Nginx proxy_pass to Node server if no html files are found

I've set up an Nginx server which does a proxy_pass to a Node server if no html files are found. I can access my static html file just fine but when I hit the Node server I get a 403: Forbidden. Here is my Nginx conf if that helps:

proxy_cache_path  /var/cache/nginx levels=1:2 keys_zone=one:8m max_size=3000m inactive=600m;                                            

upstream mysite_upstream { 
    server 127.0.0.1:8000; 
    keepalive 64; 
}       

server { 

    listen       80; 
    server_name  staging.mysite.org;                                                                                          
    root /var/www/staging.mysite.org/public;                                                                                  

    access_log /var/logs/staging.mysite.org.access.log; 
    error_log /var/logs/staging.mysite.org.error.log;                                                                         

    error_page 404         /404.html; 
    error_page 500 503     /500.html;                                                                                               

    location ~ ^/(images/|javascript/|js/|css/|style/|flash/|robots.txt|sitemap.xml|humans.txt|favicon.ico) { 
            access_log off; 
            expires max;                                                                                                            
    } 

    location @node { 
            proxy_redirect                  off; 
            proxy_set_header                X-Real-IP $remote_addr; 
            proxy_set_header                X-Forwarded-For $proxy_add_x_forwarded_for; 
            proxy_set_header                X-Forwarded-Proto $scheme;                                                              
            proxy_set_header                Host $http_host; 
            proxy_set_header                X-NginX-Proxy true; 
            proxy_set_header                Connection "";   
            proxy_http_version              1.1;                                                                                    
            proxy_cache                     one; 
            proxy_cache_key                 sfs$request_uri$scheme;                                                                 
            proxy_pass                      http://mysite_upstream;                                                           
    } 

    location / { 
            try_files $uri $uri/ $uri.html @node; 
    } 
}  

I should mention that if I take out try_files and just proxy_pass directly from / the Node app is served up but I get a 404 for all my static html files. Also, this is working fine on my local machine (osx).