In a medium saucepan, cook the onion, garlic, and parsley in the oil for approximately 15 minutes. Add stewed tomatoes, tomato sauce, tomato paste, oregano, basil, salt, pepper, and sugar. Cover and simmer for 30 minutes, stirring occasionally. Taste for flavor and add more sugar if sauce is too tart.
In a shallow bowl or pie plate, stir together the egg, milk, and dash of salt and pepper; set aside. In another shallow bowl or pie plate, combine the bread crumbs, 1 Tablespoon Parmesan cheese, and dash of salt and pepper; set aside.
Preheat oven to 350 degrees. Lightly pound chicken breasts, between 2 sheets of plastic wrap, with a mallet. Heat the oil in a large frying pan. Dip each breast in the egg mixture and then the bread crumbs, coating well with crumbs. Cook the breasts in the hot oil until golden brown, about 3 minutes on each side.
Spread 1 cup of the sauce on the bottom of a 9"x13" baking dish. Place the breasts over the sauce. Spread 1-1/2 cups of sauce over the breasts, then sprinkle with 1/4 cup Parmesan cheese.
Cover with foil and bake in preheated oven for 25 minutes. Remove foil and sprinkle with mozzarella cheese. Bake until cheese melts.
Toss cooked pasta with remaining sauce. Serve pasta on the side.