M&T Bank

The plaintiff bank sought to foreclose on a mortgage on certain real property owned by the defendant after he defaulted on a promissory note secured by the mortgage. The mortgage agreement included a provision authoriz- ing the plaintiff to purchase force placed insurance coverage for the property if the defendant failed to maintain adequate coverage. The defendant filed an answer and a counterclaim, and asserted various special defenses, including unclean hands and breach of the implied covenant of good faith and fair dealing, which were predicated on allega- tions relating to the plaintiff's purchase of force placed flood insurance from A Co., an insurance provider. The defendant did not challenge the plaintiff's right to purchase the force placed insurance but alleged that the plaintiff was involved in an undisclosed kickback scheme with A Co., pursuant to which the plaintiff used A Co. as its exclusive force placed insurance provider, and, in exchange, A Co. provided the plaintiff with certain rebates, including free or below cost mortgage services. The defendant claimed that, instead of passing those rebates on to him, the plaintiff charged him more than the cost of purchasing the force placed coverage, contrary to both the provisions of the mortgage agree- ment and certain representations the plaintiff had made to him. The defendant's answer also included numerous allegations concerning the plaintiff's nationwide kickback scheme with A Co. and its impact on borrowers generally. The plaintiff filed a motion to strike the special defenses and the counterclaim, which the trial court granted in part. In connection with its decision to strike the special defenses of unclean hands and breach of the implied covenant of good faith and fair dealing, the trial court reasoned that the allegations concerning the kickback scheme were broad and related to borrowers generally instead of to the defendant specifically, and, therefore, the allegations did not arise from the mak