Getting 'File to import not found or unreadable' when running sass

Question

I'm using gulp-ruby-sass and here's the code in gulpfile.js

gulp.task('styles', function() {
    return sass('styles/app.scss', { style: 'expanded'})
        .on('error', function(err) {
            console.log(err);
            console.log(err.message);
        })
        .pipe(autoprefixer('last 2 version', 'safari 5', 'ie 8', 'ie 9', 'opera 12.1'))
        .pipe(gulp.dest('css'))
        .pipe(rename({suffix: '.min'}))
        .pipe(minifycss())
        .pipe(gulp.dest('css'))
        .pipe(gulp.dest('dist/css'));
});

When I run gulp styles, I get the error

gulp-ruby-sass stderr: Error: File to import not found or unreadable: vendor/normalize-scss/_normalize.scss.
        on line 1 of styles/app.scss

Sass is at version 3.4.14, compass at 1.0.3, gem at 2.0.14

I have referred to several posts and none of them were able to solve this issue.