If Cat was being sincere, then I feel a little badly for her. If she wasn't, it was a great sympathy strategy. Lawson did handle the situation well, although to me it sounded as though he was saying that he had felt something for her, too, but that it was off-limits given his relationship with his girlfriend. I'm sure he'll know exactly how to word it to his girlfriend on the outside, though.
Now that he knows for certain, he needs to back away a little. I don't like the way Sam's handling the Sandra situation (she should not be giving him back rubs, for example), and Lawson shouldn't follow suite. It's just not app. And Cat also needs to learn how to back off a little, because she's flirting and coming on way too strongly.
As much as it's not only Cat's fault, I think she's coming off so desperately, and I can't blame Lawson for not being rude about it. There are so many times when guys fall for girls but can't/don't act on it and remain friends. Cat needs to learn.