Rancho Guejito — Southern California's land that time forgot

VALLEY CENTER, Calif. -- Astride his horse, Benjamin Coates could gaze across 21,400 acres and see the sweep of his power reflected in nature. A riot of mesas and meadows laced with gurgling streams. Miles of chaparral and clusters of stately oaks. A mountain that American Indians considered a deity. Herds of deer, golden eagles overhead, enough wildlife to stock a zoo. And not another soul in sight.

This was Xanadu, and it belonged to Coates.

The Pennsylvania-born businessman collected property. He owned property in New York and in France, Japan, Scotland and Switzerland.

But above all, he prized Rancho Guejito, Southern California's last undivided Mexican land grant, the properties that went to descendants of the Spanish settlers after California was carved out of Mexico and became part of the U.S.

Most people have never heard of Rancho Guejito, in northern San Diego County. Few have seen it. Shielded from view by ridgelines, with only one road leading to a locked gate and a security guard, the ranch is a time capsule from 1845, when Mexico's California governor awarded the core of it to San Diego's customs inspector.

The players

Benjamin Coates Sr. businessman involved in shipping, oil wildcatting and furniture, collected property: a Manhattan office building, a hunting estate in Scotland, a Swiss chalet, apartments in Paris, New York and Tokyo, and Rancho Guejito. He was a decorated Navy pilot who died in 2004 at age 86. He relinquished his U.S. citizenship so he could move his holdings overseas and avoid taxes. With a passport from Belize, he moved among homes in Europe, the United States and Japan.

Theodate Coates, a 60-year-old New York artist who controls her father's empire.

Hank Rupp, the attorney who represented Benjamin Coates for two decades and now speaks for Theodate.

Al Hill III, 36, a Dallas investor and great-grandson of legendary Texas oil tycoon H.L. Hunt, who contends that he, not Theodate, is the rightful manager of Coates' estate. He says Coates, a longtime family friend, didn't think his daughter or son was up to the job and was finalizing a deal that would have put him in control but didn't get around to signing the papers.

Ben Coates Jr., 57, son who was named principal trustee of family trust set up in 1986. But after a falling out with Ben Jr., the elder Coates apparently decided to create a management company overseeing a new trust that Hill would manage. Theodate was to play a secondary role, the documents show.

Los Angeles Times

Since then, a series of wealthy men have run cattle and used Rancho Guejito (pronounced weh-HEE-toh) as a private playground. Coates was the last.

It was the jewel of a billion-dollar-plus fortune the 86-year-old aristocrat planned to pass down to generations of heirs with instructions that it never be developed.

"No American family lasts. In Europe they still do, but the times are against families lasting out," Coates wrote to an acquaintance. "I do not want my life's work to be dispersed. It is organized to go on, and I want it to go on."

Then, in 2004, he died. Soon neighbors in Valley Center, a once-rural enclave tilting toward suburbia, noticed surveyors around the land. An attorney for Coates' daughter floated vague development ideas.

The mere suggestion that any part of Rancho Guejito be paved has mobilized environmentalists.

Bill Horn, a San Diego County supervisor and property-rights advocate, is no environmentalist. But he feels betrayed. For years, he worked to keep government regulators off Coates' back. Now, Horn believes the government needs to buy Rancho Guejito.

"This place is like a little Shangri-La that everyone forgot about," he said.

Whether one of the most ecologically valuable swaths of private land in California remains that way is anything but certain.

At the center of the drama is Coates' daughter, Theodate Coates, a 60-year-old New York artist who controls her father's empire. Some suspect the recent talk about development is part of a scheme to get around proposed county zoning changes and other government regulations that would undercut the ranch's value. Then it could be sold to the state for preservation at a higher price.

Hank Rupp, the attorney who represented Benjamin Coates for two decades and now speaks for Theodate, denies that's the strategy -- although he won't shut the door on the possibility.

"We're absolutely not interested in selling it to the state in the foreseeable future," he said.

Rupp won't say how far into the future he can see. Nor will he elaborate on the development proposals. But he has approached Escondido city officials to explore whether the ranch can be annexed, to remove it from county oversight. If Escondido won't, maybe San Diego will, he says.

On another front is an acrimonious legal battle in which the great-grandson of legendary Texas oil tycoon H.L. Hunt contends that he, not Theodate, is the rightful manager of Coates' estate.

Al Hill III says Coates, a longtime family friend, didn't think his daughter or son was up to the job. Hill contends Coates all but adopted him and was finalizing a deal that would have put him in control. The only problem: He didn't get around to signing the papers.

Rancho Guejito was off the beaten path. It was far from the traditional travel routes established by the Spanish priests who defined Old California by establishing the chain of 21 missions around some of which the state's larger cities developed.

This isolation has engendered a mystique common to veiled places. It's a mystique that has grown with California's population and the division or disappearance of hundreds of Spanish and Mexican land grants.

Those lucky enough to get an invitation -- or bold enough to trespass -- say Rancho Guejito lives up to the legend.

"It was a very emotional journey for me that first time," said Bob Lerner, a San Diego County historian who was a guest several times. "I felt like I was being transported back to when California was part of Mexico. Nothing had changed."

A request to tour the ranch for this story was denied. Seen from the air, Rancho Guejito is a startling contrast to the encroaching jumble of housing tracts and commercial strips.

