*The Honorable James M. Burns, United States

District Judge for the District of Oregon, sitting

by designation.

 The Honorable William R. Wilson, United States District Judge 1

for the Eastern District of Arkansas.

____________

Nos. 95-3535/3691

____________

In re: Fairfield Pagosa, Inc.; *

Fairfield Communities, Inc., *

*

Debtors. *

*

------------ *

*

Pagosa Lakes Property Owners' *

Association, Inc., a *

Colorado Non-Profit * Appeal and Cross-Appeal from the

Corporation, * United States District Court for

* the Eastern District of Arkansas

Appellant/Cross-Appellee. *

*

v. *

*

Fairfield Pagosa, Inc.; *

Fairfield Communities, Inc.; *

First National Bank of Boston, *

*

Appellees/Cross-Appellants.*

____________

Submitted: April 8, 1996

 Filed: October 2, 1996

____________

Before McMILLIAN, FAGG and BURNS, District Judge. *

____________

McMILLIAN, Circuit Judge.

This case is on appeal and cross-appeal from an order entered in the

United States District Court for the Eastern District of 1
 The Honorable Robert F. Fussell, United States Bankruptcy

2

Judge for the Eastern District of Arkansas.

 The Pagosa Lakes Property Owners' Association was originally 3

named the Pagosa Property Owners' Association.

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Arkansas affirming an order of the bankruptcy court in adversary

2

proceedings which arose in the Chapter 11 bankruptcy case for Fairfield

Communities, Inc. (FCI), the debtor. Pagosa Lakes Property Owners' Ass'n

v. Fairfield Communities, Inc. (In re Fairfield Communities, Inc.), No. LRC-94-243 (E.D. Ark. Sept. 25, 1995) (hereinafter district court order).

The bankruptcy court's order disposed of a claim brought by the Pagosa

Lakes Property Owners' Association, Inc. (PLPOA), on behalf of owners of 3

property in the Pagosa Development (Pagosa) located in southwest Colorado,

and a counterclaim brought by FCI. Id., Nos. 92-4078/92-4079 (Bankr. E.D.

Ark. Mar. 11, 1994) (hereinafter bankruptcy court order). On appeal, PLPOA

argues that the bankruptcy court erred in holding that (1) PLPOA does not

have equitable ownership of certain real property within Pagosa under

either a promissory estoppel theory or a trust theory and (2) the disputed

land is subject to a valid mortgage lien held by the First National Bank

of Boston (FNBB) notwithstanding a restrictive covenant of use and

enjoyment of the land for the benefit of Pagosa property owners. On crossappeal, FCI argues that, if PLPOA does have an ownership interest in the

disputed property, then that interest is avoided under 11 U.S.C. § 544.

For the reasons discussed below, we affirm.

I.

This case concerns the treatment in bankruptcy of certain real

property referred to as the "recreational amenities" within Pagosa. Pagosa

is a 26,000-acre planned community containing residential subdivisions

surrounding a core business area. The recreational amenities include

lakes, parks, golf courses, tennis courts, equestrian facilities, and open

spaces called greenbelts. In 1990,
 According to PLPOA, at the time FCI filed for bankruptcy,

4

title to several of the recreational amenities (including two

clubhouses, a recreational center, and four lakes) had already been

conveyed to PLPOA. However, FCI still retained title to other

significant recreational amenities (including a 27-hole golf

course, tennis courts, an equestrian center, and approximately

1,000 acres of greenbelt). Brief for Appellant at 7. 

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a wholly-owned subsidiary of FCI, Fairfield Pagosa, Inc. (FPI), held legal

title to the recreational amenities, subject to a mortgage lien held by

FNBB. FPI was the indirect successor in interest to the original developer

of Pagosa, Eaton International Corporation (EIC).

On October 3, 1990, FCI filed for bankruptcy under Chapter 11. FPI

was subsequently merged into FCI as part of the bankruptcy court's

reorganization plan. PLPOA initiated an adversary proceeding in the

bankruptcy case claiming that, although FCI, as FPI's parent, held legal

title to those recreational amenities which had not been conveyed to PLPOA

at the time of the bankruptcy filing, PLPOA was the true equitable owner 4

of those amenities. On that basis, PLPOA claimed that the property was

excludable from FCI's bankruptcy estate.

