The simple, and concise yet complete answer is that the OOW and the Master of the "Californian", Captain Lord, did not know that the "Titanic" was in distress. If one doesn't know that a vessel is in distress, why would one alter one's course and approach it? Although the "Titanic" had sent a distress signal, both CQD and SOS, by radio (incidentally, the first time that SOS had been used in anger) there was nobody on the "Californian" to receive the signal as the Radio Officer had gone off watch and the radio station had been switched off. The distress rockets sent up by the "Titanic" weren't internationally recognised as such, and the OOW of the "Californian" stated in the official inquiry that he thought that they were simply fireworks being let off at a party on the "Titanic", so took no action. There is more information here http://www.encyclopedia-titanica.org/californian-incident.html Captain Lord is often viewed as some kind of pantomime villain, but, given that he wasn't called by the OOW it is difficult to blame him for not going to the aid of the "Titanic" when he didn't know that it was in distress.

I'm not the OP but one question I've been curious about is how many of the Titanic's passengers the Californian would have had the capacity to rescue.

A little bit more detail as to why the radio was shut off.

The radio operator on the California was told to stop sending messages as they were jamming the messages being sent to Newfoundland by the Titanic. The last message sent was a warning about icebergs.

http://www.environmentalhistory.org/revcomm/features/radio-and-the-titanic/

Follow up question: coincidentally, i was just told a theory yesterday that involved a conspiracy to shape the future of radio, and assassinate the financial backers of Tesla. He said the Titanic was switched with a sister ship which had been damaged previously but which insurance refused to cover. Sorry I'm sketchy on details, but is anyone familiar with this theory who can provide support or refutation?