Liz feels guilty about Michael's acts of kindness toward her, and then phones Mary to see if she made any headway in changing Julian's negative opinion of her. With Peter hospitalized for serious burns, John and Chris attempt to reassure Steve that the teenager will recover from his injuries. Later, Steve musters his courage to face Peter, who is suffering unbearable pain. Liz persuades Mary to meet her at the Red Hand, where they joke about their conspiracy against Julian. Joe delivers bad news to Steve about Peter's condition.
Joe phones Steve and Kate with serious news about Peter's infection. John tires of making casual politeness with Christine when he stops by the Prescott home. After learning that a new antibiotic is failing, Steve and Kate visit Peter in the intensive care unit and promise him that he'll feel better soon. John attempts to explain to Christine why he remarried Adrienne. A frightened Steve tells Kate all the things he wanted for Peter's life.
Julian accuses Liz of starting rumors around the campus that he and Mary are involved in a menage a trois with Loretta Jardin. Later, he threatens to reveal his affair with Liz, who counter-threatens him with the news that she's carrying his child instead of his son Michael's. John hints to Christine that his relationship with Adrienne will soon change, and warns her that Adrienne is only pretending to be her friend. Julian informs a stunned Mary that he had an affair with Liz, fathered her baby, and is being blackmailed by her.
Liz arrives following Julian's confession and is shocked that Mary knows the truth. Vicky explains to Michael how she feels safe and tranquil alone at the mill house rather than frightened, and Michael agrees that he could feel contented there, too. Mary confronts Liz about the affair with Julian, and when Liz gleefully announces she became pregnant intentionally, Mary slaps her. John accuses Liz of being as deceitful as Adrienne. A contrite Julian can't convince Mary of the truth.
Liz attempts to break the news to Michael about the pregnancy before Julian can give his version, but she realizes she really loves Michael and doesn't want to break his heart. When John confronts Adrienne about her manipulations and deceptions, she claims she did it out of love for him. Unmoved, John walks out on her. Julian arrives to tell Michael the truth, leaving Liz terrified that she's going to lose everything.
Julian confesses to a horrified Michael that Liz intentionally became pregnant to pay them both back. Realizing how badly he was duped by Liz, Michael is unable bear the sight of her any longer, and he leaves. John tells Christine that he is finally free of Adrienne and begs her for another chance at love. A devastated Mary learns about the situation between Michael, Liz, and Julian. Fearful of a setback in her emotional state, Steve makes plans to take Mary to the Caribbean for a long, recuperative vacation.
Michael seeks and finds consolation from Vicky, whom he now sees in a very different light. The reunions of Chris and John and Allison and Hugh helps restore some order to the Hathaway family. Julian and Mary face their pain and move toward a reconciliation. Adrienne and Liz realize they are both all alone, but Liz knows that she still has her baby, which she intends to keep. Julian faces Michael, and the two men take one last hopeful shot at being father and son again.