The bankruptcy court held an eight-day trial on PLPOA's claim of

equitable ownership of the recreational amenities and related issues raised

by FCI, the debtor, and FNBB, the mortgage lienholder. Twenty-nine

witnesses testified at the trial. Following the trial, the bankruptcy

court set forth its findings of fact and conclusions of law in a 63-page

memorandum opinion. The detailed findings of the bankruptcy court are

briefly summarized as follows.

EIC began construction of Pagosa in 1969. Bankruptcy court order,

slip op. at 6. In 1983, FCI purchased the stock of EIC. FPI, FCI's

wholly-owned subsidiary, became the owner and manager of Pagosa. Id. at

6 & n.7. (Hereinafter, EIC and its successors in
 Between 1970 and 1979, EIC recorded and amended similar DORs 5

for various Pagosa subdivisions, relating to particular parcels and

particular uses. Those DORs all contained the same language as in

the master DOR's Paragraph 10. Pagosa Lakes Property Owners' Ass'n

v. Fairfield Communities, Inc. (In re Fairfield Communities, Inc.),

No. LR-C-94-243, slip op. at 3 (E.D. Ark. Sept. 25, 1995)

(hereinafter district court order). 

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interest vis-a-vis the Pagosa Development are sometimes categorically

referred to as "the developer.") While the development of Pagosa was in

its early stages, EIC formally established PLPOA. The terms governing the

powers and duties of PLPOA and its membership were stated in documents

entitled "Declarations of Restrictions" (DORs). In 1970 and 1971, EIC

recorded DORs in the office of the Clerk and Recorder of Archuleta County,

Colorado. Id. at 6. Of particular importance in the present case is

5

Paragraph 10 of the DORs, which states (emphasis added):

10. OWNERSHIP, USE AND ENJOYMENT OF PARKS AND

RECREATIONAL AMENITIES

A. All parks, recreational facilities and other

amenities within the Subdivision are private, and

neither [the developer's] recording of the plat nor any

other act of [the developer] with respect to the plat,

shall be construed as a dedication to the public, but

rather all such parks, recreational facilities and other

amenities shall be for the use and enjoyment of members

or associate members of [PLPOA], to residents of rental

properties, other classifications of persons as may be

designated by [the developer], and to the guests of such

members of [PLPOA] or other residents of Pagosa who

qualify for the use and enjoyment of the facilities. 

B. The ownership of all recreational facilities

within the Subdivision shall be in [the developer] or

its designee, however, [the developer] may convey or

otherwise transfer any or all of the facilities to

[PLPOA] and such conveyance shall be accepted by it,

provided it is free and clear of all financial

encumbrances.

Id. at 7.
 The district court refers to the Property Reports as "HUD

6

Reports." See id. at 4. 

-5-

Other documents introduced as evidence at trial included "Property

Reports" (PRs), which the developer was required by federal law to provide 6

to prospective property buyers, and "Statements of Record" (SORs), which

were filed by the developer with the Department of Housing and Urban

Development. The language contained in these reports varied. On the one

hand, some of these documents expressly provided that the developer would

from time to time turn over or transfer to PLPOA unencumbered recreational

amenities. Id. at 8-9, 13-14. Among those documents, some stated that the

timing of such transfers would depend on the construction of the common

facilities, progress of the development, and PLPOA's financial ability to

maintain the recreational amenities, id. at 9, 14; and yet others expressly

noted that the developer reserved the right or the option to retain the

recreational amenities. Id. at 8, 13-14. On the other hand, some of the

documents did not mention transfer of the recreational amenities at all.

Id. at 9-11. Additionally, some of the documents specifically referred to

FNBB's interest in the Pagosa property as a creditor of FCI. Id. at 10,

12, 17. 

The bankruptcy court also received into evidence numerous other forms

of documentary evidence, including real estate contracts, contracts of

sale, statements of conditions of agreement, and purchase and sale

agreements which had been executed by purchasers of Pagosa property. Id.

at 42-43. Referring to this body of documentary evidence, the bankruptcy

court observed "[t]here is no mention in any of [these] documents of any

conveyance of the [recreational] amenities." Id. at 43.

