Elfman Strauss and Evergreen are overwhelmed and defeated by Rustyrose's Arc of Incarnation, which gives him the power to create anything from his imagination. Meanwhile, Loke realizes Caprico is the celestial spirit Capricorn, and that he has the power to take control of humans. He sends Lucy, Gray, and Cana away while he fights Caprico, who recognizes Lucy as the daughter of celestial wizard Layla Heartfilia and declares that he must kill her.