Fireplaces, Heating Stoves, Flues and Chimneys - Covering a fireplace

I have a house built in the early 70's. It is a raised ranch style with two fireplaces. One on the main upper floor and one on the lower floor. These share the same chimney unit but apparently have two seperate ducts based on two exits on the roof of the chimney. We have had the home for about 6 years and have only breifly used the upper fireplace. The downstairs is not insulated and is to cold in the winter. I am looking to add insulation to the walls. The Family Room where the fireplace is has one of its walls mostly in brick from the fireplace. I was looking to simply build a new wall and cover the fireplace brick with a normal wall of wallboard and insulation. I just wanted to know if this was safe to do. Should I definetly cover its chimney with something. Is there some type of fire risk if the upper fireplace is ever used and must this be eliminated from use also. I am simply looking at removing the hearth to save some floor space.

Yes, you can remove the hearth, close the damper, and block off and safely enclose a fireplace, and cap its flue.
Each fireplace has a separate flue, so make absolutely certain that the one that you cap off is to the fireplace that you're enclosing.
It should not affect the other fireplace.
Good Luck!
Mike