Former cop and convicted felon Logan McQueen has become a lowly private eye, occasionally teaming up with his drunken ex-partner, Charlie Duffy. Meanwhile, long-time homeless inhabitants of the Monarch Hotel - a crazy Vietnam veteran named Flynn and his henchman Kenny - take three women hostage in the governor's suite. They've declared war on the people trying to take over "their" hotel. In the process of kidnapping the women, the two disturbed men kill a young aide and a police officer.
Flynn's first demand is that he wants Charlie Duffy to handle negotiations with the police. The agents monitoring the hostage area are police Captain Waters and FBI Detective Hopkins. Waters is appalled by the demand, knowing that Duffy is no longer a cop but rather an out-of-shape drunk. However, Waters has no choice. And Duffy, dumbfounded by the request, insists that Logan be permitted to partner up with him. Now teamed up with Logan, Duffy goes into the hotel and begins negotiations with Flynn, but his cover is blown when they discover he's wired. And just as Logan arrives on the scene, the latest body and demands are hurled to the ground. Luckily, the dead body isn't Duffy.
In a desperate attempt to save the hostages, Logan and Detective Higgs maneuver their way around the booby-trapped hotel. Just as Flynn is about to kill one of the hostages, Logan crashes through a window, and he and Duffy apprehend Kenny in sync. Flynn escapes, but manages to blow himself up with his own explosives.
This difficult ordeal once again proves to Logan and Duffy that they have what it takes to make a successful team. In order to move forward, they decide to leave their past behind them and salvage their friendship.