One of the witnesses who testified at trial was David Eaton, vice

president and later president of EIC. Id. at 17. Eaton had been employed

by EIC from 1968 to 1983. Eaton testified that he
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put the DORs in writing and that, at the time, he intended to retain EIC's

ownership of the recreational amenities by preserving an option either to

dispose of or to keep the recreational amenities in the future. Id. at 17-

18. He further testified that the PRs and SORs were meant to be consistent

with the DORs. Id. at 18-19. On cross-examination, Eaton also testified

that in the Stock Purchase Agreement, through which FCI purchased all of

EIC's assets, EIC represented that it had good, valid, and merchantable

title to all the properties conveyed to FCI, including the recreational

amenities which were carried on EIC's books. Id. at 19. He confirmed that

the stock purchase agreement did not list any right or claim of PLPOA to

ownership of the recreational amenities. Id. Randy Warner, founder and

former president and chairman of FCI, testified that he was familiar with

the 1983 stock purchase as well as the documents related to the

recreational amenities and that he understood that EIC had no obligation

to convey the recreational amenities to PLPOA. Id. at 40-41.

Leonard Avery Carey, a former vice president of EIC and general

manager of Pagosa during the years 1972 to 1979, testified that he

authorized sales representatives under his supervision to tell prospective

purchasers of Pagosa property that the amenities would be conveyed to PLPOA

upon the completion of projects and PLPOA's financial ability to maintain

such property. Id. at 22. This testimony by Carey was confirmed by the

testimony of numerous other witnesses, including EIC representatives who

sold Pagosa properties and individuals who purchased Pagosa properties from

EIC. Id. at 22-36. By contrast, individuals, who were employed by FCI at

or following the time FCI bought out EIC's stock, testified that FCI did

not refer to PLPOA's eventual ownership of the recreational amenities as

a selling point to potential property owners; in fact, they testified, it

was FCI's policy to refer to the recreational amenities as FCI's assets,

consistent with the language of the DORs, the PRs, and the SORs. Id. at

36-41.
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FCI also presented evidence demonstrating that it had made capital

investments of approximately $3.2 million for improvements to the

recreational amenities and that it had consistently covered all costs

associated with the recreational amenities for which it retained legal

title. Id. at 41. 

Finally, regarding the topic of FNBB's mortgage lien, FNBB

introduced evidence showing that it initially secured a lien on the

amenities in 1983, when Pagosa was added as collateral for a pre-existing

loan from FNBB to FCI. Id. at 45. That lien was documented in a Deed of

Trust dated March 2, 1983, and duly recorded in the office of the Clerk and

Recorder of Archuleta County, Colorado, on March 4, 1983. Id. At trial,

the parties agreed by stipulation that "FNBB is the owner and holder of a

mortgage lien on the property which is the subject of this lawsuit (except

Pinion Lake)." Id. at 46. 

Following the trial, the bankruptcy court concluded: (1) FCI was the

legal owner of the recreational amenities at the time of its bankruptcy

filing; (2) FCI was also the equitable owner of the recreational amenities

at the time of its bankruptcy filing; (3) FCI's legal and equitable

ownership were subject to a restrictive covenant; (4) FNBB's liens were

valid; and (5) FCI's counterclaim pursuant to 11 U.S.C. § 544 was moot with

respect to the ownership issues, and § 544 did not apply to the restrictive

covenant. Id. at 56-62. In sum, the bankruptcy court held that the

recreational amenities were legally and equitably owned by FCI, subject to

the mortgages and liens held by FNBB and the restrictive covenant. Id. at

62-63.

On appeal, the district court affirmed the bankruptcy court's order

in its entirety. District court order, slip op. at 17. This appeal and

cross-appeal followed.
-8-

II.

