$scope not updating inside ng-include (no parent variables being used)

Question

I am ng-include-ing a nav bar with a controller called NavCtrl which has a logout button that listens to a logout function and a logoutError field.

Both logout and logoutError are used only inside the template partial (nav.html). The partial doesn't use any scope variables from the parent or vice-versa.

The logout function works just fine on click, but the logoutError doesn't update to reflect a invalid logout response from the server. The scope variables work just fine on load, they just dont update the second time.

I cannot figure out why this is happening.

Code here:

nav.html

<div ng-controller="NavCtrl">
  <!-- Nav Bar Stuff -->
          <li><a href="#" ng-click="logout()" ng-hide="logoutRequestInProgress">Logout</a></li>
  <!-- More Nav Bar Stuff -->

  <!-- logoutError here doesn't update, but loads correctly when the page is first rendered -->
  <div class="alert alert-danger alert-dismissable" ng-show="logoutError">
    <strong>Logout Failed!</strong> {{ logoutError }} 
  </div>
</div>

nav.js

'use strict';

app.controller('NavCtrl', function ($scope, $window, $location, AuthService) {
  if ($window.localStorage.token) {
    $scope.logout = function () {    
      // Reset error vars
      $scope.logoutError = null;
      AuthService.logout().then(function() {
        // success stuff 
      }, function (response) {
        // !!! THIS UPDATE DOESNT WORK !!!
        $scope.logoutError = 'Server Error';
      });
    };
  }
});