Chase and Maggie post Cole's bail, and Cole starts working part-time at the vineyard of a stunningly beautiful single mother, Katherine Demery. Richard's newspaper expose of workers' conditions at Falcon Crest leads Chase to publicly commit to higher wages and benefits for the workers, as well as changes in local labor laws. Lance agrees to take Melissa to child-birthing classes but refuses to attend, opting instead to spend time with Lori Stevens, his former girlfriend. Melissa is jealous of Katherine's attractiveness, and later Cole and Katherine's working relationship turns romantic. Richard tells his reporter, Blair, that he wants Cole convicted.

Richard schemes to buy a piece of county property earmarked for a park, on which he plans to build a memorial to Douglas Channing on one small part and plant a vineyard on the rest. While Chase vehemently opposes the plan, Richard plants a bomb in Nick's truck and successfully intimidates Nick to vote his way at the board of supervisors meeting. Leaving her prescribed bed rest in order to win Cole back from Katherine Demery, Melissa collapses and is taken to the hospital, where she delivers an unhealthy, premature baby, whom she names Joseph Angelo Cumson, after Lance's great-great-grandfather. After Cole moves out of Katherine Demery's house, he moves back into his parents' house.

Doctors give Melissa's premature baby, Joseph, who suffers from a host of health problems, a twenty percent chance of survival. Richard uses a lucrative job offer to entice Tony into securing Julia's agreement to sell off her interests in Falcon Crest and The New Globe. However, the plan backfires and Julia is devastated; Tony realizes Richard's job offer wasn't real. When Cole goes on the run to avoid facing trial for the murder of Carlo Agretti, Melissa agrees to a second autopsy of her father's body hoping it will help clear Cole. The autopsy reveals that the killer must have been right-handed, whereas Cole is left-handed, and the charges are therefore dropped.

During breakfast, Lance presents the paper for Melissa to see and thinks he is off the hook. However, Melissa knows that Richard printed this because she would not sell him her father's property. When Angie learns that Richard's evidence is from the paternity results that Lance gave him, Angie denounces Lance's inheritance. At home, Cole, referring to the same article, thinks Melissa finally told the truth about Cole's fatherhood to Joseph. Although Cole's murder charges were dropped, Chase knows they will never hear the end of this until Carlo Agretti's murderer is found. At the hospital, Angie visits Elliot McKay, who, although quite ill, defiantly rejects Angie's offer to buy his vineyard. In town, Vickie meets Nick, who professes his love for her. At The Globe, Melissa confronts Richard about the newspaper article and when Richard refuses to print a retraction, Melissa threatens to sue him for libel. Richard welcomes the extra publicity.