PLPOA argues that the bankruptcy court erred in holding that PLPOA

is not the equitable owner of the recreational amenities under either a

promissory estoppel theory or a trust theory. To begin, PLPOA maintains

that under the "collateral matters" doctrine, collateral oral promises are

enforceable under Colorado law. See Stevens v. Vail Assocs., 472 P.2d 729,

731 (Colo. Ct. App. 1970) ("[w]e determine the better rule to be that oral

agreements as to off-site improvements or land uses of adjacent properties

may be independent collateral agreements which need not be included in the

deed conveying property and are not merged"). Moreover, PLPOA argues, a

party making such collateral promises may be equitably estopped from

asserting its technical legal rights. See Kiely v. St. Germain, 670 P.2d

764, 769 (Colo. 1983) (en banc) (recognizing as part of Colorado common law

the promissory estoppel provision of the Restatement (Second) of

Contracts). PLPOA argues that, in the present case, the bankruptcy court

was bound to consider promises made outside of the written agreements

between purchasers of Pagosa properties and sales representatives for EIC,

FCI's predecessor in interest. PLPOA thus points to evidence that EIC

representatives promised prospective purchasers of Pagosa property that the

recreational amenities would be transferred to PLPOA upon certain

conditions. Furthermore, PLPOA maintains, purchasers of Pagosa property

reasonably relied upon EIC's collateral promises in deciding to buy Pagosa

properties. Consequently, PLPOA concludes, the purchasers obtained an

equitable ownership interest in the recreational amenities under a

promissory estoppel theory. Therefore, while the DORs did not create a

legal obligation for the developer to turn over the recreational amenities,

PLPOA argues, those documents together with the developer's oral promises

did create such a legal obligation which was contingent upon certain

conditions being met. PLPOA then argues that those conditions have been

met because the bankruptcy
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court ordered FCI to convey the last 900 available lots to Archuleta County

in payment of back taxes, thereby substantially completing the development

and also establishing PLPOA's financial ability to maintain the

recreational amenities (because all Pagosa property owners, including

Archuleta County, are required to pay fees to PLPOA).

PLPOA alternatively argues that, as a result of FCI's purported

obligation to convey the recreational amenities to PLPOA, FCI has become

a trustee holding bare legal title to the recreational amenities for the

benefit of PLPOA's members -- the owners of the equitable estate. In

support of this trust argument, PLPOA relies on Bishop & Diocese of

Colorado v. Mote, 716 P.2d 85, 100 (Colo.) (en banc) (Mote), cert. denied,

479 U.S. 826 (1986), in which the Colorado Supreme Court held that the "the

intent to create a trust can be inferred from the nature of property

transactions, the circumstances surrounding the holding of and transfer of

property, the particular documents or language employed, and the conduct

of the parties." PLPOA argues that, in the present case, the DORs manifest

the parties' intent to create a trust because it declares that all Pagosa

property owners and residents have a continuous, perpetual right to use and

enjoy the recreational amenities; in other words, PLPOA argues, "the

declaration creates a continuing benefit to be exclusively enjoyed by the

defined class of 'beneficiaries'" and therefore vested ownership in that

class. Brief for Appellant at 35. 

Finally, PLPOA argues that the bankruptcy court erred in holding that

the recreational amenities are subject to a valid mortgage lien held by

FNBB. PLPOA contends that, when FCI used the recreational amenities as

collateral for a loan from FNBB, the mortgage lien could not attach to the

equitable estate which had already vested in the Pagosa lot owners.

Therefore, PLPOA maintains, "since the mortgage cannot attach to the

equitable estate, its purported attachment to FCI's legal title is
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ineffective to prevent transfer to PLPOA because that title is held as

trustee for the benefit of the property owners." Brief for Appellant at

44.

III.

When a bankruptcy court's judgment is appealed to the district court,

the district court acts as an appellate court and reviews the bankruptcy

court's legal determinations de novo and findings of fact for clear error.

Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir. 1987). As the second

court of appellate review, we conduct an independent review of the

bankruptcy court's judgment applying the same standards of review as the

district court. Id. With these standards in mind, we have carefully

considered the record before us and the arguments presented by the parties.

We conclude that PLPOA is not the equitable owner of the recreational

amenities.

As PLPOA recognizes, the purchase agreements which governed Pagosa

lot sales did not mention the transfer of the recreational amenities.

Other relevant documents (i.e., those which were either on public record

or shown to prospective purchasers of Pagosa properties) expressly or

implicitly indicated that the developer retained the right, or option, to

dispose of the recreational amenities. In particular, the DORs provide

that "[t]he ownership of all recreational facilities . . . shall be in [the

developer]" and the developer "may convey . . . any or all" of the

recreational amenities to PLPOA. PLPOA is required to accept title upon

such conveyance, unless the property is financially encumbered or the

relevant project has not been substantially completed or PLPOA lacks

financial ability to maintain the property in question. Therefore, if FCI

had not exercised its option to convey some of the recreational amenities

at the time of its bankruptcy filing, PLPOA had not acquired an ownership

interest in those amenities.
 For example, the real estate contracts stated that "no agent 7

or representative of the 'Seller' shall have any authority

whatsoever . . . to make any other agreement or representation on

behalf of the 'Seller.'" Pagosa Lakes Property Owners' Ass'n v.

