As the Falcon Crest mansion is engulfed in flames, Lance plunges desperately into the inferno to try to save Melissa, who is trapped inside. The aftermath of the fire has surprising repercussions for the residents of Tuscany Valley. Meanwhile, Angela secretly arranges a meeting between Frank Agretti and his long-estranged son, Nick. Richard anxiously launches a search to discover who was behind the assassination of The Thirteen. In pursuit of an exclusive story, Emma obtains a job typing for a reclusive writer, R.D. Young, and soon meets his assistant, Cabot.

Senator Ryder is intent on killing Richard and kidnapping Maggie. Convinced that Senator Ryder's brother John is responsible for the killing of The Thirteen, Richard discovers the secret method by which Ryder and John contact each other. As Richard waits in a park for John, he doesn't know that the senator has already killed his brother and is at Richard's house.

When Angela offers District Attorney Fields her support for the governorship in exchange for dropping the murder charges against Lance, he indignantly refuses; however, when Richard offers to hire Field's leukemic son to join the staff of The New Globe, Fields agrees to the deal. Lance, on the other hand, is not grateful; he wanted to prove his innocence in court. Although not charged with any crime, Maggie is guilt-ridden by the fact that she killed Senator Ryder, even though she did it in order to save Richard's life. After Nick Agretti is enraptured when he witnesses Pilar swimming nude, Angela informs him that she has learned some information he cannot release, revealing that the price for keeping the secret is Falcon Crest itself.

After Angela blackmails Nick with incriminating information about his past, Nick surrenders Falcon Crest to Angela. While Angela makes plans to rebuild the house, Nick regrets his deference to her and warns that he will not bend in the future. Nick decides to tell Ben the truth about his mother, which enrages the young man. Richard's newspaper prints the fact that Melissa had placed a phone call after Lance's departure, proving that Lance is innocent of her death. Richard warns Pilar not to let her affair with Lance interfere with Richard's takeover of the valley. When Frank's old friend Libby appears, Nick and Ben are surprised. Libby requests Frank to join her in Columbia to mine emeralds, which is an offer that disturbs Angela. As Emma and Cabot begin an intimate relationship, Cabot questions her true identity.

As Christmas arrives in Tuscany Valley, Frank agonizes over whether or not to leave his family to mine emeralds with Libby. Ben turns against Nick for lying to him about his mother. Unaware of Richard's assistance, Maggie is delighted with the overwhelming response to her special advertising offer. Richard offers to back Pilar's failing consortium through a blind company for a controlling interest. When Daniel Cabot discovers Emma's true identity, he abandons her. Although Angela celebrates the holiday by surrounding herself with family, Pilar's holiday is spoiled when she spots her brothers Tommy and Paco being chased by security officers. However, Christmas dinner at Pilar's home brings Nick and Ben closer together and Nick to admit his love for his father.

Mercedes and her husband pressure Pilar to sign papers allowing them to adopt Lisa. Although Pilar realizes that Mercedes is the only mother the child has ever known, the thought of a final, legal adoption is more than Pilar can bear. When Pilar goes to Lance for consolation, she discovers him with an attractive young woman. After Angela is outmaneuvered for the purchase of a bottling company, she is determined to learn who is behind the consortium. After Maggie's newspaper office is mysteriously trashed a few days before the first edition, Emma discovers that Cabot has been lying to her about his true identity.

Angela is delighted when Emma announces her intention to marry the famous writer, R.D. Young, but her plans for the wedding conflict with Young's passion for privacy. Hurt by Lance's involvement with Cookie Nash, Pilar turns to Nick for consolation. Moreover, Angela discovers that it was Pilar who organized the consortium with Richard. When Maggie discovers that Tommy was present when her newspaper office was trashed, she must decide whether to give him a second chance.

Angela's hands-on approach to Emma's forthcoming wedding may prove futile when the bride and groom call the festivities off. After Emma breaks the news to Angela that the wedding is off, her prospective bridegroom, R.D. Young, apologizes for his behavior and announces that the wedding is on schedule again. During the wedding rehearsals, Young's nervousness escalates and he convinces Emma to elope. After Pilar accepts Lance's apology about Cookie Nash, their romance resumes. Nick fails to persuade Ben to curtail his relations with the Cellini family, despite his warning that the family is dangerous. An unannounced visitor adds turmoil to Tuscany Valley.