[susan53]

Because of the difference in meaning.

WILL expresses two concepts:
1. Prediction - as in "She'll be working late" which expresses your prediction of the event
and
2. Volition - here your intention not to call her in the morning: ... so I won't call her...

If you were reporting that, so it was all in past time, you would say: I knew she would (1) be working late so I decided I wouldn't (2) call her early in the morning.
Here, would expresses the report of (1) a prediction made in the past and (2) an intention expressed in the past.

But as time moves on and the day after "not calling her" stops being an intention and becomes a past event, and a fact (you didn't call her). So what you're expressing is now the simple factual event. The first part is still the report of your prediction - I knew she would be working late, but then you continue simply by describing the past event : so I didn't call her.

There's nothing "future" about it at all. WILL expresses present prediction/Volition and WOULD expresses past prediction/volition. When we're just talking about past events, stated as facts, they're irrelevant.

Hope that makes sense.
Sue