Heat olive oil and butter in a Dutch oven set over medium-high heat.
Add the onions and carrots; cook for 4 minutes, stirring occasionally.
Stir in the garlic and cook for 20 seconds.
Add the sausage and cook for 6 minutes, or until completely browned, breaking it up into pieces with a wooden spoon.
Stir in the Italian seasoning, salt, pepper, and tomato paste.
Add crushed tomatoes, diced tomatoes, and sugar; stir to combine.
Add in the chicken broth and water; add in the bay leaves and bring mixture to a boil.
Stir in the broken up lasagna sheets; lower heat to medium and continue to cook for 20 minutes, or until pasta is tender.
Taste for salt and pepper; adjust accordingly.
Top with mozzarella cheese and parmesan cheese.
Garnish with basil and parsley.