's idea and they had no knowledge of it. He then fires Richard.

Ginger's singing in a club, so the Wards go to San Francisco. Richard invites Laura over on a pretext, but once there he tries to get her to come back. She says no and they argue. Gary hears, and goes over to stop the fight. Richard pulls a gun on him, so he leaves and calls police. Richard holds Laura at gunpoint and gets crazier and crazier, so she starts to play along with him. Meanwhile, a swat team has surrounded the house. Richard eventually lets Laura go, and puts the gun to his head, but it isn't loaded. The police bring Richard to a psychiatric hospital for observation.

Karen and Laura visit Richard in the hospital where he is getting better. Val makes a romantic dinner for Gary, but he says he has a meeting with Abby and a client and he promised she'd baby-sit Olivia. Upset, Val takes Olivia and they drive into the mountains. They eat at a diner, but she forgot her wallet, so she waitresses to pay for the meal. A truck has overturned on the freeway, so they have to stay overnight. The diner owner kisses Val, but she says she can't sleep with him. Meanwhile with Val away, Gary and Abby sleep together but he's consumed with guilt. Lilimae sees Gary's car at Abby's and waits up for him, but he doesn't come home. The next day, Val apologizes to Gary and says she'll be more lenient with his business. They hug, and Lilimae shoots Gary a look that could kill!

Joe needs a date for a faculty dinner. Kenny suggests he take Ginger, so he does. Richard is ready to go home, and tells Laura he'd like to be part of the baby's birth. Laura goes to see his doctor who tells her only to go back to him if she's there to stay, but not if it's out of pity. Gary and Abby continue their affair, but he feels so guilty, he ends it. However, he keeps watching Abby from the window, and Val is extremely suspicious. Val asks Gary if they're having an affair, and he locks himself into the bathroom. Val then goes to see Abby, who tells her ""I'm not saying we are having an affair, and I'm not saying we're not. I am saying that I can have him anytime I want."" Val slaps Abby. Later, Gary sees Abby and kisses her.

Richard tries to get his job back, and they call Laura to bring him home. While there, she sees a suicide note in the garbage, and decides to move back in. Val's publisher changes the name of her book to ""Capricorn Crude"", and hires Joe to be the editor. Val asks Gary to go to her publishing party, but he says no because he's mad about the book. At lunch, Karen and Lilimae see Abby and Gary coming out of an apartment together. Lilimae tells Gary she saw this and will tell Val if he won't go with her to the party. Gary agrees to go to the party, but that night he's at the apartment with Abby, who won't let him leave. At the party, Val's very upset about Gary not showing up. Karen leaves and Val sees her and follows. Karen goes to the apartment and bangs on the door until Gary and Abby finally let her in. The door is open and Val walks in and sees what's going on. She takes off for home where she packs. Gary has followed, but she won't let him in. As she gets back into her car, Gary trie