Preheat over to 350 degrees. Spray a 13 x 9 baking dish with non-stick spray.
Cook pasta per package directions and drain the water. Set aside and keep warm.
While the pasta is cooking, brown the ground beef. Season ground beef with the Italian seasoning. Drain the grease when the ground beef is cooked through.
In a Dutch oven pot, saute the onion and garlic with the butter until onions start to soften.
Add the flour and whisk until blended.
Gradually add the milk while still stirring.
Bring the mixture to a boil. Continue stirring to avoid any burning. The mixture should thicken slightly.
Add in the can of diced tomatoes (drained) and let mixture thicken a bit more.
Stir in the the dash of nutmeg, ground mustard, salt and pepper until smooth.
Add 1 cup of sharp cheddar and 1 cup of pepper jack cheeses and stir until melted and smooth. Turn off heat.
Add the drained cooked pasta and the ground beef into the sauce and stir well until all the pasta is coated.
Transfer the mixture into a greased 13 x 9 baking dish. Top with remaining 1 cup of cheese.
Bake uncovered at 350 degrees for 30-35 minutes.