PAUL MONETTE is the rule-breaking sort of novelist. Readers noticed that temperament in his first novel, Taking Care of Mrs. Carroll , and will find it in this second, along with the psychological subtlety and stylistic elaboration that seem to be his pecial talents. The first rule he breaks prescribes that novels must be "realitic," plausible, and even autobiographical -- at least when they're not cast in a fantasy genre like sci-fi. Monette stands between the two extremes: he writes a naturalistic prose romance.

Drawing his setting from the world we inhabit and his characters from the stock of recognizable contemporary personality, he scrambles expectations by introducing untoward and sometimes fantastic happenings into the plot. This kind of prose romance, historically, counts a few master pieces -- Moby-Dick, The Marble Faun, The Trial -- but many more failures or near-failures. The Picture of Dorian Gray , for example, despite local incandescences, doesn't finally come off: Wilde loses focus halfway along, and the lurid denouement could be summed up by recasting something Wilde himself said about Dickens: "Only a man with a heart of stone could fail to laugh at the end of Dorian Gray ."

The Gold Diggers (to be published March 15) has as many flaws as Wilde's prose romance, but in fact most of these go hand in hand with the rare and improbable pleasures offered by the book. The story unfolds in Los Angeles, or rather L.A., as all the characters have it. But this is an L.A. out of movieland or, the same thing, dreamland: an imaginative wizard behind a silver screen keeps the plot always on the boil, arranging for coincidences of the wildest kind, conjuring up sex, violence, cash, and beautiful things -- landscapes, houses, silks, jewels, paintings, bronzes, chests -- to keep readers enthralled. It's a book filled with what the Industry calls "production values."

What distinguishes The Gold Diggers from the kind of book you buy in one airport lobby and discard in the next is, first, its believable, in-the-round characters. The linchpin, clearly, is Rita -- smart, humane, no longer an ingenue but, as they say, "attractive." She chucks New York, along with a number of other passionate, destructive affairs, and catches up with her friend Peter out on the Coast, where he's become a superstar interior designer. Peter descends, romantically, from displaced Russian nobility, but otherwise there's no nonsense about him. He lives with Nick, handsome and stalwart in a familiar western way. How the destinies of these three reasonable and feeling people (plus a hustler with the heart of a rattlesnake) intertwine among themselves and with a cache of stolen art treasures belongs to the narrative paractices of prose romance mentioned before.

More original are these pages' unerring presentation of the way people -- at least some of them -- talk and think nowadays. For example, Rita's reaction when introduced to Nick: "He didn't look gay in the least, she thought, memtally slapping her hand." Graceful and funny observations like this abound; and much of the freshness comes from the book's taking for granted that people of the same sex are attracted to each other and fall in love. Here, too, Paul Monette breaks the rule that would have the world of the sexual ten percent clouded with guilt, the threat of exposure, and self-destructive behavior. The dilemmas in this novel have nothing to do with either self-recrimination or "coming out as gay." All their heterosexual friends and clients know Nick and Peter are a couple, and if anything, take a mildly proprietary stance toward the relationship. (Whether this counts as one of the dreamlike ingredients of The Gold Diggers Angelenos must debate among themselves.)

The real coming out of the closet in the book has to do with the hedonism and "enlightened" materialism of the '70s. L.A. was always a little more of a money town than other American cities. But it's obvious that the new wave cares only about money as a stepping-stone to the real thing -- pretty clothes, a fabulous house filled with things, ambrosial food and drink, and beautiful sex partners. Or does this oversimplify matters? Possibly the new sensuousness is only a screen covering a greater pleasure: the sense that the concumer has outdistanced his competition, by knowing what to consume, and then managing to get it. Competition, the harmonic of self-doubt, may be the final American and Puritan passion.

If so, The Gold Diggers has plenty of data to offer on the question, and L.A. was the logical place to begin research. At the end of the western road civilization has taken, this locale has given Paul Monette a cast of self-improvising Americans who perform in the oldest romantic drama, one moment, however fair, could stay, and stay dissatisfaction.