After 5 weeks, no one can find Peter. Val grieves over Ben, and makes up with Laura. Abby's really worried about Olivia, who has been having nightmares, and has reverted to infantile behavior. Mack becomes friendly with a man from his messenger service, Al Baker. Paige goes to Greg, concerned about her paternity. He plants a passionate kiss on her to prove he's not her father. Then Mack and Paige discover that they are both allergic to cantaloupe, so he must be her father! The crack at the Lotus Point playground gets worse. Workmen say it's structural, and needs to come out. Abby just wants it patched, but Gary and Karen out vote her. The workmen remove the cement and find Peter's body.

Al Baker starts to hang around Mac's office, and Peggy suspects he's homeless. Mac agrees to let Al sleep in his office. Peggy comes by with dinner, and finds the office filled with homeless people. Paige has nightmares, and Mac thinks it's odd that Paige left Peter several friendly messages when he knew she was mad at him. Olivia's scared to talk to Mac and Detective Garcia, and runs to Val's instead of meeting with them. Gary wants to get an attorney, but Abby says that will just make her look guilty. Detective finally questions Olivia, and takes out the locket. Olivia says she had given it back to Peter. Detective. Garcia pats her on the shoulder, but is really taking fibers from her school uniform. The fibers match fibers found on Peter's body, and police go back and accuse Olivia of the murder. Abby says she killed Peter.

Lilimae is worried that Val isn't getting over Ben, and tells her she should try smile therapy. Al lives in his station wagon, and brings it to the MacKenzies to show Mack. Lilimae is very rude to Al, so he tells her to try smile therapy. Val buys a sportscar. She tells Gary he is the father of the twins. Jill tells Gary that she is sick of his ex-wives, step-children and secret children, and moves out. Later they make up, and she moves back in. Paige admits to Mack that Peter fell on a spindle when they argued. Since it was an accident, the police don't press charges, but Mack says she needs to apologize to people she hurt. Paige apologizes to Greg, who says she's lucky that Mack is her father because he'd hang a snot like her out to dry. Paige tells Abby she's sorry Abby is off the hook, and Abby says that she is going to get Paige for this. Laura quits Lotus Point, and tells Greg in a round-about way that she is dying.

Michael saves a girl - Jody - from drowning, and is embarrassed when he makes her out to be a hero. Greg hires a nanny, stressing it's only until Laura returns. Lilimae warms to Al, and he asks her out. She's shocked that he lives in his car, and they have dinner by the side of the road. Romance begins to bud. Olivia still grieves Peter, so Abby tells her about her first love, Charles. Gary is hurt when Val doesn't invite him to the twins first birthday party. He tells Val he wants to be in their life, but she says no. Gary implores Lilimae's help. Val tells Lilimae that Gary is unreliable, and how many fathers can the twins lose? Val finally relents and brings the twins to the ranch to see Gary. Jill doesn't like this. Karen meets with some men to arrange a convention for them at Lotus Point. She's shocked when she meets their boss. It's Abby's old boyfriend Charles.

Eric visits and has a surprise - he's married! Karen doesn't like his wife Linda. She also doesn't like Michael's new girlfriend Jody. Val invites Gary to dinner, and after the twins are asleep they kiss passionately, but he leaves. Abby meets Charles for lunch and asks him if leaving her was the worst mistake he made in his life. He says he's the most miserable man in the world. Flashback Scenes: Young Abby meets Charles when Sid fixes his car. He asks her out, but is angry that she won't sleep with him. She eventually gives up her virginity to him, and tells Karen she is going to marry him. Later, Karen shows her the Society Page, which has an announcement of Charles marrying someone else. Charles explains to Abby that Judith will be a more appropriate wife for him, and they'll all be happier in the long run, but he'd like Abby to continue to be his mistress. Abby leaves him, but is devastated.

Karen plans a reception for Linda and Eric, but doesn't warm to her. Michael is irritated at Jody's neediness and insecurities. Al proposes to Lilimae, who says she can't leave Val. Finally, Lilimae tells Al she won't marry him, but will live with him. They buy a motorhome and leave Knots Landing. Gary spends lots of time with Val and the twins. They laugh about how everyone thinks they're having an affair. Abby tells Jill that Gary and Val are using the twins as an excuse to see one another, and that Jill no longer excites Gary because the cheating excites him, not the woman. Abby waits at a restaurant for Charles, but then his secretary calls and says he's overseas. She remembers trashing her room after she left Charles, and vowing that she would never let a man hurt her again. Greg misses Laura terribly, and tells Meg about all the things they'll do together when she's back. Then he gets a call from the clinic that Laura is dead.