The 8,000-square-foot hacienda-style home Coates built is on a ridge at the ranch's southern end. Its U-shaped courtyard and swimming pool overlook the property -- a dozen miles long, three across.

A broad mesa stretches north, flanked by two pine-studded valleys that converge in a meadow fed by Guejito Creek and its numerous tributaries. A maze of rugged mountains anchors the ranch's northern end.

The property's catalog of riches include Indian archaeological sites and various wildlife.

In the early 1970s, the state of California nearly bought it all for use as a park. Coates, who already owned a Hemet ranch that once belonged to John Wayne, scooped it up for about $10 million.

Over the years, he fought attempts to take parts of it for a reservoir and an airport, but he also rejected offers to sell it for preservation.

Coates prospered in a variety of businesses -- shipping, oil wildcatting and furniture among them. But land is what stirred his passion.

He once sold a Thoroughbred that won a major French race to buy a 23,000-acre spread in Scotland. Wanting to watch the America's Cup yacht race off Newport, R.I., Coates is said to have bought a seaside estate -- then sold it after the race. When he couldn't find a suitable penthouse in Manhattan, he financed an apartment building on the Upper East Side and took the top for himself.

He was a decorated Navy pilot who hunted Nazi submarines in the Atlantic between Brazil and Africa. His friends were royalty -- the Bismarcks of Germany and Japanese Prince Fumitaka Konoe, whom he met in college at Princeton.

He was a steely entrepreneur who relinquished his U.S. citizenship so he could move his holdings overseas and avoid taxes.

With a passport from Belize, he moved among homes in Europe, the United States and Japan.

In the 1960s, Coates began transferring his holdings to a web of foreign companies, many of them in Liberia. Rancho Guejito is managed from Colorado Springs, Colo., New Jersey and New York and is owned by a Netherlands Antilles company that is owned by a trust in Liechtenstein.

But Coates wasn't a nouveau riche jet-setter. He was born with money, married into it (Nancy Coates inherited her own fortune) and made far more through entrepreneurship.

Letters he wrote late in life reflect a man of the past intent on controlling the future.

The Liechtenstein trust Coates created in 1986 was the vehicle to accomplish that. Coates named his son, Ben Jr. -- listed as vice president of Coates Bros. Co. Inc. on the father's letterhead -- to become principal trustee upon his death. Theodate Coates isn't mentioned in the document.

But something happened that changed Benjamin Coates' mind. He had a falling out with Ben Jr. -- no one familiar with the details will say why.

"I just don't think they saw things eye to eye ... on making a profit, on doing what you're supposed to do, on working a job regularly," said Matthew Dowling, an Oklahoma City attorney who once represented Ben Jr. "Things that a man would expect from his son."

So Coates went looking for a man he could groom for the job.

Coates came to know the Hill family of Texas in the early 1960s after he got into the oil business.

Al Hill Sr. married heiress Margaret Hunt, the first of H.L. Hunt's 14 children from three families, two of which he kept secret for years. The Hunts and Hills were Texas royalty and embodied qualities Coates admired: generational wealth built by shrewd, self-reliant risk-takers.

Hill's 36-year-old grandson, Al III, is a Dallas investor who was 18 when he met Coates.

How the aging billionaire came to consider Hill worthy of managing his holdings -- and passing this responsibility to Hill's male heirs -- is spelled out in Hill's lawsuit against Theodate Coates, filed in a New York court. (A separate action subsequently was filed in a Liechtenstein court.)

"I believe it was the second time I met Al III that I realized the marvelous presence the boy presented," Coates wrote to a lawyer representing the Hill family.

Documents cited in the lawsuit show Coates instructed business advisers and attorneys to create a management company overseeing a new Cayman Islands trust that Al III would manage. Theodate was to play a secondary role, the documents show.

Hill's role, Coates wrote, would be "overlooking what women cannot necessarily do properly -- lawyers, employees, etc. ... "

Hill says he and Coates made an oral agreement for Hill to begin managing the Liechtenstein trust and to oversee its transfer to the Caribbean. Coates told his attorney to provide "strong incentives" to prevent his children from challenging the new trust, according to a memo between the two.

Hill wants the courts to hand him the keys to Coates' empire and assess monetary damages against Theodate.

"He's rolling over in his grave right now over how it's being handled," Hill said. "He became like a grandfather to me. And I became like a son to him."

Hill was a pallbearer at Coates' funeral. Ben Jr. didn't attend.

Attempts to reach Ben Jr., 57, for this article were unsuccessful.

Rupp, the Coates' attorney, won't discuss Ben Jr., and Theodate Coates doesn't grant interviews. Rupp is the public face of Rancho Guejito. A former prosecutor, he left conservationists aghast when he recently proclaimed, "There isn't enough money in the state treasury to buy Rancho Guejito."

An indoorsman, Rupp finds the ranch's wildness unnerving. "When you go out there, you want to strap on a sidearm," he said. "I don't get out of my car. Things sneak up on you there. ... There's a rumor that there's a jaguar."

Hill says he simply is trying to fulfill the wishes of his mentor.

Lawyers for Theodate argue that even if her father had signed the new trust documents, it wouldn't have been legal because the original was to last 100 years and is irrevocable.

Hill's purported oral agreement with Coates is unenforceable in New York, they argue, and filing a claim in Liechtenstein is irrelevant because, well, this isn't Liechtenstein.

"He basically flirted with the idea of other business [arrangements] but never was serious about any of them," Rupp said.