Peggy (Molly Shannon) is a Nice Person. She brings donuts into the office for no reason. She has Cathy cartoons posted in her cubicle. She listens with rapt attention as her socially awkward boss drones on and on about how he's getting shafted, and to her chirpy best friend Layla (Regina King) who talks dreamily about the boyfriend everyone but her can see is a player.
The love of Peggy's life is her dog, Pencil. She drives with him in her lap, eats with him in her brightly decorated kitchen, sleeps with him in her cozy bedroom. With Pencil by her side, Peggy leads a happy, if not a tad unexamined, life.
This changes abruptly one day when Pencil begs to go outside in the middle of the night and then doesn't come back. When she wakes up alone the next morning, Peggy frantically searches for her faithful companion. When she finally finds him seriously ill in her neighbor's yard, she rushes him to the vet, where he dies soon after.
The remainder of the film chronicles how this deep loss affects Peggy. When her family and friends try to comfort her, offering a work bonus or some Xanax, suggesting she get drunk or have meaningless sex, we can see in Peggy's vacant expression that these friends don't get it. Their suggestions of how she cope with her grief show the extent that they don't understand its depth. And in as much, these people she's unconditionally supported over the years let her down.
There's a hint of silver lining when Al (John C. Reilly), the neighbor whose yard in which Peggy found Pencil, offers to take her to dinner. Optimist/delusional Layla gets excited at this turn of events, suggesting that maybe Pencil died so that single Peggy could meet Al. There's also a romantic possibility in Newt (Peter Sarsgaard), ...1