Issue with installing ansible 1.9.1 using python 2.7.10 on Mac OSX (with gather_facts: yes)

[AnsibleUser026]

I recently upgraded to ansible 1.9.1 and was not successful in executing any of my old playbooks (which ran successfully using 1.7.1) on local MAC (OSX) machine. I've tried many things, including installing Python in a custom space but still not able to resolve.

Here is the setup on Mac OSX (10.10.3):

1. Python

    $ which python

    /Library/Frameworks/Python.framework/Versions/2.7/bin/python

    **2.7.10 (v2.7.10:15c95b7d81dc, May 23 2015, 09:33:12)**
    [GCC 4.2.1 (Apple Inc. build 5666) (dot 3)]

2.  pip

    $ which pip

    /Library/Frameworks/Python.framework/Versions/2.7/bin/pip

    $ pip -V

    **pip 1.5.5** 

    from /Library/Frameworks/Python.framework/Versions/2.7/lib/python2.7/site-packages/pip-1.5.5-py2.7.egg (python 2.7)

3. Ansible

    $ ansible --version

    **ansible 1.9.1**

      configured module search path =     externals/libraries:/usr/share/ansible:/usr/local/share/ansible

Playbook Error:

PLAY [localhost] **************************************************************

GATHERING FACTS ***************************************************************
failed: [localhost] => {"failed": true, "parsed": false}
/Library/Frameworks/Python.framework/Versions/2.7/lib/python2.7/distutils/dist.py:267: UserWarning: Unknown distribution option: 'install_requires'
  warnings.warn(msg)

Note: If I make "gather_facts: no" in the playbook, it works. Though it is not very useful in that case :(.

Please help with your thoughts ASAP.