alias and nested location

I have a location to match php files:

# PHP handler
location ~ \.php {
## Catch 404s that try_files miss
if (!-e $request_filename) { rewrite / /index.php last; }

## Store code is defined in administration > Configuration > Manage Stores
fastcgi_param MAGE_RUN_CODE default;
fastcgi_param MAGE_RUN_TYPE store;
fastcgi_param HTTPS $fastcgi_https;
rewrite_log on;

# By default, only handle fcgi without caching
include conf/magento_fcgi.conf;
}

I need to setup an alias so requests like /coolapp/ go to the coolapp located outside the document root. The only problem is when these requests are for .php files, the location I have above is matched instead. I was insctruced to take the location matching for .php files above and nest it in my location /coolapp/, but nginx is now giving me 404 File not found for php files. My location for /coolapp/ looks like this

location /coolapp/ {
alias /var/www/apps/coolapp/;
location ~ \.php {
# Copied from "# PHP Handler" below
fastcgi_param MAGE_RUN_CODE default;
fastcgi_param MAGE_RUN_TYPE store;
fastcgi_param HTTPS $fastcgi_https;
rewrite_log on;

# By default, only handle fcgi without caching
include conf/magento_fcgi.conf;
}
}

conf/magento_fcgi/conf looks like this:

fastcgi_pass phpfpm;

## Tell the upstream who is making the request
proxy_set_header Host $host;
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
proxy_redirect off;

# Ensure the admin panels have enough time to complete large requests ie: report generation, product import/export
proxy_read_timeout 1600s;

# Ensure PHP knows when we use HTTPS
fastcgi_param HTTPS $fastcgi_https;

## Fcgi Settings
include fastcgi_params;
fastcgi_connect_timeout 120;
fastcgi_send_timeout 320s;
fastcgi_read_timeout 1600s;
fastcgi_buffer_size 128k;
fastcgi_buffers 512 64k;
fastcgi_busy_buffers_size 128k;
fastcgi_temp_file_write_size 256k;
fastcgi_intercept_errors off;
fastcgi_index index.php;
fastcgi_param SCRIPT_FILENAME /var/www/apps/coolapp$fastcgi_script_name;
fastcgi_param SCRIPT_NAME $fastcgi_script_name;
# nginx will buffer objects to disk that are too large for the buffers above
fastcgi_temp_path /tmpfs/nginx/tmp 1 2;
#fastcgi_keep_conn on; # NGINX 1.1.14
expires off; ## Do not cache dynamic content

Here are the error messages I'm seeing in nginx error log:

2014/02/28 11:10:17 [error] 9215#0: *933 connect() failed (111: Connection refused) while connecting to upstream, client: x.x.x.x, server: mysite.com, request: "GET /coolapp/test.php HTTP/1.1", upstream: "fastcgi://[::1]:9000", host: "www.mysite.com"
2014/02/28 11:10:17 [error] 9215#0: *933 FastCGI sent in stderr: "Primary script unknown" while reading response header from upstream, client: x.x.x.x, server: mysite.com, request: "GET /coolapp/test.php HTTP/1.1", upstream: "fastcgi://127.0.0.1:9000", host: "www.mysite.com"
2014/02/28 11:11:59 [error] 9220#0: *1193 FastCGI sent in stderr: "Primary script unknown" while reading response header from upstream, client: x.x.x.x, server: mysite.com, request: "GET /coolapp/test.php HTTP/1.1", upstream: "fastcgi://127.0.0.1:9000", host: "www.mysite.com"