John and Isabella visit jailed henchman Gregory about a mysterious locket, prompting him to eventually call back offering to cooperate. Roman learns he's been demoted to Captain despite expecting to resume his old rank after returning from seven years away; Abe remains Commander. At Roman's surprise welcome-home party at the Brady house, Carrie sneaks away feeling excluded, retreating to read her romance novel "Carlotta of the Cape." She fantasizes herself as the heroine Carlotta caught between the noble stable hand Tanner and the passionate but morally questionable nobleman Lazlo (Lawrence). In the fantasy, Lazlo's heart belongs to another woman, but he ultimately rescues Carrie from Tanner's advances, professing his care for her. Meanwhile, Bo and Carly discuss Dr. Goddard's knowledge of Carly's past, and Roman confides his demotion to Marlena before they leave together.
