It's no secret that Severus got bullied by James, Sirius, Remus (Lupin), Peter. But one time Lily saw and like always told them to knock it off Severus was embarrassed and before he could stop himself he called her a 'Mudblood' Lily got really mad at him and the two never talked again.

Lily was the only one who celebrated his birthday so when it came around without her talking to him, he was really depressed.