Recreational soccer clubs are run by volunteers. The coaches are volunteers. The board is volunteers. Without volunteers you do not have a club. If nobody is willing to step up an volunteer then you will not have a club.
Typically registration is held, coaches volunteer, and then the coaches draft from the pool of kids registered. If there are not enough coaches then I am not sure how they would determine who stays and who gets refunded, but it sounds like they do not have enough volutnteers.
I don't believe they did anything wrong. If you are not happy with the format of recreational soccer than I would recommend that you look for a "cup" team where you try out, the coaches are paid, and if you make the team you pay $$$$.
The other solution would be for you to learn about soccer, free up your schedule to coach and find another willing parent to assist you to fill in your gaps. Look at it this way - your child will always have a coach ;-)
I hope everything works out.