Gary makes a car deal with ""Orchid Cab Co."" againest Sid's better judgment. Gary also hires a female mechanic, Linda Stryker. Laura starts her real estate job. After her first sale, her boss, Scooter Warren, kisses her.Val starts college. Richard thinks a prestigious Chicago law firm will hire him, so he tells off his boss and quits his job. Then he finds out the Chicago firm's offer is for a salary several thousands less than he was already making. He cannot accept the job. He tells Laura he declined the job since she didn't want to move, but then starts crying.

Abby comes on to Gary, but then says she's kidding when she sees how uncomfortable he is. Everyone thinks Laura's having an affair with Scooter, because of all their flirting. Laura tells Scooter that they can't really have an affair, because they're both married. Richard asks Laura if she'd like to discuss his affair with Abby, so that they can start over. Val's night school teacher is Earl Trent. He invites Val over to work on a story, and then asks her to sleep with him to get even with Gary and Judy. Val refuses and he starts to force her, but then breaks down weeping. Gary comes over and apologizes to Earl for having an affair with his wife.

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.

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.

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.

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