You would probably benefit from a 30 minute consultation with an attorney. If the plaintiff failed to show for the second mediation you can file a motion to dismiss the claim. If you have a counter-claim you can file it, but there is a filing fee.
No attorney-client relationship is created by answering questions in this public forum. If you wish to create an attorney-client relationship, you must contact me directly and sign a representation agreement. Answers are provided based on general ideas and an answer specific to your situation would require a review of all documents.
There is always a preference for a case to be decided on the merits rather than a technical issue such as a default. For that reason, many judges will try to give the parties an opportunity to settle, or will bring the case to trial if the facts seem to warrant it. As for bringing the case back, keep in mind that the plaintiff may be able to refile the case (although he/she may have to pay an additional filing fee to do so). For this reason, the judge may be allowing the case to proceed under the original filing rather than dismissing and permitting the refiling of the case only to see the same parties and issues back again.