Coat a sauté pan with olive oil and place over medium heat until hot. Add the onions, garlic, and bay leaves cook and stir for 5 minutes until onions and garlic are soft. Add the olives and tomatoes. Continue to simmer and stir until the liquid is cooked down and the sauce is thick, about 15 minutes; season with basil, sugar, salt and pepper. Lower the heat and keep warm.
Preheat oven to 450°F (230°C).
With a flat meat mallet pound each chicken breast on a cutting board with a protective piece of plastic over them to keep things clean, until they are 1/2-inch thick.
Set up your breading station:Easy as 1-2-3
Put the flour in a shallow bowl and season with a good amount of salt and pepper; mix with a fork to distribute evenly.
In a wide bowl, combine the eggs and water, beat until frothy *and hot sauce if using
Put the breadcrumbs on a plate, season with salt and pepper.
Heat 3 tablespoons of olive oil over medium-high flame in a large ovenproof skillet. Lightly dredge both sides of the chicken cutlets in the seasoned flour, and then dip them in the egg mixture, letting the excess drip off. Next coat the chicken in the bread crumbs. When the oil is hot, add the cutlets and fry for 4 minutes on each side looking for a golden color and crisp texture. Try to turn only once.
Place the chicken cutlets in a baking dish. Layer with mozzarella and Parmesan over the chicken and ladle the tomato sauce on top . Bake for 20 minutes or until the cheese is bubbly.
Serve over spaghetti if you prefer.
Note I like mine with garlic buttered spaghetti on the side.