Fairfield Communities, Inc. (In re Fairfield Communities, Inc.),

Nos. 92-4078/92-4079, slip op. at 55 (Bankr. E.D. Ark. Mar. 11,

1994) (hereinafter bankruptcy court order) (quoting real estate

contracts).

 The contracts of purchase contained a legal description of

8

the property that was being sold and did not mention an ownership

interest in the recreational amenities. Id.

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As to the representations made by EIC sales representatives to

prospective lot purchasers, the bankruptcy court did not clearly err in

finding that the Pagosa lot purchasers' alleged reliance on the oral

representations of EIC sales representatives regarding the conveyance of

the recreational amenities to PLPOA was not reasonable in light of the

purchasers' constructive notice of the DORs, the express language to the

contrary contained in the documents which they signed, and the relevant

7

written descriptions of the property being sold. Bankruptcy court order, 8

slip op. at 54-55. Thus, the bankruptcy court did not err in concluding

that, under a promissory estoppel analysis, PLPOA is not the equitable

owner of the recreational amenities. 

We also hold that PLPOA's trust argument fails on the merits,

notwithstanding FCI's contention that PLPOA failed to advance this trust

argument in the bankruptcy court. Under Colorado's statutes, a trust

conveying title to real estate, unless created by act or operation of law,

must be in writing and signed by the grantor. Colo. Rev. Stat. Ann. § 38-

10-106 (West 1996). No such signed written trust exists in the present

case. To the extent PLPOA suggests that the DORs may be construed as a

written trust, there is insufficient evidence of an intent to create a

trust, as required under Colorado case law. Ayres v. King (In re Estate

of Daniels), 665 P.2d 594, 595 (Colo. 1983) (en banc) ("In order to create

an express trust it is essential that the settlor intend
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that a trust come into existence."). While "Colorado recognizes that the

intent to create a trust can be inferred from the nature of property

transactions, the circumstances surrounding the holding of and transfer of

property, the particular documents or language employed, and the conduct

of the parties," the inference of an intent to create a trust must come

from "'[c]lear, explicit, definite, unequivocal and unambiguous language

or conduct.'" Mote, 716 P.2d at 100 (citations omitted). In the present

case, neither the language of the relevant documents nor the conduct of the

parties -- including the statements made by sales representatives for EIC

-- satisfies this standard. Accordingly, no finding of a trust is

warranted as a matter of law.

IV.

In sum, upon careful de novo review, we hold that the bankruptcy

court correctly concluded that PLPOA does not have an equitable ownership

interest in the recreational amenities. We agree with the bankruptcy

court's conclusion that PLPOA's interest in the recreational amenities

exists in the form of a restrictive covenant, which is manifested in the

DORs' dedication of the parks, recreational facilities, and other amenities

to the use and enjoyment of members or associate members of PLPOA and other

qualifying Pagosa residents. As to FNBB's interest in the recreational

amenities, we further agree with the bankruptcy court's determination that

FNBB duly recorded its lien, which remains valid, subject to the

restrictive covenant held by PLPOA, of which FNBB had constructive notice

via the DORs on record. Finally, having held that PLPOA does not have an

equitable ownership interest in the recreational amenities, we dismiss as

moot FCI's cross-appeal asserting that, if PLPOA is held to have an

equitable ownership interest, 11 U.S.C. § 544 operates to avoid
 FCI does not argue that § 544 avoids PLPOA's restrictive

9

covenant, although conceivably that argument might be inferred from

FCI's claim that "[t]he bankruptcy court erred in determining that

§ 544 does not avoid any equitable interest of the PLPOA in the

recreational amenities." Brief for Appellee/Cross-Appellant FCI at

46. In any case, we agree with the bankruptcy court's conclusion

that, in the present case, § 544 does not operate to avoid PLPOA's

restrictive covenant. Bankruptcy court order, slip op. at 61-62.

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PLPOA's interest.9

For the foregoing reasons, the order of the district court affirming

the order of the bankruptcy court is affirmed.

 

A true copy.

Attest:

 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.