Preheat oven to 350F. Grease a 13 x 9 baking dish.
To prepare cake: Microwave carrots in the bag 3 minutes on high. Set aside to cool.
Using a mixer or by hand mix sugars, oil and eggs until well blended.
In a separate bowl combine flour, baking soda, salt, cinnamon and nutmeg; add to wet mixture stirring until well blended. Add vanilla. Add the carrots and pineapple mixing until well incorporated. Add 1 cup chopped nuts. Pour into prepared pan and bake 40-50 minutes until toothpick comes out clean.
Allow cake to cool completely before frosting.
To prepare frosting: Using an electric mixer cream the butter and cream cheese. Add vanilla. Add confectioners sugar until icing reaches the proper consistency.
Frost cake then sprinkle top with remaining 1/2 cup of chopped nuts.