                                 ____________

                             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 Court1 for the Eastern District of




      *The Honorable James M. Burns, United States
      District Judge for the District of Oregon, sitting
      by designation.
     1
     The Honorable William R. Wilson, United States District Judge
for the Eastern District of Arkansas.
Arkansas      affirming    an   order   of   the    bankruptcy   court2     in    adversary
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. LR-
C-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),3 on behalf of owners of
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 cross-
appeal, 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,




          2
       The Honorable Robert F. Fussell, United States Bankruptcy
Judge for the Eastern District of Arkansas.
      3
     The Pagosa Lakes Property Owners' Association was originally
named the Pagosa Property Owners' Association.

                                             -2-
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,4 PLPOA was the true equitable owner
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




        4
       According to PLPOA, at the time FCI filed for bankruptcy,
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.

                                    -3-
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.5   Id. at 6. Of particular importance in the present case is
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.




     5
      Between 1970 and 1979, EIC recorded and amended similar DORs
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).

                                     -4-
        Other documents introduced as evidence at trial included "Property
Reports" (PRs),6 which the developer was required by federal law to provide
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




        6
       The district court refers to the Property Reports as "HUD
Reports." See id. at 4.

                                       -5-
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.




                                            -6-
      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.




                                        -7-
                                           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




                                           -8-
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




                                        -9-
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.




                                     -10-
        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,7 and the relevant
written descriptions of the property being sold.8        Bankruptcy court order,
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




        7
     For example, the real estate contracts stated that "no agent
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).
            8
      The contracts of purchase contained a legal description of
the property that was being sold and did not mention an ownership
interest in the recreational amenities. Id.

                                          -11-
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




                                        -12-
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.




       9
       FCI does not argue that § 544 avoids PLPOA's restrictive
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.

                                   -13-
