In a large skillet, heat 1/4 c olive oil over medium heat until shimmering. Add onion, a large sprinkle of kosher salt and some black pepper and saute until soft and translucent, 3-5 minutes. Add garlic and saute until fragrant, 1 minute. Add bay leaves, red pepper flakes and kalamata olives. Saute another 3-5 minutes, until onions begin to brown. Add basil, tomatoes and sugar. Stir well and simmer 10 minutes.
In a wide, shallow dish, season flour with salt and pepper. In a second dish, whisk together eggs and milk with a pinch of salt and pepper. In a third dish, season bread crumbs with salt and pepper, and stir in Parmesan, parsley and garlic powder.
Heat 1/4 c olive oil in a large skillet. Dip each chicken breast in the flour, coating both sides then shaking off excess. Dip in egg wash on both sides, allowing excess to drain off. Dip in bread crumbs, coating both sides well. When oil is hot, fry coated chicken breasts 4 minutes on each side, until golden brown and crusty.
Spoon tomato sauce over chicken breasts. Top with sliced mozzarella and more Parmesan. Bake in preheated 350°F oven 15 minutes or until cheese is bubbly. Serve with spaghetti.