ground rules -vs- rule book

[Buckeye12]

I did a 16 & under game last night (FED) and this situation came up. With 1 out and bases loaded and the home team at the plate, the batter lines a pitch right back to the pitcher. The pitcher catches it and fires over to third to try to get the runner, who is still off the base. On this diamond is an open gate directly in line with the pitchers mound and third base. The ball goes over the third baseman's head and out the gate. I called the ball dead then moved the runner on first at the time of the pitch to third and the runner's on second and third scored. The visiting coach didn't like that decision at all and said that it was a one base overthrow, not two. I tried to explain to him that only a throw from the pitcher while on the pitcher plate was a one base award. Then after the game, the home team coach (actually he was my coach at one time) told me that I missed that call and it should have been a one base award. Was I correct on my ruling or were the coaches?