When the kidnappers call again, the phone trap points to a nearby phone booth. John and Andy race out to grab the guy before he leaves, but a collision with a drunk driver derails their plans. Andy, already upset about the holiday in general and this case in particular, goes ballistic when the other driver calls him an asshole, and smashes the man's car up while a dazed Kelly looks on.
The two return to the precinct, relatively unharmed, and interview Sachs' nurse, looking for patients with histories of drug problems, since the kidnappers recently demanded that drugs be included with the ransom. After she firmly dismisses several possible suspects, Andy goads her into admitting that she thinks her son is involved.
Sipowicz and Kelly, riding in a police car disguised as a cab, tail the doctor as he goes to pay the ransom, then follow the skell who makes the pickup in hopes of following him to the girl. But when he decides to pull over and shoot up with the uncut drugs -- which could kill him and leave John and Andy back at square one -- they bust him and Sipowicz threatens him at gunpoint to give up the girl's location.
The kidnappers are holed up in Ft. Lee, NJ, and the detectives manage to convince the local cops to go in without a warrant, saying that if they're asked, they can just claim that they heard the girl scream for help. They storm in and find her in a closet, unharmed but very scared.
Sipowicz, who overheard most of the exchange, mentions later in the day to Fancy that he shouldn't worry about Haverill. Fancy denies anything is going on, and tells Sipowicz to mind his own business.
After he and John rescue the kidnapped girl, Andy tracks down Haverill in a parking garage. He brings up an old case that he worked years ago, where a mobster with whom Haverill was dining got whacked, and Haverill convinced Andy to keep his name out of the report -- and if Haverill doesn't stop hassling Fancy, Andy'll start singing to Internal Affairs. Haverill doesn't understand why Andy would stick up for Fancy, but agrees to lay off him. He shows up at the station later and angrily tells Fancy to unpack his bags -- his errand boy did the job. Fancy is honestly confused, but Haverill doesn't buy it.
At the end of the Christmas party, as Sipowicz is taking off the Santa suit in the locker room, Fancy comes in to confront him about interfering in his feud with Haverill. He gets himself worked up and repeatedly says that he doesn't owe Sipowicz, then storms out. He walks back in a minute later and says that he's sorry -- it's just that every time he tries to talk to Andy, he gets too angry to think straight. He walks out again, only this time with the words "I owe you one."
Getting nowhere with James, they decide to interview the woman with whom he was travelling. She says that she and her son were hitchhiking in Alabama, that she never knew him before, and that she saw him go into the store where he was supposed to have committed the robbery, but didn't see anything that went on inside. She says that she'll testify, because she doesn't want to go to jail and lose her son. After running it by riding DA Laura, Medavoy talks to Fancy and says he believes her story, but Fancy tells him to run her prints through BCI before giving her a walk.
While the party is getting started, Martinez gets info over the wire that James also recently busted his wife out of prison, and that the prints of their "witness" match the wife's. But as they try to arrest her, she grabs a pair of scissors and takes Donna hostage. Sipowicz (coming out of the locker room dressed as Santa) distracts her, and Medavoy jumps her from behind. Donna, severely freaked, thanks Greg for saving her life.
At the precinct holiday bash, Janice chats briefly with John, who goes out of his way not to ask her about her situation. At Linardi's, Janice gives him the patrol routes, and he gives her and Richie a bonus, though it's smaller than Richie used to get under Marino. As Janice leaves, Richie and an out-of-towner gripe about what a cheapskate Linardi is.
Fancy and Kelly pull James aside during the party and announce that they got him a present: his gold detective's shield. "Flying James, you're a detective, you son of a bitch," Kelly compliments his protege.
Andy's certainly not in the best of moods on this joyous day -- Christmas has traditionally been the time of year where he made his biggest screw-ups. John, trying to cheer his partner up, suggests that Andy being on the wagon will make things all better, but when Sylvia asks him out for dinner, he turns her down, stating that he'd be very poor company.
At the end of the evening, Kelly goes to visit his mother in a senior citizen's hospital. Her Alzheimer's has gotten very bad, and she quickly confuses him with John's late father, John Kelly, Sr, and proceeds to lecture him on how he needs to spend more time with "John Jr." John tries to play along, but can't help shedding a tear or two. He gets up for a moment to get his mother some water, and by the time he turns around, she's suddenly lucid, recognizing John as her son, but with no memory of the previous conversation. She asks him if he can sit with her for a while, and he agrees.