Tenses - using the word "had" in a sentence

If you take a close look at the chronological order of the events, it will become obvious to you that had apologised would not be accurate.

In the order the events occurred, we have:

1. Graham had once called him a coward.
2. It came out one night after they had both been drinking (where "had been drinking" is included in the duration of "one night")
3. The next day his friend apologised profusely, but Austin knew that he was right (where apologised is included in the duration indicated by the verb knew).

Therefore, since apologised occurred after came out and is included in the duration of knew, the use of had apologised is not justified.